Blockchain + Social Good: An Overview

From Investing to Impact

A few weeks back, we saw Facebook take the stage in front of the US Senate and Congressional committees to lay the case for Libra, their proposed cryptocurrency. The hearings were laden with interrogations and accusations, but the silver lining in the affair was the discussion on crypto’s current and potential impact on the world. Surprisingly, the committee was more concerned with Facebook’s corporate reach than it was the abilities and values that blockchain brings to Libra.

This is a big leap in decentralized tech and is increasingly being treated by the public as having core intrinsic value. With the awareness of Bitcoin and crypto growing by the minute, the discourse on the tech’s implications has expanded substantially. The flavor of the government hearings has also changed dramatically from less than a year earlier when Roubini and Valkenberg debated whether Bitcoin was even useful. We are realizing that digital and decentralized money brings about a level impact that we haven’t been able to achieve with paper money in a global context.

So today, we’re looking at the fundamental qualities of blockchain technology that allows to explore a whole new level of social impact worldwide. To start things off however, this following video by BRIC TV and host Brian Vines introduces notable initiatives that illustrate much of what we’re going to be discussing.

PS: Shameless self-plug… You can find us at 16:53 discussing Steem Park.

1. Global Value

If you followed any of the hearings on Libra, you likely would have picked up on the phrase “banking the unbanked” and wondered exactly what that meant. An estimated 1.7 billion people in the world do not have access to bank accounts, which naturally puts them at a high risk of financial insecurity. Even with an account, many account holders are susceptible to corruption, theft, and price volatility due to the fact that their currency isn’t stabilized and secured on the global market. This all makes traditional banking an unfeasible option for a vast number of people around the world.

Amongst the many potential offerings of blockchain to global market, banking this population is one of the primary and most exciting incentives. Because crypto does not require a brick and mortar reserve or governmental systems to regulate and distribute, 1 Libra or Bitcoin will act precisely the same way in a mobile wallet in the US as it will in Uganda or the Philippines. Stealing, manipulating, and identity theft are also magnitudes more difficult with crypto. Blockchain stands to bring in that at-risk population, potentially a few billion in total, into the global financial system and escape the difficulties of marginal currencies.

Overall, crypto is becoming much more than just a digital version of cash. It is challenging the infrastructure of the global market and places more power into the hands of the individual. Old-time Bitcoiners often repeat the phrase “be your own bank,” and this so pertinent in parts of the world where banks cannot be accessed or trusted over the long-term. With more citizens worldwide being more likely to have a cellphone and access to Facebook over having a checking account, the security of financial systems in major countries can directly stabilize the value system in developing ones.

2. Accountability

We all love a good cause and it is no wonder that non-profit and donation industries are very robust and global. However, good intentions don’t always equate to the best operations, and many recent studies have shown that most non-profits fail to maximize their mission and respective causes. A great deal of funds are lost due to mismanagement, lack of efficiency, communication, or corruption.

A blockchain’s transactions, functions, and information can all be logged publicly. We can see where every penny is spent, who is responsible for a given task, who authorized what, and the consequences of any action. These are the open books of activity that the public needs in order to continue supporting causes with trust and reliability — one of the main barriers for non-profit growth.

This is where pairing governance with tokens aligns the interests and operations of a social initiative much better than previous models. There are currently few ways to keep organizations accountable for their outcomes, especially since impact can oftentimes be so speculative. This is where crypto can play a pivotal role. Pairing a digital currency alongside impact-centric tasks and deliverables can start to establish a metric for rewarding and incentivizing contributions and consequences. It will also be easier to distribute funds based on contingent accomplishments, with organizations only receiving secure digital value when a task or commitment is fulfilled and verified.

One noteworthy initiative is ixo, a blockchain company establishing protocols for ensuring social impact. They’ve begun to implement funding structures based on impact metrics. Their most recent article “The Tokenised Impact Economy” details specifically why crypto is uniquely situated to take this and bring in innovations around data, metrics, communication, and more. This naturally expands from simple use of internal budgets and donations to the more effective distribution of grants + capital funds, core functions of the impact economy.

3. Transparency

This point is almost ‘2-b’ as it overlaps in benefits with general accountability. Having open protocols and transparent ledgers of activity has the added benefit of mobilizing competitiveness in the social-impact market. By establishing immutable ledgers with inherently standardized metrics, it is easier to compare the efficacy of various impact models.

It also opens up the economy to accepting non-financial contributions like pro-bono consulting, in-kind donations, and more. Due to the difficulties of non-profit management, organizations typically ask for the most basic type of contributions such as volunteering hours or one-time donations. The delegation of responsibilities becomes easier to solicit when a need is obvious and incentivized. Ideally, these organizations should have a structure that allows unsolicited contributions to come in and be evaluated ongoingly. This allows organizations to scale with transparency as the opportune entry-points are clear for all to see and engage.

This layer of market competitiveness helps avoid the excesses that come with philanthropy and maintain a quality of innovation and entrepreneurship in a domain that has been largely passive in its financial adaptation to modern economic strategies.

4. An Economy of Altruism

One of the legal stipulations for non-profits in the US is that they cannot “have a business model,” barring them from any sustainable stream of income from goods or services. Even the number of permitted fundraisers is limited by law as to prevent that being the status quo of daily 501c(3) activity. This, unfortunately, makes non-profits either highly vulnerable to market shifts or opens them up to corruptive activity.

Blockchain may be the first foundation that permits a true business model in the non-profit sector and allows the following -

• Direct comparisons of income strategies and operational costs
• Trustless governance
• Incentivized resource sharing
• Standardized metrics on impact

We know that stats and info are highly monetizable in the modern world, and the data produced by non-profits are no different. The lack of industry standards and operational clarity within and between impact projects is a major barrier to scaling their missions. We’re beginning to see a global network emerge where organizations and initiatives no longer have to only rely on one-time contributions. Rather, an economy of volunteering, contributing, and impacting is starting to form.

With any new market, there is a natural fixation on the immediate technological and financial opportunities, and activities such as initial coin offerings (ICOs) are a consequence of this natural progression. This quickly migrates to applications that are not so focused on capital markets and transfer that to tangential models. Philanthropy and social impact are such domains that are poised to scale with blockchain technology.

Do you know of any recent blockchain projects in the social impact space? Hopefully, this gives you a better sense for why organizations and institutions are getting pretty hyped on blockchain’s disruptive prospects. Let us know your comments and thoughts below!

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