LWL #29 Blockchain and its application to collective challenges

Ivette Yáñez Soria, Mariana Rozo, Mariem Omrani, Sara Ortiz Jul 08 2021 Blog

LINKS WE LIKE #29

Blockchain and its application to collective challenges

Although it has most commonly been associated with cryptocurrency, since its release in 2008 with the white paper “Bitcoin: A Peer-to-Peer Electronic Cash System”, the blockchain system has been always praised for its potential to transform various sectors. Namely, blockchain can be used to address environmental challenges, enable e-voting, expand digital mobile ticketing, facilitate health care service and even contribute to achieving the Sustainable Development Goals (SDGs). One of the biggest appeals of this system is its intrinsic characteristics of transparency. According to Kazuhiro Gomi (CEO of NTT Research and leading researcher in physics, informatics, cryptography and information security) the fact that blockchain technology automatically includes a public record of any data transactions that have been conducted, eliminates the possibility of manipulating the system without other users noticing and being alerted. This is precisely what makes blockchain so appealing for other sectors to adapt into their needs of privacy and security. 

Despite the widespread popularity of the term and its use, there is still confusion about its exact meaning and the reason it has been used to revolutionize multiple sectors. In a nutshell, blockchain is a “distributed digital ledger that stores data of any kind” (Rodeck & Schmidt 2021). This ledger is oftentimes referred to as the chain that is formed by blocks of data. As new data is inserted into the network, new blocks are being created and added to the chain after being verified and confirmed by a majority of nodes. The most interesting and revolutionary part of the system is that it is completely decentralized and transparent. In other words, there is no central authority that stores, updates and verifies all transactions, but rather there is a community of participants that hold a copy of the chain and the transactions which is visible for everyone (European Environment Agency 2021). 

Some critics find the lack of a regulatory system behind this new technology to be troublesome, particularly when applied to cryptocurrencies. Despite having some countries take the initiative of proposing such laws, other countries have either banned this system or failed to regulate it. Another common critique is immutability; due to the permanent record the blockchain systems hold about each transaction made, users are not allowed to remove any of that content. This may result in harmful consequences in areas such as criminal records, control over personal data, or even child abuse imagery inserted into the system (bitcoin) which can not be removed without the approval of an entire community. 

To explore the promises and new applications of blockchain, this edition of Links We Like explores a curated list of resources to help you understand the collective challenges and individual interests that can be addressed through this system. 

In his TED Talk, Digital Marketing Manager at a full-service blockchain marketing consulting agency Ali Raza Dar explains what blockchain is and the specific ways in which it can be used to improve our societies. First, he emphasises that in its simplest form, blockchain can be defined as an online distributive system that stores information in connected blocks containing three things: data, hash (an identifier or fingerprint for each block) and a hash of the previous block. The way blockchain has been set up, he argues, is precisely where the value of this technology stems from. Through a simple example of three friends, Ali shows how the blockchain system does not rely on third parties to make transactions but rather creates a peer to peer notion of work. He further explains that blockchain technology can be applied to different areas such as purchasing medicine, or ensuring that paid taxes are spent adequately. Blockchain can also serve as a mechanism to even the playing field and work towards the elimination of poverty by guaranteeing that everybody is given the same opportunities of, for instance, getting a loan. In sum, Ali’s talk  emphasizes how this technology can save time, move and reduce unnecessary risks from third parties, and be leveraged across areas  to help people, especially vulnerable communities.

