How Blockchain puts food on the table of 100,000 people.
An overview of how the World Food Program utilized Blockchain technology to help Syrian refugees.
A few times a month, Bassam pushes a shopping cart through the aisles of a grocery store in Tazweed market. To his right is bags full of rice, to his left, a small selection of fresh vegetables, among other items.
The Tazweed market is on the outskirts of a 100,000-person refugee camp in the dry, unforested grassland, six and a half miles from the Syrian border.
When he arrives at checkout, the cashier scans his items and calculates the total. However, Bassam doesn’t pay with cash or a credit card. Instead, he lifts up his head to face a camera, while an image of his iris appears on the cashier’s screen. Bassam is handed a receipt, which reads “EyePay” and “World Food Programme Building Blocks” across the top, as he exits the market and continues his day in the Zaatari refugee camp.
Although Bassam is unaware, his experience is one of the first uses of Blockchain in Humanitarian aid. The machine that scanned his iris verifies his identity in the United Nations database, which is registered on the Ethereum blockchain by the World Food Programme (WFP). He was able to buy his items without opening his wallet.
This article will give you an overview of how this was achieved. I will go through:
- Parity Ethereum
- Consensus Mechanism
- Smart Contracts
- Identity, future, and more
The World Food Program (WFP) is the food-assistance arm of the United Nations. They help feed 80 million people across the globe.
How do they do this?
The traditional approach: Find people who are hungry, bring food in-kind (like rice, corn, and wheat,) and deliver the food so people can eat.
This strategy is short-term — only beneficial long enough to get a nation back on its feet.
So, in most cases, WFP uses cash-based transfers. Instead of delivering food, give people the means to purchase their own food — from bank cards, mobile money, to E-vouchers.
This is great, as it allows users to make their own purchasing decisions; It empowers people with a choice to address their essential needs in local markets. As a bonus, the economy is benefited.
Sounds Amazing! But this strategy is not perfect. It’s inefficient and costly. Let me explain:
Why Financial Intermediaries is a Disadvantage
In order to enable this process, the WFP normally has to rely on banks, mobile money companies, cash agents, etc.
On a high level, the two main services fall under two broad categories:
- Accounting: Creating accounts for beneficiaries, providing a distribution mechanism (sim cards, credit cards), and authorizing transactions when the beneficiaries spend their entitlements — eventually reporting to the WFP.
- Payments: Paying the supermarkets where beneficiaries have spent money.
So, what’s the issue?
- Cost: Increased volumes of assistance are expensive.
- Control: In order to add beneficiaries or increase entitlements, the bank must be formally advised. This can be a lengthy process, which means somebody goes without food for longer periods of time.
- Privacy: Beneficiary information needs to be shared, and WFP must make a time-consuming effort to verify reports to ensure transactions actually took place.
- Flexibility: In order to utilize e-vouchers, mobile money, and ATMs, etc, if these companies don’t talk to each other, the WFP must divide the money to these different entities.
You may be saying, well, no system is perfect. While that may be true, at scale, these issues have adverse impacts. For the WFP, which transferred over $1.3 billion in benefits in 2017, transaction and other fees are money that could have gone to millions of meals.
So how exactly are these issues solved through Blockchain? Well, I’m glad you asked.
Building Blocks: A WFP led Blockchain network
WFP Building blocks is a permissioned Ethereum network, based on Parity.
Fundamentally, Building Blocks is a collection of blockchain nodes which are a bunch of computer servers independently operated by the WFP members in the assistance process.
This new process looks something like this:
Let’s break that down.
The foundation: Parity Ethereum
Ethereum is a distributed network of computers running software (known as nodes) that can verify blocks and transaction data. You need an application, known as a client, on your computer to “run” a node.
This usually includes:
- A Consensus Mechanism
- An Implementation of the Blockchain Virtual Machine
- Database component to store data
- An interface that allows external software to interact with Blockchain
Enter, Parity Ethereum. Parity Ethereum is an example of such software that allows an individual to run a node on the Ethereum protocol.
Think about when you post a selfie on Instagram. Instagram is the software that allows you, as the user, to post a picture. You can post a picture on Facebook or Twitter, but you are choosing Instagram based on your needs. (Just like Parity is not the only Ethereum client.) The building Blocks network is like your Instagram account.
You might be asking why you need different clients. While all clients use the underlying Ethereum protocols, the controlling organization like Parity sets permission levels, security, authorizations, and accessibility based on their needs.
Here’s where the permissioned aspect comes in.
