Exploring Blockchain’s Potential: Developing Countries Ahead of the Curve

Corey Billington, CEO of an asset tokenization firm, Blubird,

Summary:
The adoption of blockchain technology, particularly through the process of asset tokenization, is rapidly gaining traction globally. As developing countries struggle with outdated paper-based systems for ownership records, they may be positioned to leapfrog into a more efficient digital future. Corey Billington, CEO of Blubird, discusses the challenges and opportunities that emerging markets face in embracing blockchain technology.

Key Takeaways:

Asset tokenization transforms real-world assets into digital formats on the blockchain, enhancing speed, accessibility, and efficiency.
Emerging markets may adopt blockchain solutions faster than developed countries due to the limitations of outdated record-keeping systems.
Legal frameworks in developing nations often lag behind technological advancements, complicating the implementation of blockchain.
Transparency, reduced costs, and anti-corruption measures are primary motivators for governments considering blockchain registries.
The transformation to a blockchain-based economy requires a comprehensive digital infrastructure, including digital wallets and identification systems.

The Momentum of Asset Tokenization

Asset tokenization—the process of digitizing physical assets like shares, real estate, and legal documents on the blockchain—is quietly gaining momentum. The benefits are significant: quicker transfers, fewer intermediaries, and improved global access to ownership. However, while technology advances rapidly, many governments are struggling to adapt. In numerous developing countries, ownership rights are still recorded on paper, leading to administrative systems that are slow, fragile, and vulnerable to disruption.

Corey Billington, the CEO of the asset-tokenization company Blubird, believes that these very challenges might enable emerging markets to take the lead in adopting blockchain technology. In an interview with crypto.news, he elaborates on how nations still reliant on manual record-keeping might be uniquely positioned for this digital transition and the potential benefits it could unlock.

Where Do We Stand on Equity Tokenization?

Crypto.news: Recently, there has been a significant push toward asset tokenization, including Initial Public Offerings (IPOs) and converting equities and real assets to blockchain formats. What is the current state of equity tokenization, and what factors are driving this trend?

Corey Billington: In equity tokenization specifically, we're at a pivotal point. Some countries have established legal frameworks and supporting infrastructure; however, many developing and some developed nations lack these foundational elements.

Emerging markets particularly require these systems to foster growth and transition to developed nation status. Yet, they often lack the legal structures to manage tokenized assets properly, maintain registries, and address updates for on-chain transactions. This disparity exists between the technology’s capabilities and the legal support available, affecting the implementation of solutions like those provided by Blubird.

The Syncing Issue Between Registries and On-Chain Events

Crypto.news: Are these registries unable to keep pace with on-chain activities?

Billington: Precisely. For instance, in the case of equity, if the share registry does not update alongside on-chain transactions, the legal recognition of those transfers can be problematic. Many countries only acknowledge on-chain transfers if their records are updated correspondingly. This issue extends beyond equity to real estate and commodities, which may follow distinct regulations.

Currently, we are collaborating with a government to tokenize the land title registry itself, which addresses these inefficiencies right from the source. This initiative has garnered support not only from the government but also from several major companies recognizing the urgent need for transformation.

The Challenge of Establishing Efficient Registries

Crypto.news: Can you disclose which country is involved in this venture?

Billington: I can only reveal that it’s a developing nation in the Caribbean. They face considerable challenges like document forgery, squatting, and ownership disputes. Establishing credible ownership in court becomes difficult when documentation is unreliable.

We are addressing this by moving the entire registry on-chain, which will serve as the definitive source of truth. Beyond the registry, this transition necessitates a full-scale digital infrastructure, including citizen wallets for ownership verification and management.

Building a Digital Economy from the Ground Up

A national wallet system is essential for citizens to access their on-chain ownership information. Rental agreements and other contracts will also reside within these wallets. By utilizing managed wallet solutions from companies like Utillia or Fireblocks, we can ensure security and permission controls that banks already trust.

