Wednesday, May 22, 2019

Blockchain Narratives, Property and Belonging in Post-Soviet Eastern Europe

by Daivi Rodima-Taylor, Boston University

The kratt. Source:

In Estonian folklore, the kratt or “firetail” was a creature humans assembled out of old household objects and animated by drops of blood to performs tasks for its human master. In the current day, this mythological critter has gained prominence in the cultural and political space of post-socialist Estonia – including recent efforts around the implementation of artificial intelligences or ‘kratts’ in the country’s e-governance and private sector, and discussions of KrattLaw around the legal status of AI. Why has this folk metaphor from an Eastern European peasant tradition become central in debates about emerging digital technologies that we often think about as so definitively global?

Looking at the cases of Estonia and Georgia, I am interested in how post-socialist Europe’s historically and locally specific adoption of these new digital technologies may offer insights into the social imaginaries of blockchain. There is an increasing understanding that digital technologies such as blockchain are not merely technological tools, but carry important social and political implications. The use of blockchain in the public administration systems of post-socialist Eastern Europe offers interesting perspectives on how attitudes in popular culture cast light on how these technologies are instituted and used.

Blockchain is a software protocol that facilitates electronic transfer of information without the need for third-party intermediation. Changes in its ledger are added to the data structure when multiple distributed parties come to consensus based on pre-agreed rules. The new modes of decentralized value transfer, identity verification, and business and asset management enabled by crypto-codes raise novel questions about the nature of social trust and institutions such as property and citizenship as mediated by the new technology.

With its origins partly in crypto-utopian pursuits of decentralized monetary and governance technologies, blockchain has increasingly appealed to more traditional institutions of finance and governance. Governments are pursuing blockchain technologies to render their populations and property systems legible while enhancing transparency.

Blockchain has been hailed as a key technology to help formalize property rights by facilitating secure and transparent land registries – a technology that would “unlock the value of landholding” and boost the entrepreneurial potential of its owners. It is perhaps no wonder that the assumed potential of blockchain to facilitate order and formality in situations of instability is particularly pronounced in post-socialist and post-conflict states. Specific histories of post-socialist property restructuring and decollectivization efforts to (re)construct private property have been marked by legal and administrative ambiguities and alternative institutional arrangements. New property forms may blur distinctions between private and public, resulting in “recombinant” property forms that can be assessed by multiple standards of measure. The promise of a secure digital public database may therefore particularly appeal to societies characterized by fuzzy normative frameworks and unclear land use practices.

Farmland in Tanzania. Photo: Daivi Rodima-Taylor

Currently existing application cases, however, cast doubt on the potential of blockchain to automatically rectify the vast expanses of informality, signaling logistical and political challenges, as in the examples of Honduras and Ghana. Blockchain land registration is underway in Georgia, offering interesting glimpses into the political and social rationale of such initiatives, as well as the implications for existing infrastructure.

Selling land in post-socialist Georgia used to be a long process, prone to bribery. The development of the Georgian land registry was seen as justified by popular sentiments that “politicians could influence transactions.” Georgia re-gained its independence from the Soviet Union in 1991 after a centuries-long history of foreign invasions, reducing public trust in government. Many property records had disappeared or were non-verifiable after the fall of the Soviet Union. The expansive land denationalization reintroduced the notion of private property, and in doing so created a vast database of recent land titles.

Georgia’s blockchain adoption built on its openness to other digital technologies. The arrival of blockchain-empowered land registries in Georgia was preceded by a decade-long effort to digitize property and business registries of the country, with the help of international development banks and aid agencies. The National Agency of Public Registry (NAPR) partnered with the blockchain company Bitfury in 2016, to elevate the protection of property rights “from national to global levels.” The blockchain layer was thus designed to function as an addition to the already existing IT infrastructure of the database. Over 300,000 titles were transferred to blockchain, drastically reducing transaction speeds and operational costs, and smart sales contracts for property transactions were piloted in 2017.

Bitfury had been operating bitcoin mining centers in the area since 2015, so residents and government institutions were already somewhat familiar with the blockchain technology. Due to popular awareness about cryptocurrencies, many individuals took up small-scale mining activities in their garages. The World Bank estimated in 2018 that up to 5% of households in Georgia were engaged in cryptocurrency mining or investments.

Bitcoin mining in Georgia. Source: NPR

Elsewhere in post-socialist Eastern Europe, Estonia’s innovative e-governance demonstrated a similar embeddedness between distributed digital technologies and existing digital infrastructures, initiatives, and political rationales. The e-Estonia system is considered the most ambitious nation-wide digital initiative globally. With a small population of 1.3 million, Estonia has a unique socio-political background, including a desire to re-connect with the outside after the Soviet-era isolation. Security was a significant factor - the organized cyber-attacks against the Estonian Internet infrastructures by Russia’s hackers in 2007 mobilized a unified digital response. Since 2000, Estonia has employed a distributed data exchange layer for secure online transfers between information systems – X-Road. In 2007, a team of Estonian software and security specialists designed the digital signature system that would lead to Keyless Signature Infrastructure (KSI) Blockchain Technology Stack that is used in a variety of state registries.

The well-established national digital services framework served as a basis for the innovative e-Residency initiative. Offering a transnational digital identity to citizens of any part of the globe, it allows anyone outside Estonian borders to engage in commercial activities with public and private sectors. About 35,000 e-residents have applied from 160 countries, with thousands of new companies established. As the first program in the world to provide a government-authenticated digital identity to foreigners, it could be seen a step towards a novel idea of a borderless state. The e-Residency platform also serves as a site of expansion for other blockchain initiatives in the country such as decentralized public notary services with blockchain startup Bitnation, and Nasdaq’s blockchain applications with Tallinn Stock Exchange. While the distributed technologies allow the users of Estonian e-governance initiatives better control over their data, the country’s digital embeddedness is viewed as serving an important security protection for the small state with turbulent history. E-Estonia likens blockchain to “digital defence dust” that covers data and smart devices for protection from corruption and misuse, noting that blockchain could be compared to the deterring effects of NATO allies in Estonia.

The growing use of blockchain in public administration systems also gives rise to new risks and vulnerabilities. By enabling an “unbundling” of property rights, blockchain registry facilitates a market for small real estate investments, and as other digital registries, may foster an illusion of immutable land rights, while backgrounding other relevant relationships around the landholding. The entry of private startups working with governments in the blockchain space may entail implicit privatization of land registries, creating private markets in public data. The increasing financialization of land may thus be part of the tendency to “re-risk” that often accompanies blockchain applications.

While it is too early to evaluate the actual impact of these technologies in Eastern Europe, it is evident that rather than cutting out the middleman, blockchain registries build on existing social and political frameworks and infrastructures. In order to understand the ongoing reintroduction of intermediaries and the types of “recombinant” collectivities and property forms blockchain registries facilitate, one should study the social imaginaries and metaphors that surround the technology. It is perhaps unsurprising, then, that figures like the kratt from folklore suggest themselves to help narrate the new relationship between technologies with globalizing potentials, and post-socialist projects of the re-emerging nation state.

The kratt could be seen as a broader cultural metaphor of how Estonians think of their digital infrastructures - as a pragmatic combination of different elements and layers of technology, animated by human agency and desire – but also a creature with a separate subjectivity. Estonian digital progress could be seen as an expression of an important continuity embodied in the character of the kratt – as representing indigenous inventiveness and resilience that has sustained Estonians throughout their difficult history. This cultural metaphor for a particular kind of symbiosis between humanity and technology also entails an acknowledgement of an inherent unpredictability of the digital technology that, similarly to the kratt, could turn against its creators and has to be managed by smart policies and “KrattLaws.” The folkloric creature - the kratt - has thus become an important popular metaphor for efforts to grapple with the emerging ethical issues around digital technologies, while calling attention to the fruitful connections fostered through these, as well as their inherent precariousness.

November (2018) Exclusive Clip "Kratt Needs Work" HD

While the implementation of digital technology often accompanies a global sense of oneness, the example of Estonian ‘recombinant’ nationhood that defines allegiances in terms of virtual and not territorial or ethnic affinities, and the blockchain land registry in Georgia that legitimizes private property after long decades of socialist rule, suggest these national distributed digital projects need to be studied in their own terms. Only then is it possible to evaluate the promise of decentralizing digital technologies for enhancing democratic and participatory governance.

Daivi Rodima-Taylor is reachable at

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