August 15th, 2018
Overstock, the online retailer that was among the first to accept Bitcoin (and the most prominent) has launched a subsidiary company to handle land records in Zambia. The company, Medici Land Governance, has announced a partnership with the Zambian government to tackle the issue of land titles and financial access for rural Zambians.
We’ve posted articles about housing and land records before, and we’ve also posted about Africa being prime for blockchain technology to transform. While you wouldn’t think that Overstock, a US-based online retailer selling kitchen wares and furniture, would be the ideal candidate to tackle problems with real estate in Zambia, you might be wrong.
Let’s take a look at the opportunity. To highlight a few points from our recent article about how bitcoin blockchain technology could transform real estate:
Land titles are often kept on paper, especially in less-developed nations. After the Typhoon Haiyan hit the Philippines in 2013, records to large swaths of land simply disappeared. When a town is leveled and the only land records are somewhere in that town, there is no longer an official ledger of who owns what.
Image from The Telegraph
Conversely, the 2008 financial crisis struck as a result of highly-leveraged mortgages, subprime loans, and derivative products being traded in a dizzying game of profits and greed amongst bankers and investors. When the dominoes finally fell, housing prices collapsed and the banks came calling for the land that they now owned. The only problem – well, one of many problems, was that they tried to seize land they didn’t own. Between all the quick deals and swaps between bankers, titles and mortgages simply disappeared in the electronic stew of transactions. Some people fought tooth and nail until the banks could provide proof of ownership. Others simply lost their homes.
Now, let’s look at Zambia.
Zambia, or the Republic of Zambia, is a democratic nation of around 17 million people. While their country has stabilized economically, and has received much foreign investment as a result of their copping mining deposits, it is still not all rosy.
Unemployment and underemployment are serious problems and put a dent in the small nation’s economy. While 44% of Zambians live in urban areas, (making it one of the most urbanized nations in Sub-Saharan Africa) the remaining Zambians in rural areas are mostly subsistence farmers. Additionally, Zambia is a relatively corrupt country, sharing the 87th place (of 176 countries) on transparency.org’s Corruption Index. Because of factors like this, Zambia was declared one of the least economically competitive countries in 2007 (ranking 117 of 128).
So how does blockchain technology fit into a largely rural, relatively poor, population with a sizable amount of subsistence farmers? Potentially really well.
In a previous post about digital currencies becoming adopted by nation-states, we noted that Rwanda was ripe for a jump to the blockchain not only because of domestic economic issues, but because of their technology. Many Rwandans don’t have access to banks, but the country has a high percentage of its population with mobile phones – meaning it could potentially “skip” past banks and landline installations right to digital currencies spread through mobile phones/ smartphones.
The same could be true of Zambia. There’s no need to go from paper records to electronic records (held by a single office) to the blockchain when you can jump right from A to C.
Zambia has relatively high mobile internet penetration (79%) which seems to be growing over 30% per year. And while their mobile market is supposedly expensive, there are also 23 mobility companies in Zambia (more than 1 per million Zambians), meaning that competition is high and prices are bound to fall. I wish the same could be said of Canada’s internet/ phone companies.
If Zambia is in a prime position to benefit from blockchain technology, and the land titles are the first target, how does Medici actually plan on making this work?
A press release from Medici Land Governance was recently put out, celebrating their partnership with the Zambian government. (The Zambian Ministry of Land and Natural Resources, to be exact.) The press release explains the opportunity:
“Zambia, like many other developing countries around the world, struggles with low levels of participation in formal land registry systems. This low participation is a major barrier to financial inclusion, and hence economic development, for approximately two-thirds of the world’s population. Without formal ownership, individuals struggle to obtain access to credit and public services, while governments are limited in their ability to collect taxes, enforce property rights, and plan for economic expansion and innovation. Using blockchain and other technologies, Medici Land Governance (MLG) will create systems to collect and easily secure property ownership information.”
The press release goes further, noting that the real opportunity lies far beyond Zambia and land titles:
“At Medici Land Governance, we believe that the first step toward reducing global poverty is to build a secure and stable way to record land and property rights, and using our expertise in blockchain, mobile apps, and other technologies, we are building the technology that can do that. I look forward to a future where all land and property services — including utility payments, national and municipal tax collections, and mortgages — are managed on a secure, user-friendly system that provides equal access for all people.”
How weird is it for an online retailer to spin out a company like this? It’s weird, but it’s something Overstock has been doing for a while: Medici Land Governance is actually one of a number of blockchain/ technology companies owned by Overstock. A press release on the Nasdaq site notes: “Medici Ventures (owned by Overstock) has a growing portfolio of groundbreaking blockchain-focused investments, including tZERO, Peernova, Bitt, SettleMint, Factom, and IdentityMind, Spera and Symbiont. The company’s majority-owned financial technology company, tZERO, executed the world’s first blockchain-based stock offering in December 2016.”
And while it’s weird for a publicly-traded company to spin out so many companies that are so divergent from their core business, Overstock is not your typical business – it was the first online retailer to accept Bitcoin payments (in January 2014) – and its CEO Patrick Byrne is a pretty interesting person.
Before starting Overstock in 1999, (and taking it public in 2002,) Byrne received a degree in Chinese, a Master’s in philosophy, and was the president/CEO of two manufacturing firms that specialized in equipment for police and firemen. He’s survived cancer three times, and he’s a tae kwon do black belt who once pursued a career in professional boxing. Not exactly the pedigree of your typical internet startup founder.
He saw opportunity in the dot-com burst to liquidate the assets of other failed dot-com companies, he’s gone head to head with Wall Street bankers, and he’s consistently been able to see where technology is heading years before everyone else.With Medici Land Governance, he’s probably seeing an industry that would benefit immensely from blockchain technology (real estate, and particularly land titles) in a region, Sub-Saharan Africa, that’s particularly ripe for blockchain and digital currency adoption. I wouldn’t bet against him.