Slumlord: A Whole New Meaning – Blockchain Land Registry May Lead to New Global Financial Crisis
“Karl Marx noted that “History repeats itself. First as tragedy, second as farce.” Let us hope that the DAO of the MBS doesn’t prove this adage correct.”
Blockchain Land Registry May Lead to New Global Financial Crisis
A Blockchain-based land registry may help create new toxic assets and lead to a new financial meltdown.
Across the Third World, from Honduras to the Republic of Georgia, efforts are underway to establish land titles via the Blockchain. Proponents of this system advocate it as a mechanism to enable marginalized residents of the world’s slums to take out loans using this newly recognized property as collateral.
The commodification of people’s homes for use as financial instruments was at the heart of the financial crisis of 2008. The correlation between those toxic assets and the Blockchain-based property schemes which are now in the early phases of implementation warrant close scrutiny. Failing to learn the lessons of the last financial meltdown may precipitate another massive disenfranchisement of the world’s most vulnerable citizens.
Land Grab Mania
The financial crisis of 2008 is considered by many economists to have been the worst since the Great Depression of the 1930s. The impetus of this man-made disaster was the securitization of home mortgages which were subsequently arranged into tranches and partitioned on the basis of repayment expectation.
Predatory lenders issued mortgages to unsuspecting victims in the form of NINJA loans (No Income No Job or Assets). These financial instruments were thrust upon people with no real hope of paying them back and the result was countless families losing their homes when the system imploded in 2008.
Hernando de Soto is President of the Institute for Liberty and Democracy. De Soto espouses the notion that residents of Third World shanties such as the Juhu slums of Mumbai, depicted in the film Slumdog Millionaire, are essentially locked out of global capital markets by their inability to secure credit.