The technology behind cryptocurrencies took humanitarian aid by storm circa 2017-18. Today bitcoin, blockchain and the crypto-world is entering the mainstream and making the future of this technology in humanitarianism a less volatile one than previously thought. This article aims to briefly summarize what blockchain is, how it can be used in the humanitarian context, and the potential risks involved.
What is blockchain?
Blockchain is the mechanism behind cryptocurrencies. Essentially, it is a digital record of every transaction. It is not limited to cryptocurrencies such as bitcoin. Blockchain technology can be used to track, manage and store transactions for digital art, land registry and more. Anyone can access the blockchain, and no one can change the information. Due to its nature, it erases the middle man; no banks, government, or company is responsible. The words most often used to describe or explain blockchain are decentralized, immutable, verifiable, and tamper-proof. The narratives surrounding blockchain contain elements of trust and truthfulness, transparency, accountability and data ethics. Not a surprise that within humanitarian aid, there are multiple ways of implementing blockchain.
What does a blockchain-based humanitarian aid system look like?
How might we start to think of such a seemingly powerful technology? And how do we begin to apply it to the complex and changing world of humanitarianism? Here is just a few of the many potential applications of blockchain in humanitarian aid.
Reduce corruption
What is novel about blockchain as a technology is the transparency of its inner workings, which are public for anyone to download and audit. Since the blockchain is completely transparent, accessible by anyone and almost impossible to hack, there is a consensus about this technology’s promotion of accountability and transparency. According to Paynter (2017), an estimated “30% of all development funds don’t reach their intended recipients because of third-party theft or mismanagement.” Blockchain can be used to track funding from donors every step of the supply chain, and actively battle the loss of aid fund due to corruption.
Reduce fees
Since there is no third party such as a bank intermediating, using blockchain can significantly reduce transaction costs, which are estimated to be around 3.5% per aid transaction. The World Food Programme blockchain pilot in Jordan, which is the first major ‘humanitarian blockchain’ project, aimed to provide cash distribution for thousands of Syrian refugees. Using blockchain technology, WFP were able to save 98% of the costs of money transfer; “if scaled up to the entire organization, would result in tens of millions in savings. This additional cash aid could be thereby allocated to affected populations and increase impact” according to Bricout & Aurez (2020).
Secure storage of identity
It is estimated that 1/7 of the world’s population, 1 billion people, do not have proof of identity. This means 1 billion people struggle to access vital services and opportunities due to a lack of official identity. Although blockchain can certainly be a part of the solution for storing, managing, and verifying IDs of individuals, it cannot authorize or create identity; that responsibility is down to governments. However, one company has taken this idea and implemented blockchain tech to help create an ‘economic passport’ for refugees. BanQu allows users to own their personal data, create a portfolio of economic histories which can benefit applications for jobs or loans, whilst also ensuring Covid-19 supplies are reaching the most vulnerable communities in the MENA region.
Challenges of Implementing Blockchain
Although the crypto-world seems to be entering the mainstream in 2021, blockchain is still not understood on a wide scale, which limits its adoption in the humanitarian sector.
There are practical and legal challenges. Implementation of blockchain requires certain infrastructure such as internet connectivity, which will be difficult in some crisis areas. Although the decentralized blockchain technology is revolutionary, it requires multiple computers to function consistently, which means high energy consumption, and therefore limited efficiency in countries where brownouts are common. Furthermore, the illegality of cryptocurrencies in some countries such as China and Bolivia can hamper the use of blockchain technology.
In conclusion, the possible applications of blockchain technology in the humanitarian aid sector has immense potential, and is already being implemented in various ways. But like any other technology, there are risks that must be taken into consideration, especially in the context of humanitarian work. “Any use of this potentially revolutionary technology must uphold the principle ‘do no harm.’” As much as it creates opportunity and connection, blockchain can be used to further strengthen inequalities between communities. We live in an age where we have to be careful of technology’s side effects, and blockchain is not any different.
About the Author
Simge Genç is a Junior Officer in the research department of Trust Consultancy. She is a recent graduate of psychology from Vrije Universiteit Amsterdam and plans on studying a Masters in Public Health. Her main interests lie in the improvement of mental health of displaced individuals.
