Blockchain’s potential leads future for international aid

Distribution of international aid is rarely an efficient process; rather, it is often more commonly known for its bureaucratic red tape, mismanagement and corruption. However, world food aid took a drastic leap forward with cryptocurrency-based vouchers in late May, in Jordan’s Azraq camp, currently sheltering 36,000 Syrian refugees. The United Nations’ World Food Program (WFP) used an Ethereum blockchain-enabled platform, called Building Blocks, to record and authenticate transactions for refugees without the interference of a third-party. This successful initiative was proof that blockchain has a place in revolutionizing international aid.

In a nut shell, blockchain is a public, digital ledger system where transactions are “chained” together in unalterable blocks. Blockchain allows encrypted data to be shared and instantly updated by multiple parties, allowing all to be on the same page at any time. Furthermore, blockchain enables greater transparency since transactions are “locked” and backtracking is virtually impossible.

Today, the buzz around blockchain hasn’t subsided, as more companies and industries realize its potential. Recognizing blockchain as a real game-changer in fintech, financial leaders are racing to develop the first blockchain products. In recent news, a group of banks joined UBS and IBM to create a new global system for trade finance based on blockchain, designed to track goods and automatically release payments. But blockchain’s impact goes beyond fintech. Dubai recently began processing all real estate transactions on blockchain and aims to record all properties on the technology within two to three years. Disney, Pfizer, Oracle, and others have also made forays into the fledgling industry.

As already shown, this disruptive innovation has the potential to make a big impact in international aid, where lack of transparency, lack of documentation, and insufficient operating budgets are rife. According to Ben Paynter in Fast Company, “international relief organizations can lose up to 3.5 per cent of each aid transaction and … an estimated 30 per cent of all development funds never reach their intended recipients due to third-party theft or mismanagement.” In the instance of the refugee camp in Jordan, where a recorded 10,000 refuges benefited from the blockchain technology, the WFP reduced management costs by a staggering 98 per cent. Given the scale at which the WFP operates around the world (with an annual spending of $6 billion across 80 countries, according to the UN), the opportunities that blockchain offers can dramatically impact the lives that the UN touches.

In addition to distributing aid, blockchain can be used for other humanitarian initiatives, such as combating climate change, providing identity to migrants, and enabling free transactions for remittances. Regarding climate change, the UN announced this year its ambition to engage blockchain technology to improve the trading of carbon emissions, to enhance transparency of tracking emissions reductions, and to create a secure, cost-efficient forum to buy and sell renewable energy.

In another important use of blockchain, Accenture and Microsoft partnered in June to create a digital ID network called ID2020, which connects with existing record-keeping systems to allow undocumented users access to their personal information. In war-torn countries, for example, refugees often flee their homes without birth certificates and other credentials, making it difficult for them to start afresh. With blockchain’s ability to securely track data, the issue of identity loss or even identity theft can be prevented. Furthermore, the World Bank estimates that remittances flowing into developing countries totaled $516 billion in 2016, and are growing each year; however, more than $30 billion a year is eaten away by transaction costs. By leveraging blockchain and thereby eliminating the middleman, the cost of sending money can be significantly reduced.

The possibilities of blockchain technology are limitless and are being creatively leveraged to solve many of today’s problems. As pilot projects are scaled and proofs of concept become successful, blockchain will change the way we help one another across the world.

The UN continues to spearhead this new discovery and spur important discussions around the technology’s possible applications. In addition to hosting a UN Blockchain Day in August, the Digital Blue Helmets, the UN’s program of technology experts, will lead a summit this October in New York to speak to blockchain and other innovative technologies aiding their humanitarian agenda.

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