The Regime of Blockchain in Movable Property in Italy

Jul 29, 2019 at 12:22 // News
Coin Idol
There are numerous applications, nevertheless in a nascent stage, of this technology: in the context of financial technology (FinTech) we can think of digital payments in cryptocurrencies, smart contracts and insurance.

Since 2017, the word Blockchain has resounded more and more often in the ears of Italians. The technology became famous mostly thanks to the Bitcoin marvel, which in December 2017 reached a record value of more than $20,000. There are numerous applications, nevertheless in a nascent stage, of this technology: in the context of financial technology (FinTech) we can think of digital payments in cryptocurrencies, smart contracts and insurance.

In the field of Public Administration to digital identities, as happens in Estonia and Italy, or to real estate registers. The community can also think of Supply Chain Management. Let’s focus on some implications regarding the expansion of the technology with reference to the circulation of unregistered movables. There is indeed an interesting platform dubbed Everledger, which consists of a Blockchain-based register designed to avert fraud in the sale of diamonds.

As regards the movement of the movable property, the successor in charge is subject to the purchase if, by purchasing from the non-owner, he takes possession of the movable property in good faith on the basis of a title which is abstractly suitable for the transfer of ownership.

The advertising regime, that is to say those particular procedures with which one wants to make known to third parties the existence of certain facts, of relevant legal situations or the content of legal transactions or judicial documents is different between movable and immovable property.

Pertaining to movable property (unrecorded), the need for publicity is provided by possession: the physical passing on of a thing puts the third party in a position to think that a change in ownership of the right has occurred over it. This is the mechanism by which it is possible to guarantee the ease of movable property: if in fact there was a register created specifically for all the movable assets and it was necessary to transcribe the purchase deed to make the effects of the store opposable to third parties, securities circulation would remain strongly paralyzed.

Blockchain Technology and Internet of Things

Given these premises, one wonders how the physicality of a good (in our case, a diamond) can find its digital representation on the Blockchain. This can be done using other innovative technologies such as Internet of Things ( IoT).

Along these lines, a physical asset can be uniquely identified and registered in the ledger. In Everledger, each diamond is associated with a unique ID and assigned a digital passport in which it is possible to view the whole history of it: when and where it was extracted, the degree of purity and all the previous owners of the jewel. The diamond in this way is represented digitally in the Blockchain in the form of a token. Whoever intends to buy the diamond, by consulting the register, will therefore be able to make all the assessments regarding the convenience of the purchase.

Thanks to a blockchain-based register, it is therefore possible to satisfy the needs found in the system of land registers - in particular the verification of the legal situation that revolves around that property - with reference to the movable assets registered there.

Moreover, if in the future the application of the technology will expand in such a way as to be able to identify and record any movable property, then its knowledge would become common to the community and therefore proper to the average Italian. And in this case, the conduct of the subject who purchases a movable good without verifying in the Blockchain the various juridical events pertaining to it, would constitute a hypothesis of gross negligence pursuant to the law.

Generally, with the expansion of Blockchain technology there will not even be a need for a reform of the circulation and advertising system related to unregistered movables. The combination of blockchain-based register and gross negligence of the subject who does not verify the legal situation of the asset as it appears from the Blockchain, produces a system of circulation similar to that of real estate.

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