We present three use cases in international development in which blockchain technology might best be applied: (i) e-government service design, (ii) assessment of blockchain technology suitability to a use case, and (iii) aid transparency. These areas, and how blockchain technology may disrupt them, are of keen interest to a number of actors in the global international development community.
We provide this concept note to promote robust discussion on how blockchain technology might be appropriately factored into the design and planning of aid interventions. It is hoped that the information provided herein will help international development actors to explore use cases for blockchain technology in a systematic and rigorous way, so as to avoid getting caught up in the hyperbolic claims about blockchain technology and what it can do.
Neocapita comprises international development and software technology professionals and focuses on how developing country clients can “leapfrog”. Neocapita’s foray into blockchain technology began in 2014 and has involved intensive study and investment to develop its knowledge base in this field of computer science and its applicability to use cases in the international development sector.
Neocapita’s mission is to empower development partners with an understanding of blockchain technology and how to pilot different use cases of the technology within the developmental context. Additionally, Neocapita is the inventor of Stoneblock; a ‘generalised’ blockchain platform designed to facilitate low-cost, highly-scalable, quick-to-market solutions for government agencies wishing to introduce secure and robust e-government services.
Using the power of the blockchain, agile methodology, and a proprietary assessment toolkit, Neocapita can work with a development partner to rapidly prototype and deploy a basic e-government solution, which in terms of cost efficiency, security, and quality, surpasses what traditional database-driven solutions can provide.
Stoneblock provides solutions for, but not limited to, the following e-government use cases:
- aid transparency, linking financial transactions with performance/results;
- business registration & licensing;
- cross-border payment monitoring;
- land title registration & search; and
- citizen life event registration (births, deaths, marriages, divorces).
Use Cases in International Development
1. Criteria to Determine Applicability of Blockchain Technology
Both the speed and rate at which technology innovations diffuse in our global society is increasing: mainframe computing, the personal computer (PC), the global Internet, search, mobile, social media and web 2.0; each technology paradigm has built on scaffolding that the previous technology left behind. Further, entire industries have been created, only possible because of these computing technology platforms: bioinformatics, genetics, cloud-based computing, big data, crowdsourcing, artificial intelligence, machine learning, humanoid robotics, autonomous vehicles (drones, cars, divers), nanotechnology, biomimicry, smart materials, intelligent infrastructure, sensor technology; but are only the beginning.
Of interest to actors in the international development space is how to leapfrog along this developmental trajectory so that the developing world is not continually left behind the developed world. Without short-circuiting this development cycle the “digital divide” will simply persist into the future and never close, albeit sliding further up along the economic complexity continuum.
Of critical importance then, is that international development actors keep up-to-date with the role that the technology innovations play in these societal and economic dynamics, and to avoid delay in doing so. The purpose for staying up-to-date with the role technology plays, in the best case, is to catalyse socio-economic development enabled by these technologies in the developing world. In the worst case, it is to avoid being an obstacle to our developing countries partners’ early adoption.
Blockchain technology, in terms of typical technology diffusion timescales, is by no means new, introduced to the world in 2008. Given it is already 2017, it is now imperative that we move quickly to incorporate knowledge of this technology and how it can be used to enable our aid interventions to be more relevant and useful to our developing country partners.
Neocapita has developed a series of resources to accompany or be used independently of its Stoneblock software platform. The Stoneblock nanodegree, which includes training on the Stoneblock blockchain assessment framework, empowers staff to confidently and systematically determine when a use case is an appropriate target for the use of blockchain technology.
Not understanding this essential criteria risks applying blockchain technology unintentionally, squandering limited and therefore precious time and resources (even more limited and precious in developing country contexts) on blockchain applications that don’t work or work but provide no additional value.
2. Blockchain for e-Government Service Design
Traditional e-Government service design relies largely on three components: (i) identity of a customer or citizen or user; (ii) business process reengineering; and (iii) information about the service and the user’s interaction with it, stored in one or more centralised, web-enabled databases.
Even in the best designed e-government workflows in developed countries, significant vulnerabilities still remain when the outcomes are achieved — centralised and web-enabled databases cost a lot to secure and maintain, where the upfront cost of implementation obscures the recurrent and long-term expenditure then needed to keep the system intact. The business processes and organisational change required to maintain e-government services is substantial and a large part of those costs is borne in order to: (a) secure the people, (b) secure the processes, and (c) secure the technology infrastructure underlying the e-government service.
Processes must be re-designed in order to segregate duties and include hierarchical checks and balances to make it harder for collusion to occur between people charged with executing any human-driven parts of the overall process. Infrastructure like web servers, database servers, and kiosk computers at a one-stop-shops must be secured and repeatedly assured to be resistant to all kinds of tampering and malicious behaviour. The infrastructure, hardware and software, must also provide a robust audit trail and technical staff are needed to assure that it is available when information is called into question or a problem occurs. People involved in both providing and consuming the e-government service must be identified and their authorisation to perform certain actions must be defined, managed and monitored.
All told, centralised web-enabled e-government services, whilst still more effective than human-driven manual government service delivery, must now give way to a more cost effective, more robust and more secure computing & information paradigm — the blockchain.
Distributed Ledger, Smart Contracts, & Cryptocurrency: Relevance to the International Aid Transparency Initiative
Blockchain technology can be thought of as providing three levels of service and the level of use need only correspond to the particular application blockchain is being used for:
- Level 1: a shared ledger;
- Level 2: a shared ledger and a smart contracting mechanism; and
- Level 3: a shared ledger, a smart contracting mechanism, and a cryptocurrency.
If an application is developed to use only the first level of blockchain service, then the application will feature a shared, transparent, tamper-proof distributed ledger of “transactions”. It is shared in the sense that many people (have access) can read and write to the ledger. It is transparent in the sense that everyone can see what is on the ledger without revealing the identity of those who transacted. It is tamper-proof in the sense that no entries can be modified once recorded in the ledger so it is a permanent source-of-truth. It is distributed in the sense that every participant in the ecosystem has an entire copy of the ledger so there is no single point of failure (like with a traditional web-based and/or centralised database application).
If an application is developed to use the second level of blockchain service, then the application will feature both a ledger and a way of “smart contracting”. Smart contracting just means a way to automate how transactions get entered into the ledger. Digital or real-world triggers can make an entry appear automatically with the same integrity as if typed in by a human user. This makes for a very efficient way of recording information in the ledger because humans and machines can interact via the ledger using a smart contract.
Finally, If an application is developed to use the third level of blockchain service, then the application will feature the ledger, the smart contracting mechanism, and a token representation of something that can be used to store or exchange anything of value. The token is represented virtually by recording in the ledger the way tokens are created on the ecosystem and the way in which they are passed around from participant to participant. At any time the application knows who has how much token.
Conclusion
It is argued by some that blockchain technology is likely to be more disruptive than invention of the Internet itself, enabling the re-organisation of human, institutional and societal relationships on a global scale, empowering transacting without the need for trust or intermediation between counter-parties.
New use cases for blockchain are appearing frequently and with no sign of abating. Some use cases will persist and some will fail. It will be critical for the above three use cases in international development to be explored piloted and understood, among many others in the international development space, in order to help developing countries to leapfrog.
We will follow-up this concept note with some suggestions on how Neocapita can provide support to international development agencies at this important time, to empower them and the programs they manage, in order to maximise relevance and value to developing country partners, in light of this new technology.
