Cross-Blockchain Protocol for public databases and property registries
Oleksii Konashevych, University of Bologna
The protocol is fundamental for the use of blockchains (public decentralized DLTs) for property registries (land cadastre) and other public databases run by governments. Without this protocol the use of blockchains for legal relationships are impossible for various reasons.
Instead of blockchain technology, a lot of governments consider the so-called “permissioned DLT”, a centralized technology which has vulnerabilities and limitations similar to those of other centralized technologies. No advocates of the permissioned DLT have introduced convincing evidence why this technology is better than those of centralized systems which governments have used for decades. It ensures immutability for records only at the discretion of the authorities, which means that retroactivity, censorship, corruption and even full-stop of services are possible in permissioned DLTs.
At the same time, most claims against the use of blockchain are about legal issues with enforceability and immutability, hardforks, digital identity and privacy, scalability and price volatility. The cross-blockchain protocol (CBP) addresses them. It introduces a concept of “smart laws.” This is a framework for smart contracts and enforcement. Smart laws consist of algorithms which enable Digital Authorities to address legal issues: disputes, inheritance, loss of private keys for cryptoassets and smart contracts, etc.
Another distinguishing benefit of CBP is that it enables the use of multiple blockchains in the bundle. Why would any public servant make a decision for citizens to determine which technology they must use to keep their records of property rights (titles)? Instead, people freely choose which ledger is better for their needs (provided that chains in the bundle meet the highest security standards). It will ensure fair competition of technologies (may be not only blockchains, who knows) and it goes along with the fundamental principle of technological neutrality.
To understand the work of the CBP at the basic level, let us consider any jurisdiction with their laws and government. Any transaction which happens in this country, be it a paper transaction or an electronic one, is compliant with the law or not. The legislation is a set of rules which helps to define in which category a transactions appears. We can imagine rules as filters: if the transaction is illegal, it is filtered out. If it is not, we see it in the result of such processing. The smart law is a technological framework which enables such filters. Paper based rules are digitized in the form of code and introduced in the system as filter algorithms. In the result we a have a multilayered infrastructure:
a bundle of blockchains which are based on a mathematical consensus to ensure decentralized governance and immutability of ledgers;
the protocol which hooks records from ledgers if they are compliant with our digitized rules and
database on top, which collects resulted transactions.
For example, Bob stole a token from Alice. We cannot change this transaction but we don’t need to keep it. Alice will go to the court, and the court will issue a “patch” in the blockchain that will filter out from the top database Bob’s token and re-issue a new token for Alice. As we see smart laws are not intended to rewrite the database each time any legal issue is to be resolved. Any transaction is recorded into the blockchain, legal or not. And Bob still will own the stolen token at the blockchain level. But not for our community, as we agreed in the very beginning to set up rules, and use our cross-blockchain database to define the current state of affairs. Therefore, smart law is a result of our social consensus, a mandate of power that we grant to someone whom we trust.