Are notaries threatened by the blockchain?

What does the notarial profession consist of?

A notary is a lawyer, officer and public servant working independently and impartially..

Guarantor of the legal and material security of the acts of citizens, he is authorized to pass acts in the cases conferred by law and where a party requests it.

Acting among other things as an independent advisor, this is a trustworthy person who legally records agreements between individuals. He keeps the minutes (originals of the deeds) as well as the private deeds deposited in the rank of his minutes (compromise, holographic wills, etc.) by protecting them from any loss.

It certifies and authenticates dematerialized data and documents, in particular at the level of their origin, the identity and the electronic or handwritten signature of people.

What is a blockchain?

Component a technology for storing and transmitting information at minimal cost, secure, transparent and operating without a central control body, a public blockchain (as opposed to a private blockchain) also designates, by extension, a secure database, both common and distributed (because shared by its various users), containing a set of transactions, recorded chronologically in a large database. common data whose validity everyone can check.

A public blockchain can thus be compared to a public, anonymous, immutable and tamper-proof ledger book. In sum, it is a distributed and immutable digital ledger where data is stored chronologically in a large common database.

Public blockchain and private blockchain: what are the differences?

Similarities and differences between the notary profession and blockchain technology

After outlining the main functions of the notary and those performed by the blockchain, we can detect a number of similarities, but also differences.

In terms of similarities, we highlight that they both have the following tasks in particular: the conversation And the certification (give authenticity to) transactions.

Regarding the distinctions, we observe that the notary plays a key role in drafting of acts and practice as independent advisor whereas in the case of a blockchain these attributes are absent.

In addition, it should be noted that the notary provides a institutional trust while the blockchain only provides a technology confidencewhich is not yet fully proven.

Indeed, we can note that notarial deeds are based on strong institutional mechanisms and from which the blockchain does not benefit, namely professional discipline, ethics And the force of acts of public authority.

Another important disparity is that with a blockchain supervision is still necessary, which makes it a weak point compared to the notary. Indeed, it will always be appropriate for an individual to review the quality or accuracy of the data entered. In the event of insertion of acts in the blockchain, no one can modify them anymore, because, as a reminder, the data there is immutable and tamper-proof. The profession of notary therefore requires that he checks that what is written is indeed in conformity with reality. Such concern for compliance is unknown to the blockchain.

Here are some examples of cases where human control is still essential today:

The mortgage register is not complete, as it only records transfers of property between the living. Thus, if someone inherits a property, it does not appear in the mortgage register. If we were to download this existing register as the first block, it would be incomplete. The person who has inherited a property and wishes to sell it subsequently will not be able to mention the sale in the blockchain. This will require the intervention and control of a central authority.

The blockchain cannot verify the consent and legal capacity of the parties to enter into real estate transactions as well as their understanding of the terms of the contract. For example, what if a seller is demented and threatens to sell his property well below market price?

In the same vein, imagine that I want to insert the purchase of a home into the blockchain: who could then guarantee that I am the person I claim to be, in this case the buyer?

Notwithstanding this pitfall, we are seeing the emergence of so-called decentralized identity solutions (or DID in English), with a view to precisely being able to solve this kind of online identity management problem, whether through the difficulty remembering passwords and identity theft or to protect the confidentiality and security of user data.

Here are some of the projects in this niche: ION (developed by Microsoft and running on the Bitcoin blockchain), Litentry (LIT token) implemented on the Polkadot blockchain or MyDid (and its SYL token) from the XSL Labs project.

To go further on decentralized digital identities

The blockchain is also unable to monitor whether the seller has paid its debts and in what order.sometimes complex, its possible creditors (tax authorities, mortgage office, trustee, real estate agent, etc.) by means of the proceeds of the sale.

Alongside its role in drafting acts, the notary also acts as an independent advisor : when buying a home, which for the majority of people is the most important investment of their lives, it draws attention to possible risks and difficulties, but also to possibilities and opportunities .

It can also address topics that you might not have thought of. Perhaps the buyer should review his will following his purchase? Or revise his marriage contract? And perhaps the acquisition of the property also involves important tax consequences?

These are certainly points of attention that require personal interaction with a notary : task that no technology can currently take on, subject possibly to the emergence of dedicated solutions using artificial intelligence.

