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Serpro wants to use blockchain to end corruption in Brazil

Brazil’s national data processing company Serpro wants public and private organizations to use blockchain to do business and reduce cases of corruption in all sectors of the economy.

Although the current project from Serpro lets people without bank accounts buy government bonds for the first time, the company hopes that the technology will also spread to other businesses such as land registration agents, agribusinesses. It could help these companies store data such as land records, contracts, and assets.

Serpro’s director-president Gloria Guimaraes says the Thomson Reuters Foundation,

“It is a good tool to reduce corruption and fraud. I see it as one more way for us to help citizens, businesses (and) the government to improve their controls, reduce their fraud and improve their records”.

“This technology has been sold as the solution to all problems and it is not,” said Pablo Cerdeira, a technology expert with the country’s biggest think tank FGV.

Sergio Jacomino, head of the Institute of Property Registry in Brazil (IRIB) also says the blockchain has no value after testing it by carrying out a fictional property transfer in the city of Sao Paulo. Nevertheless, it could still be employed once all the underlying issues have been dealt with.

Ideally, it could help businesses that require obtaining reliable, valid, credible information with its safest protocols. Thus low risk of fraud and hacking. For instance, corrupt officials who delete or change entries leave a visible trail on the chain.

An example of areas it could find large application is a land registry. Brazil does not have a single centralized land registry. The land is registered in different regions by about 3,400 privately-owned agents, known as cartorios. It is confusing, widely abused and there are double allocations and corruption. Maintaining the records, transfers and title deeds also fuels land conflicts.

London-based campaign group Global Witness said Brazil is world’s deadliest country for land rights activists with one-quarter of 200 deaths in 2016.

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Corruption also characterizes Brazil among contractors and executives of state-run companies and politicians. Many top executives and politicians have been in jail and Petrobras. However, an oil company, forced to pay nearly $3 billion in a U.S. class action corruption lawsuit.

Pelotas is another company exploring the use of blockchain in the country. Ubiquity platform is part of the deal. With the Ubiquity platform, users can input and transfer records permanently and record changes after each saves. This would mean that the files are hard to erase by corrupt individuals.

“We want to produce trusted records,” said Marina Reznik, a partner with the U.S.-based technology company Ubitquity.

The company hopes to expand in other cities in Brazil, Chile, and the United States.

However, Brazil could present a much more significant problem even with the use of the technology in enhancing land registry. Unlike in Honduras, Georgia and the Isle of Man where blockchain is being in use to improve the system. Brazil citizens claim to land based on parental rights, and there is competition from agribusiness and wealthy elites. A Canadian study claims there are about 5 million landless families.

The government is giving state-owned plots to small farmers under the government’s land demarcation process. These, however, need be registering by cartorios to be entirely legal. This is according to Terra Legal Amazonia, a national program granting secure titles to small families who farm in 55 million hectares of land in the Amazon region.

The poor cannot afford cartorio services while the rich pay and bribe to steal land. Corruption fuels conflicts over land between indigenous people and cattle ranchers in the northern state of Para. Forest loss in the Amazon, world’s most extensive rainforest, is also another effect.

Corruption is eminent further because four times more land is privately registered than exists according to U.S research.

Ruy Veridiano, an official working in a cartorio in the city of Osasco, said,

“What personally annoys me is the hype that blockchain will substitute a lawyer in a cartorio. We may use blockchain, but we still have to have a lawyer to ensure the document is legal”.

It will need a legal analysis where the authenticity of identity documents, title deeds, and government allocations are cross-checked to avoid double titling. That is the challenge of using blockchain.

“This technology will sells as the solution to all problems, and it is not”, says Pablo Cerdeira, a technology expert with the country’s biggest think tank FGV.

Sergio Jacomino, head of the Institute of Property Registry in Brazil (IRIB) also says the blockchain has no value after testing it by carrying out a fictional property transfer in the city of Sao Paulo. Nevertheless, it could still be employed once all the underlying issues have been dealt with.

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David

David Kariuki is a journalist who has a wide range of experience reporting about modern technology solutions including cryptocurrencies. A graduate of Kenya's Moi University, he also writes for Hypergrid Business, Cryptomorrow, and Cleanleap, and has previously worked for Resources Quarterly and Construction Review magazines.

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