Marianne Schoerling, Head of Stakeholder Engagement at Geneva Macro Labs in Switzerland, takes part in this blockchain specialized podcast Insureblocks to discuss the application of blockchain technology to achieve the UN Sustainable Development Goals. Although she recognizes that blockchain is not a panacea that can be applied to every SDG challenge, she does stress that it is a technology worth considering and incorporating into the field for the potential impact it has contributing to the well-being of communities worldwide. Marianna also shows the growing interest in the field to implement this technology by bringing forward the Blockchain 4-Impact conference held in 2019 in Geneva to discuss the opportunities and challenges blockchain technology brings to the context of SDGs. During this event, three main areas were identified where blockchain could be applied to benefit others and help achieve specific SDGs. These areas were financial exclusion, ecological/socially responsible production and distribution of commodities, and documentation of property rights. Additionally, as Marianne states, blockchain can help NGOs fundraise and have an accountability system with their donors to ensure complete transparency in the most efficient way. In other words, the application of this technology to the SDGs could contribute not only in working towards these goals but also in the coordination efforts set in place by member States and international organizations aiming at fulfilling the 2030 agenda.

A Nobel Prize winner and the world’s largest humanitarian organization, World Food Programme is reaping the benefits of blockchain technology to fight hunger in crisis and post-crisis settings. The organization is providing the largest blockchain-based cash transfer assistance through ‘Building Blocks’, an innovative project that helps the WFP to deliver food and cash assistance more effectively. The pilot was first rolled out in 2017 at Sindh province, Pakistan targeting only 100 beneficiaries. After a successful first phase, WFP implemented it in two refugee camps in Jordan, in 2017. Under the scope of this project, beneficiaries are entitled to a given amount of cash which is stored in a virtual wallet maintained on the blockchain. They also have his/her own unique biometric identification that enables them to purchase food at local grocery stores and pay with an iris scan at the checkout. Transactions are done electronically using digital vouchers, where these are transferred from the beneficiary’s wallet to the merchant’s wallet. Through this process, blockchain technology allowed unbankable refugees to benefit from cash loans, savings on financial transaction fees by 90%, fostering trust, and spurring sustainable development activities within the community. This technology also ensures security, data privacy and greater transparency. By September 2018, more than 100,000 refugees living in the Zaatari and Azraq camps effectively received cash transfer through blockchain. These benefits prompted WFP to set a goal of scaling up to reach all 500,000 of its Syrian refugees in Jordan. In 2020, the organization scaled ‘Building Blocks’ in Bangladesh.

More WFP projects can be found here: 3 ways blockchain innovation is enhancing humanitarian response | by WFP Innovation Accelerator | Apr, 2021 | Medium 

The benefits of blockchain have not only been enhanced by international organizations to promote Sustainable Development Goals, but by private companies that wish to have a social impact. Accenture is a multinational consulting company currently using blockchain technology to connect producers and consumers in the supply chain. In fact, Accenture is leveraging blockchain to help businesses grow while benefiting communities all over the world. As Paul Daughtery, Chief Technology and Innovation Officer at Accenture explained: “leading companies have seen this increasingly strong connection between trust and growth, and are looking to advance their businesses in ways that not only meet their business goals, but also benefits people, communities and citizens”. This is how Accenture has devoted its expertise to advise small and medium businesses on how to implement blockchain solutions to connect and expand their business models while having a social impact. In addition, by partnering with Akshaya Patra, Accenture advised the creation of a Mid-Day Meal Program for children in Indian public schools that uses blockchain to drive efficiency and timeliness of lunch programs. Likewise, the company worked with DHL in creating transparency and traceability in the pharmaceutical supply chain to eliminate counterfeit drugs thus showing how blockchain can not only be used for social good, but also how companies can gain from it while having a positive impact on the world.

For the past decade, the private sector has shown a certain degree of skepticism towards blockchain’s potential to disrupt business models. Of course, as Iansiti and Lakhani argue in an article from 2017, “in a digital world, the way we regulate and maintain control [over economic, legal and political systems] has to change”. At the same time, there are those that have warned about blockchain’s hidden vulnerabilities and the need to be cautious with its use. Interestingly, the MIT Sloan article proposes that those doubts are dissipating. According to a survey cited, more than 50% of executives “place blockchain among their top five strategic priorities”. The question now is, what will happen as more businesses decide to embrace blockchain? How is this going to change the way we make daily transactions locally and globally? We’ll see.