The goal is more than just tokenizing land; it involves creating a complete digital economy. Once this foundation is established, processes like rental agreements and invoicing can become much more streamlined. Although this nation currently relies on paper records for essential operations, it’s becoming wealthier and recognizes the need to move past outdated methods in favor of a fully digital system based on distributed ledger technology (DLT).

Skipping Over Legacy Technologies

Crypto.news: This is reminiscent of leapfrogging traditional technology—like going directly to mobile from landlines.

Billington: Absolutely! They are skipping over several stages. Interestingly, developed countries could adopt this approach too, but many remain stagnant due to comfort with existing systems. There seems to be a hesitance to innovate, as they appear to be waiting for smaller nations to test and refine these systems before they adopt them themselves.

Corporate Motivations for Supporting Registry Reforms

Crypto.news: You mentioned that significant corporations are advocating for these registry reforms. What incentives drive them?

Billington: They face similar challenges, including document fraud, unreliable title systems, and legal uncertainties. These businesses understand that following outdated first-world models is not advantageous; rebuilding a broken system doesn’t make sense.

Instead, they’re focusing on the long-term, not wanting to invest in infrastructure that may become obsolete soon. Their investments are part of agreements to enhance local infrastructure, which often translates into building modern digital foundations.

For example, one firm has already invested $3 billion and committed to further similar initiatives in the region. Creating a national title registry on-chain necessitates digital wallets, IDs, and secure management systems. Once this is accomplished, other layers can be built, like rental agreements and invoicing, resulting in compounded efficiency gains.

Benefits to Governments, Industries, and Citizens

Crypto.news: What are the tangible advantages for governments, industries, and citizens?

Billington: Speed and cost reduction are paramount. Audits can be performed quickly due to transparent and verifiable data trails, as manual legal validations become unnecessary. The immutable, cryptographically secure nature of blockchain streamlines processes by reducing the number of intermediaries needed for transactions.

Crypto.news: Could you provide a practical example?

Billington: Certainly! Consider purchasing a house; typically, you would need a notary to validate identification, possibly a lawyer, and a multitude of document checks. However, with a government-issued wallet linked to your digital ID, signing the transaction would suffice as proof of identity.

This wallet functions like a digital passport. It's unique, secure, and verifies identity instantly, eliminating the need for a notary and extensive paperwork. While auditing firms will still exist, their roles will adapt; they won’t need to sift through physical records as the trustworthiness of blockchain means data is already verifiable.

Addressing Privacy and Security in Blockchain Systems

Crypto.news: What measures are in place to ensure privacy and security within these systems? Is everything on-chain publicly available?

Billington: It’s crucial to find a balance. While the base blockchain is public, we can employ tools like Zero-Knowledge Proofs (ZK Pass) for sensitive information. The public can verify transactions occurred, but details may remain private, depending on the access level of users.

For example, accessing medical data may require keys from both the individual and their healthcare provider. Gated access is essential, necessitating consent or approval from both parties.

Billington: There will always be risks, especially regarding smart contracts due to potential bugs or exploits. However, in our case, it’s manageable because we handle simpler contracts like ID verifications and title transfers, as opposed to complex financial systems. Some risks, like social engineering, still exist but are mitigated by multi-signature systems that require multiple approvals for significant actions.

So unlike Web2, where a single insider might exit with valuable data, our approach demands greater security, making unauthorized access significantly more difficult.

Trends Worth Noticing

Crypto.news: Lastly, what trends do you believe deserve more attention?

Billington: Governments are more receptive to these technologies than most people realize. Many are actively investigating ways to cleanse corruption and improve transparency—not just testing but implementing solutions to tackle systemic issues like forged documents and hidden registries.

The financial aspect of blockchain adoption is also significant. A blockchain-based registry is not just superior; it’s more cost-effective, which is crucial for governments striving for rapid modernization. Transparency, anti-corruption efforts, and cost savings are key factors propelling this evolution forward.