Blockchain for Social Good
In the last 8 years, the words ‘blockchain’ and ‘bitcoin’ have gone from being a ‘fad’ or tech jargon, to words everyone wants to know about, regardless of what industry they’re in. A lot of this can be attributed to the meteoric increase of cryptocurrency, especially Bitcoin. 5 years ago, in June 2013, Bitcoin’s value fell to $70. Last Friday, October 20, it was worth 80 times that at $5600. However, what most industry bigwigs and technical people are interested in is not the bitcoin, or cryptocurrency aspect, but rather the underlying blockchain technology and the impact it can have — including its social impact.
In a line, the blockchain can be described as a tamper-proof, distributed ledger that is capable of securely recording all transactions that occur. The blockchain technology allows for a lot of solutions to be built on top of it, as it eliminates the need for a intermediary who is prone to human error and fraud. As a system it eliminates the need for separate ledgers, allowing for one single ledger that is virtually impossible to alter. Moreover, one of the biggest benefits of the blockchain is the fact that it is transparent. Each party in the blockchain network is able to access the ledger when necessary. It has also been suggested that Blockchain technology can be used to address issues associated with information integrity in the present and near term, assuming proper security architecture and infrastructure management controls. 1
While a lot has been said about the fact that bitcoin is risky, this is more to do with the volatility of its value as opposed to the technology itself. Blockchain is extremely secure, and all transactions have a complex validation process. For a transaction to take place, there must be consensus from all members. Once a transaction takes place, it is permanently recorded and cannot be deleted. This is just one of the benefits of blockchain. Blockchain can also enable enterprises to lower their transactional costs by removing the need for a human intermediary for each transaction. It also removes the cost of any potential errors. Further, the blockchain ensures that all transactions occur at a much faster pace, and with a higher rate of efficiency.
The most well known use of blockchain currently is cryptocurrency, and that is primarily due to the fact that people do not completely trust their governments and banks. By using cryptocurrency people feel a lot more secure in knowing exactly where their money is going and who it is going to. However, cryptocurrency is only the tip of the iceberg. People are just beginning to explore the technology, and the future holds the potential for major social impact. For instance, ConsenSys, a software company, recently launched a $50 million in-house venture capital fund to back startups that are using the blockchain technology to solve global social issues such as refugee assistance, distributed energy, and supply-chain tracing. 2
The head of the fund Kavita Gupta stated that she strongly believes in the 100 year mission of blockchain, which is “to completely change the way society functions through decentralised technologies.” She gave the example of refugees who flee their countries and who are not able to collect all their documents, such as their birth certificates, educational credentials, bank accounts. This makes it extremely difficult for them to integrate their old lives into new countries. However, if their country used blockchain technology, all this data would be instantly accessible and easily verifiable whenever required. Research shows that Bitcoin could be a promising technology for validating many types of persistent documents in public sector. 3 All of the Sustainable Development Goals, which have been adopted by the United Nations can be solved using the blockchain according to her.
A recent Harvard Business Review research project backs up these claims, and believes that there is strong evidence that the blockchain could not only transform businesses and governments, but also the society as a whole in “profound ways.” 4 For example, smart contracts are able to self-execute contracts between parties on the completion of certain conditions. This completely eliminates all agency and coordinating costs, while ensuring that there is no opportunity for fraud. A company called Mycelia, has been able to build songs with smart contracts built in, thus allowing artists to sell to consumers without having to use any intermediary software. Since the royalty and licensing agreements get executed automatically on sale, artists get paid instantly.
A company using the blockchain for social impact is Everex, which is built on Ethereum technology. Everex’s aim is to provide cross-border blockchain micro-finance. The products build by the company allow for storing and sending of funds on the Ethereum network. This allows all transactions to be monitored, securely registered, and easily and instantly verifiable. The transparency eliminates the possibility of any corruption. The company states that by “using auditing tools, anyone can determine the cost of their transaction, the fees they have been charged, the location of their funds, and more. By ensuring the community monitors and is monitored to prevent malicious activity, Everex avoids the trap that some traditional lending and savings institutions fall into.” 5 The potential of technology such as this is massive in countries such as India, and other developing countries where micro-financing institutions are heavily relied upon. A United Nations Working Paper suggests that the blockchain can play a role in building social and solidarity-based finance. 6
The impact of the blockchain is likely to be huge in the years to come. According to the Harvard Business Review, it is “likely to do to the financial system and regulation what the internet has done to media companies and advertising firms.”7 Research has shown that blockchain technologies can bring about — and justify — new models of governance. This was based on research done on the potential model of governance offered by blockchain technologies, and it was found that it reflects key governance themes and assumptions located within social contract theories, focusing on the notions of sovereignty, the initial situation, decentralization and distributive justice. 8 There is no doubt that it will play a major role in solving many of the world’s most pressing issues, and we must immediately start working on building this technology.
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- http://www.emeraldinsight.com/doi/full/10.1108/RMJ-12-2015-0042 ↩︎
- https://news.impactalpha.com/consensys-puts-up-50-million-to-hunt-for-blockchain-solutions-to-global-challenges-a56892a3941 ↩︎
- https://link.springer.com/chapter/10.1007/978-3-319-44421-5_20 ↩︎
- https://hbr.org/2016/05/the-impact-of-the-blockchain-goes-beyond-financial-services ↩︎
- https://blog.everex.io/a-brief-introduction-to-everex-cross-border-blockchain-microfinance-b339e9bacd36 ↩︎
- http://www.unrisd.org/brett-scott ↩︎
- https://hbr.org/2017/03/the-blockchain-will-do-to-banks-and-law-firms-what-the-internet-did-to-media ↩︎
- https://ledgerjournal.org/ojs/index.php/ledger/article/view/62 ↩︎
