Blockchain for Social Impact
The Frontier Tech Hub has a growing body of evidence from pilots that are attempting to use blockchain
Despite increased interest, blockchain application in international development and humanitarian sectors remains poorly documented. The objective of this collaboration is to fill this gap by researching blockchain's value-add within humanitarian and developmental contexts.
What's been proven to date about the different ways in which blockchain can add value add for International Development and Humanitarian use cases?
To date, there is limited evidence, with some notable exceptions, on how blockchain is currently delivering value at scale within international development and humanitarian sectors. However, from an analysis of early blockchain innovations, and some scale projects, we can identify several ways, and uses cases, where blockchain shows strong potential to add value to stakeholders. These include:
Simpler data sharing for coordination, transparency and accountability: Humanitarian and development actions often carry characteristics of highly complex “wicked” problems commonly attributable to a lack of coordination amongst relevant actors. Blockchain has been effectively used to provide a common operating picture (whether it be a supply chain, donor activity coordination, providing a platform for pooling of resources to de-duplicate efforts, etc.) in these contexts which mitigates the “fog” that often contributes to ineffective coordination. Existing pilots indicate that blockchain demonstrates potential for enabling greater transparency and accountability in aid distribution, reducing the risk of corruption and ensuring that resources reach their intended recipients.
Simple trust building: Where there is a lack of trust between parties who are conducting data transactions of any type, and where the lack of trust is only related to the transaction of data (meaning there are no legacy trust issues around identity, deeper financial incentives, etc.) then blockchain could provide significant value add in acting as an automated trust agent for these parties.
Financial Inclusion and remittance: Blockchain-based solutions have already started to demonstrate high potential for impact in enabling improved access to financial services to underserved and unbanked populations, who are often excluded from traditional financial systems.
Supply chain management: blockchain-based solutions have shown high potential for impact in improving supply chain management, ensuring that goods are tracked from source to destination, reducing the risk of fraud and ensuring that products are ethically sourced. As was demonstrated through one of our Frontier Technologies pilots.
What are the key things for any blockchain project to think through, to make sure it's the right solution for the problem that is being tackled?
Based on the work of previous Blockchain pilots, we’ve identified instances where blockchain worked well, and others where there were challenges, or it wasn’t the right solution for the problem being solved. Based on the learnings from these pilots, here are key things for projects to think through, while at the early stages of designing a project:
Technical education amongst ecosystem actors: Different use cases require different levels of awareness of the technology by different actors in the ecosystem (some might require none while others a lot more). Knowing what technical knowledge is needed and by whom is only partly known at project inception but expands during field testing, etc. As education requirements increase so does pressure on pilot resources.
Low probability of spoilers: Spoilers are often those actors whose function, authority, etc. are diminished through the use of a blockchain and they can spoil its use through anything from open hostility to death by a thousand bureaucratic cuts. Knowing about potential spoilers, their level of possible opposition (along with their resources and mandates they can use to spoil) is critical. Some spoilers can be mitigated but some require high level policy, institutional or cultural reform. Blockchain works well in contexts where the function the blockchain is fulfilling is not being fulfilled by anyone, meaning there is no actor whose function is replaced through the use of a blockchain.
Behavior based assumption testing: The greatest risks for successfully using a blockchain are behaviour based. It is important to 1.) map the ecosystem for the pilot theory of change, 2.) identify relevant actors and desired/undesired behaviours for the desired objectives and 3.) outlining how blockchain enables or disables these behaviours before identifying what behaviours are more probable and impactful. Those behaviours which have higher levels of uncertainty could be prioritised for assumption testing.
No regulatory conflict: Given the infancy of the technology, there is often a lack of regulations governing numerous blockchain use cases. Lack of regulation is not always a showstopper but regulation prohibiting types of blockchain usage or a hostile government attitude to the technology can be. Hence it is important to assess the regulatory environment before piloting an innovation that can’t be scaled given the regulatory environment.
Governance: Blockchain projects often involve multiple stakeholders and require a governance structure to ensure accountability and transparency. It's important to consider the governance structure of the blockchain solution and ensure that it aligns with the values and interests of all stakeholders involved to ensure ownership.
Ethics: There is no consensus on development/humanitarian specific guidance for the ethical use of blockchain yet but there is some guidance like the Blockchain Ethical Design Framework from Georgetown University. The Principles for Digital Development are also a useful reference point for ethical implementation of blockchain technology. Specific areas of ethical concern in using blockchain in development/humanitarian interventions center on the management of sensitive personal identifying information, entering faulty data on an immutable ledger (without preventive or remedial planning) and the use of a blockchain for nefarious purposes.
More information on blockchain
See our blockchain fundamentals content
Read this blogpost about trends in blockchain applications from previous FT Livestreaming calls.
View learnings from our blockchain pilots: