What blockchain experts have surprisingly ignored

By Fintech For Longevity — Thoughts on blockchain technology for intergenerational relationships

Photo by Brett Jordan on Unsplash

Blockchain has been widely used globally in supply chain management. Different parties, often competitors, have been using blockchain to improve operational transparency, immutability, and trust throughout the various stages of delivering goods from one place to another. The decentralized and secure nature of blockchain also makes it a powerful tool for many other industries, including gaming, healthcare, insurance, payments, and more.

Simultaneously, blockchain has become an essential player in the field of social good and charity organizations. For this purpose, blockchain applications are usually driven by the centrality of a leading organization, such as humanitarian aid for flow provision or monitoring of identities, for example, during migration processes.

In the case of charitable organizations, the use of blockchain technology offers a trusted environment for resource management, operational transparency, and effective governance. There are already examples of blockchain technology in the charity realm. For instance, the Binance Charity is a non-profit organization that works toward sustainable development goals to fight poverty and inequality and improve people’s health. Through the advantages of blockchain technology, Binance Charity is providing a “crypto-charity” with a “traceable, accountable and immutable process of giving.” For instance, charity-giving of Cryptocurrency for quality schooling to children in Uganda is traced across the whole donation chain, as illustrated in the figure below. This negates the traditional inefficiency and lack of transparency in charitable giving, leading to a loss of trust and high intermediary costs.

Source: Flow of donation for lunch for children in Uganda

Traceability, accountability, and immutability are the foundations of a trusted relationship between different parties in a given environment, where the flow of funds is involved. Given that a multigenerational family is an economic institution with different parties and the flow of funds is involved, an interesting question is what can we learn from blockchain for social good and what could be adapted to mitigate intergenerational conflicts.

The scarcity of a generalized framework for the use of blockchain in the private sphere is unfortunate. This is taking into consideration the advantages of blockchain as a way to mitigate conflicts among different parties. Intra and inter-generational relationships that involve monetary flow exist between siblings and older parents and their children. This becomes especially important as life expectancy increases and families often live in a four-generational setting with intergenerational economic dependency.

Extended longevity involves intergenerational transfers and external finances from third parties, as in the case of reverse mortgages. Older adults might want to improve their economic standing by unlocking their home equity in the latter case. Nevertheless, their hires are concerned about the house's value after their parents pass away and the mortgages are fully repaid. With the parents’ consent, the use of blockchain for a transparent flow of funds between the elderly parents, siblings, and the bank, could mitigate a potential conflict between the parties.

Despite the rarity of blockchain-based solutions for the family, a recent solution for end-of-life planning was presented to me some time ago by my friend and colleague @Dr Milly Perry, an international expert in the world of blockchain. This solution, named after the ancient Sarcofagus, is based on a “dead man’s switch” mechanism. To summarize, the development of blockchain-based technologies has enormous potential for a family, intergenerational relationships, and a seamless flow of funds between family members.

According to their website, Sarcofagus’s solution is based on an autonomous and incentivized application while leveraging the combination of three elements: Bitcoin, Ethereum, and Arweave. While Bitcoin contributes to making the physical action, Etherum provides them with the ability to execute code on decentralized and immutable computers. Lastly, Arweave is leveraged for the ability to store and retrieve files from the system.

Indeed, Sarcofagos is a novel example of the use of blockchain in the private sphere. Nevertheless, the use of technology for end-of-life planning has been flourishing in the past two years. The leaders of this trend are using artificial intelligence and machine learning to offer digital trusts and wills and digital vaults by helping families mitigate the uncertainly involved in sudden death of a family member (as in the case of Covid-19). Undoubtedly, the latest technologies are democratizing legal procedures that were out of the reach of many until recently. However, the democratization of digital trust and wills might bear the risk of “over-standardization” of personal circumstances; a good question is whether blockchain provides a more flexible tool to settle disputes when and if they arise, especially when third parties (as a bank or a caregiver) are involved.

To summarize, there is a huge potential in developing blockchain-based technologies for the family, intergenerational relationships, and a transparent flow of funds among family members. End-of-life planning and the reverse mortgage are only the tips of the iceberg.

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Fintech for longevity

Fintech for longevity

We bring financial technology to financial inclusion through research, education and innovation.