Where Land Intersects With The Ledger

Lighting Up A Shadow Market

What is happening with Overstock is old news for everyone even remotely interested in the cryptoverse but it took a bit of nudging from Mr. Market, in the form of a stock chart updated for the first week of 2018, to get me writing. But I’m only thinking about one aspect of this one node in the Internet of Money -where a company is not only transforming itself and changing its focus but is also joining forces with a most interesting partner. This entry may begin with a price chart, but that is not what is on my mind.

After the first week of the year, Overstock is already up 32%. George Soros is now the second largest holder -> https://t.co/7b5sfezSqT 

— StockTwits (@StockTwits) January 5, 2018

A quote from the Overstock press release, as follows:

“World-renowned economist Hernando de Soto and blockchain technology leader Patrick Byrne (founder Overstock.com, Inc. (NASDAQ:OSTK) and blockchain subsidiary Medici Ventures) have formed a joint venture to develop a global property registry system to surface the property rights of billions of people in the developing world. The new company — De Soto, Inc. — brings together de Soto’s decades worth of reforms (especially regarding property rights) at the Institute for Liberty and Democracy (ILD) and Medici Ventures’ blockchain expertise to build solutions to empower individuals through recognized property ownership.”

Hernando de Soto Polar has been involved in this new new thing for a little while now. About a year ago he was working with Bitfury on a blockchain project for land titles in the Republic of Georgia. A new and more eye-catching chapter, however, may have just begun thanks to Overstock’s pivot away from eCommerce and towards the Blockchain. This appears to be a match made in the economic heaven when you consider de Soto’s expertise.

What was de Soto doing decades before Satoshi Nakamoto issued his whitepaper? A Swiss-educated expatriate, he returned home to Peru in 1979 as an economist and consultant — his parents had fled the country during a military coup in 1948. In Lima, he founded the “Institute For Liberty And Democracy“, ILD, which “had designed the administrative reform of Peru’s property system which has given titles to an estimated 1.2 million families and helped some 380,000 firms, which previously operated in the black market, to enter the formal economy.”

ILD essentially helped to deregulate and reduce friction in property registration so much that about half of the country’s landowners (mainly in the urban areas) ended up registered. It would go on to other projects which, to oversimplify, have been focused on merging legal economies denominated by elites with invisible and informal “black market”/shadow economies that most people work and operate within.

Like many others who know of him, I have read his book, The Mystery of Capital (2000). It is about the role of private property in prosperity — that “no nation can have a strong market economy without adequate participation in an information framework that records ownership of property and other economic information.”

The poor of the world — five-sixths of humanity — have things, but they lack the process to represent their property and create capital. They have houses but not titles; lands but not deeds; businesses but not statutes of incorporation.”

ILD teams have spent decades measuring and quantifying the value of these assets all over the globe and the figure they come up with is immense: almost $10 trillion.“*

(*Note: That estimate was made circa 2000.)

In a Bitcoin magazine interview, de Soto asked an interesting “big picture” question about where land-holding & property intersects with the “ledger”:

“”What we are essentially talking about here is re-writing something that is already formatted and standardized on paper. So the question becomes ‘what happens to the five billion or so global citizens who are not tied to traditional property reporting system?’”

I cannot comment about other aspects regarding Overstock’s transformation. Most of the “story” has been covered in depth by the press and more informed observers. It is but one flower in a large valley in bloom*. It does fascinate at the moment, however, for displaying both proletarian and libertarian colors.

Markets ebb and flow, and businesses come and go. Incumbents are overthrown and many pretenders throw on royal colors and vie for the throne. All enterprises’ narratives, however heroic or tragic, shrink to footnotes within the long tail of history. (*Pun intended re: “crypto valley”, feel free to Google it.)

Meantime, the real story of secular change is far and few between. It relies upon and conjures up stewards capable of both disruption and discovery. If there was no “de Soto” ready to join forces with a going concern in transformation, then the Internet of Money would have had no choice but to have hashed someone like him into existence to serve as an advocate for the Great Unbanked and Untitled.

Originally published at big-stack.com on January 6, 2018.