On The Blockchain
Can Blockchain Redefine Development?
Posted By On September 20, 2017
Visualization of bitcoin transaction

Blockchain is fast becoming fashionable in international development discourse. The World Bank, USAID and UN agencies such as UNICEF are touting the potential development benefits of this unregulated decentralized digital ledger. Blockchain has graduated from its association with Bitcoin and international crime and is now being heralded as the possible solution for everything from climate change to world poverty. For the more self-reflective development partner, it could even help in tracking aid spending. The problem is that most of us have little clue where to begin with Blockchain.

In one effort to tackle this knowledge gap, Abt Associates, the Australian Department of Foreign Affairs and Trade and Indonesia’s National Development Planning Ministry, Bappenas, organized a discussion in Jakarta earlier this month on Blockchain: Improving Services and Economic Opportunities. This event highlighted exciting possibilities, illustrated with interesting examples from initiatives already underway in several countries. But is also hinted at some daunting challenges for applying Blockchain for development. The Asia Foundation and World Bank will also be hosting a roundtable discussion in Washington, DC, this week entitled, How Online Platforms and Blockchain are Redefining Development and Changing the Rules of the Game.

First, the possibilities—which have been written about extensively elsewhere: Blockchain might offer a range of genuinely transformative solutions to more effectively trade carbon credits or even water, provide digital assets to the unbanked poor or stateless refugees, provide more effective and transparent public services—for example in ensuring that medicines and vaccines reach those most in need, and improve tax collection and election administration. Potential solutions in support of legal identity were of particular interest to at the Jakarta event, given that an estimated 25 percent of Indonesians aged from 0-5 years do not have birth certificates. This despite the fact that legal identity is recognized as a basic human right by the United Nations.

Interesting examples were presented. Aid:Tech uses Blockchain technology to establish legal identity, which it has, in turn, used to target transparent and effective assistance to refugees in Lebanon. GovBlocks, meanwhile, is promoting a tokenized economy in India—where transactions are made using digital currency (tokens) backed by physical currency reserves. This model uses mobile technology, addressing concerns that Blockchain is inaccessible to those in more remote areas with limited or no internet access. While this tokenized economy might sound far-fetched, cashless economies are already just around the corner.

But these pilots are few and far between. Blockchain for development is very much in its infancy. Many of the early applications have been in the financial services sector.

Development professionals are already struggling to adapt to the demands of technological change and the battle cry to innovate. While they may not know how to build an app, they are at least familiar (for the most part) with using one; not so with Blockchain. For now, we all need to learn more about the technology, the development possibilities and how to pursue these most effectively and ethically. One moderator at the Jakarta event confessed to Googling the topic the night before. She would have done well to read this bluffers’ guide.

Blockchain is, by design, unregulated. As such, regulation in Blockchain for development—for example, to ensure that all data used belongs to the end users or beneficiaries rather than being a commodity to trade—relies on self-imposed advisory boards or other such means. And while data on the Blockchain are encrypted, ensuring the security of these data—given that proposed solutions include the most sensitive applications around personal identity, from tax to voting to medical history—is paramount.

The question is not if but how Blockchain can support social and economic development. But, to quote Shakespeare, in this case caution is preferable to rash bravery. The technology and related (self-)regulatory as well as security issues are new and often confounding. Successful application of Blockchain—given the complex technology and varied sectors in which it is currently being trialed—will require the type of broad-based collaboration that is not instinctive to many development programs. Host government buy-in and participation will be critical, given what Blockchain is and is capable of. And at the risk of sounding preachy, designing with, and around the interests of, the intended beneficiaries—rather than offering pricey off-the-shelf solutions designed by international experts—is more likely to lead to sustainable solutions.

The POPS Blog will feature routine information as well as event notices concerning Blockchain for development. Contact us if you have information to share.

Image credit: Martin Nadal, Bitcoin Traces. CC BY-NC-ND 2.0.

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