• March 31, 2017

The implications of blockchain technology for the humanitarian sector

The implications of blockchain technology for the humanitarian sector

The implications of blockchain technology for the humanitarian sector 1024 432 AID:Tech

Initially created as an enabler of digital cryptocurrencies such as Bitcoin, blockchain technology is starting to make waves in other areas.

Majority of the currently functional (as opposed to proof-of-concept) blockchain applications relate to backoffice operations and services. For example, the Nasdaq stock exchange has launched its Linq blockchain ledger to issue securities, while Deutsche Bundesbank and Deutsche Börse have unveiled a functional blockchain-based prototype for securities settlement.

Outside finance, government-led initiatives are using blockchain technology to record official data, like land titles and company registries.

Payments and software companies are getting on board too: in October 2015, Visa and DocuSign showcased a proof-of-concept app that uses blockchain to automate the processes and payments involved in leasing a car. And in December 2015, AID:Tech piloted the use of blockchain for tracking and administration of aid payments for Syrian refugees.

Blockchains can be used to keep track of anything of value such as money, titles, contracts, identities, assets and even votes. With so much potential, it’s not surprising that blockchain is also finding a role in the humanitarian sector and is reaching out deeper, into digital identity services, as exemplified by the AID:Tech push for the creation of a digital ID platform that can serve as a base for provision of various public and private services.

Blockchain: not just for the business world

Don Tapscott, influential author and professor, describes blockchain as a fundamentally transformative technology:

 ‘The first generation of the digital revolution brought us the internet of information. The second generation — powered by blockchain technology — is bringing us the internet of value: a new platform to reshape the world of business and transform the old order of human affairs for the better.’

Blockchain has applications far beyond the business world. It has many applications in the humanitarian sector:

  • Financing is made more efficient and transparent by blockchain-powered technologies that give visibility into transactions and outflows. An estimated $1.1 trillion of financial aid is lost through fraud and corruption each year. Blockchain technology can prevent a significant share of such losses;
  • Supply chain transparency is improved when blockchain ledgers are used to trace the origins, movements and destination of humanitarian and other supplies;
  • Identities can be easily verified through distributed public ledgers. Nearly one-fifth of the world’s population lack proper identification, which poses a challenge for relief workers and early response programmes. A distributed public ledger solution (like AID:tech’s Digital Identity) makes it easier for individuals to obtain humanitarian assistance, travel to areas of safety, gain access to financial services, and more;
  • Data can be recorded on decentralised, distributed ledgers in which information is stored across a network, instead of in one central location. This makes data more accessible and harder to tamper with, breaking down the information silos and questions around data validity that hinder inter-agency collaboration;
  • Access to financial products, land titles and other assets can be improved with blockchain technology. The implication of this alone is huge given that 5 billion adults in the world are underbanked, and many landowners all over the world have no legal title to their land. Financial and legal inclusion would improve the quality of life for billions of people, and it’s possible to achieve with blockchain technology.

This is just the tip of the iceberg. Crowdfunding, microfinancing, insurance, logistics – it’s all being (or could be) revolutionised by blockchain technology. At a fundamental level, blockchain technology provides decentralised, verifiable and secure data repositories (ledgers, if you will) that can make humanitarian projects more transparent and efficient. And that’s a good thing.

Click here to download our latest guide: How blockchain technology is enabling international aid to be delivered transparently