Why is it that capitalism seems to work so well in Western countries and fails the majority of the world that is living in poverty? According to the economist Hernando de Soto, the answer lies in something that he calls “dead capital” – assets without proof and liquidity.
Developing countries struggle to establish efficient property ownership frameworks. However, blockchain offers a revolutionary solution that can tackle this issue and have an everlasting social impact.
The Root of Poverty Lies in Dead Capital
As Hernando de Soto wisely laid out in “The Mystery of Capital,” five-sixths of the world is poor, despite that fact that the people in underserved parts of the world do own houses, land, crops, and businesses, just as those in the western capitalist nations do. However, there is one major difference: all of their assets are not participating in the economy, so it is a “dead capital.” It means that they do not have deeds, or anything that represents ownership and incorporation proof. Hence, the poor cannot even use their extralegal properties. Their properties represent “invisible potential,” because no one can verify who owns what.
Without property laws in place, we can’t transfer ownership, verify owners, divide ownership into shares, buy rights over properties, force people to pay debts, or enter some formal businesses. It is one big mess, but it is one that blockchain implementation is solving. Internet is known as the protocol to transfer information and blockchain is the best protocol to transfer value and digital assets; both are changing the society.
How Land Registry on the Blockchain Can Create a Massive Social Impact
Land/title registry on the blockchain can create a massive social impact. Silicon Valley investor (Zoom, Bitfury) Bill Tai stated, “In developing markets where there may NOT be 100% clarity on who owns what, access to capital is hindered….