As you will understand, all the added value of the notary lies in the advice he provides to his clients whether in terms of sale, inheritance arrangements, marital union or tutoring as well as their ability to deal with the unexpected such as pre-emption (priority right to purchase) or legal action, which the blockchain alone cannot guarantee.

Uses and advantages of blockchain and use cases in the notary profession

Despite its weaknesses mentioned above, the blockchain has a number of undeniable advantages over the resources mobilized by a notary.

Its first usefulness that comes to mind is that it allowsestablish a secure cadastre in countries that do not have it. It should be recalled in this regard that the World Bank estimates that 70% of the world’s population does not have access to land titles..

The advantage is therefore twofold: a guarantee of security, coordination and trust, this creates a transparent and tamper-proof property register demonstrating that such a person is indeed the owner of such property and, in the eyes of the State, it allows to collect more property taxes easily.

In Ghana, for example, the NGO Bitland has been working since 2016 to register title deeds on the blockchain and thus resolve land disputes.

In Sweden, an experiment is underway to integrate digital cadastres into the blockchain. Buyers and sellers sign digitally and each change of ownership is stored in a dedicated blockchain.

According to an estimate by the consulting firm Kairos Future, which is also involved in this project, this inclusion could save the Swedish taxpayer more than 100 million euros ($106 million) per year by eliminating paperwork, reducing fraud and speeding up transactions.

According an OECD report, Georgia is one of the first countries to use blockchain technology to register its cadastral assets and has already registered more than a million extracts and deeds.

Here are some other interesting uses of this technology:

The UK, the startup Willchain allows the drafting of a will online. Users are guided step by step through a form and the latter suggests personalized solutions according to their situation. Upon receipt of the notification of death, the will will be activated and its beneficiary will receive his due.

We can still cite Block Notary, an online journal for notaries to keep track of each authenticated document.

The blockchain also makes it possible to create smart contracts: these are autonomous programs which, once started, automatically execute actions defined beforehand without human intervention.

A classic example of a smart contract is the fact of being able to guarantee that the passengers of a delayed flight automatically receive compensation if the plane is really late, an event which most of the time can be verified using an oracle.

What is an oracle in the blockchain world?

It is also possible to use these smart contracts at different stages of the process of selling a property.. Currently, the notary must collect a series of documents before the sale can take place: the cadastral extract, the mortgage certificate, town planning information, etc. Each sale is thus preceded by a panoply of research.

Thanks to these “smart contracts”, this theoretically ensures that the parties can only sign the contract (compromise and/or deed) of sale once all this information has actually been collected. The same process may be used to transfer the property from one individual to another only after payment of the purchase price.

Through smart contracts, the administrative work of the notary (in particular the numerous searches) would thus be considerably lightened in the long termresulting in both substantial cost savings and huge time savings.

Does blockchain represent a real threat to the notarial profession?

Although the blockchain is in itself a progress in many respects, it cannot on its own replace the notarial activitybecause, in fact, notaries remain essential for the elaboration, duplication and certification of deeds. Blockchain, on the other hand, performs well as a secure storage and certification mechanism. Thus, the role of the notary lies more in production and intelligence than in custody, a role that can be allocated to blockchains.

In addition, the notary enlightens the parties on the legal terms and advises them on the legal aspects of their commitments.. All in all, he offers real expertise based on his skills and professional experience.

The notarial profession is resolutely moving towards a real dematerialization and digitization of notarial acts and, in this, the blockchain can constitute a serious strategic support.

The real challenge for reflection would rather be to question the ability of a fully decentralized network to effectively certify information. Indeed and as we have seen, although a blockchain is capable of certifying data, how can its veracity be guaranteed?

By virtue of the existence of the blockchain, it is still quite difficult to define the direction that the notarial profession will take. That said, it can reasonably be said that it will play an important role in the evolution of the profession of notary, because it is a continuation of the dematerialization and digitization of notarial activities, the request for setting up of which has never been as strong as since the Covid-19 health crisis.

In view of the above, the primary mission of the notary would no longer be so much authentication – which will inexorably be supplanted in particular by the blockchain over time – but rather that of providing advice and enlightening the parties on the legal terms. of their contracts.

Through testing and then integrating blockchain technology, the notary will be able to focus more on his role of advice and personal contact with the client.

In the end, far from constituting a threat, the exercise of the tasks carried out by the notary and the blockchain are in no way opposed, but on the contrary are complementary and mutually reinforcingthus giving all parties a valuable advantage both for notaries and related administrations, and for citizens.