One can have a public, private, or permissioned Blockchain.
- In a public blockchain, anyone is free to join and participate in the core activities of the blockchain network.
- A private blockchain allows only selected entry of verified participants; the operator has the right to override, edit, or delete the necessary entries on the blockchain.
- A permissioned blockchain has properties of both private and public blockchains.
A permissioned blockchain is exactly how it sounds. Using a permissioned blockchain, WFP is able to control who is able to be registered on the blockchain — being the refugees, and can regularly add people when needed.
This is used to ensure data privacy. WFP can identify its users with certainty, without sharing this data with the world.
Consensus mechanism: Proof of Authority
Every Blockchain network needs a consensus mechanism to validate nodes on the Blockchain.
To put it simply, a consensus mechanism is the means by which people reach an agreement on the state of a blockchain, specifically on the validity of transactions.
There are three main consensus mechanisms:
Proof of Work (PoW): Members of the network (known as miners) race to solve a complex cryptographic problem. Once solved, their block is verified and added to the blockchain, and the miner is rewarded with cryptocurrency.
Proof of Stake (PoS): Instead of mining, a person can validate blocks depending on how much stake (coins) they have in the system. The more coins they own, the more probability they have of mining the next block.
Proof of Authority: A modified version of PoS — except, it values identity/reputation rather than stake. PoA blockchains are secured by validating nodes that are randomly selected out of predetermined trustworthy nodes.
Building Blocks uses a proof of authority consensus mechanism to validate transactions on the blockchain. In this case, the organizations that are providing entitlements to citizens of Jordan are the validators.
Why Proof of Authority?
POA is highly efficient and scalable. Think of it like this. In a group project, it takes a lot longer for 10 people to come to a consensus, rather than 3 people.
It is important to note that POA is not suitable for public Blockchains, but enables companies to maintain their privacy while keeping the benefits of Blockchain Technology.
Validators of WFP just need to create blocks when chosen and validate proposed blocks when they’re not. This validation is known as attesting. You can think of attesting as saying “this block looks good to me.”
It’s important to note that a private/permissioned blockchains often compromises decentralization. But this compromisation allows security and scalability to be prioritized. Permissioned blockchains have seen an increase in popularity thanks to their ability to allocate specific permissions to various users on the network, which is crucial to businesses that need some form of authority in order to run properly.
The execution: Smart Contracts
Traditionally, when 2 people want to buy something or perform a transaction of some kind in the online world, they have to trust an intermediary that will move the money from an account to the other.
But why do we have to trust so many middlemen to take care of a personal transaction and lose time and money paying random fees, money that can go into the hands of the hungry?
Financial intermediaries can be removed through the use of smart contracts that automate transactions and remove the need for an intermediary to carry out an action. Rather than a bank transferring money between two parties, the smart contract is programmed to automatically make the transaction.
Smart contracts simply work on an ‘if-then’ basis, similar to how vending machines work. I have money, and the vending machine has my Twix bar. (Best chocolate ever. Don’t fight me.) If I input the correct amount of money, then the vending machine is authorized to release the Twix bar.
However, smart contracts can’t use dollars, Syrian pounds, or fiat currency. They can only make payments in cryptocurrencies. So, a modified process takes place to preserve simplicity for beneficiaries.
Instead, let’s say I need a Twix bar every day. Instead of paying every day, the vending machine recognizes I am a regular customer, and allows me to receive my Twix bars regularly without payment. The transactions are stored on the vending machine, and at the end of the month, I must pay all the money I owe in one simple transaction.
In the context of Building blocks, Citizens in Jordan need food, and the supermarkets running need money. Take Bassam for example. When Bassam’s iris is scanned, the Blockchain is able to verify his identity, that he, in fact, is a refugee. If he is a registered member of the blockchain and he has entitlements, then the transaction can go through, and food can be obtained.
At the end of each month, the world food program is able to use the data and identify the amount of money required by the supermarkets and can pay in one transaction.
If you’re asking why this works, a company like the WFP has an established reputation, therefore they are trusted and cannot just run away without paying supermarkets.
Owning your identity
If the man behind the project, WFP executive Houman Haddad, builds upon this system, the blockchain-based program will do far more than save money. It will tackle a central problem in any humanitarian crisis:
“how do you get people without government identity documents or a bank account into a financial and legal system where those things are prerequisites to getting a job and living a secure life?.”
Haddad imagines Bassam one day walking out of Zaatari with a digital wallet, filled with his camp transaction history, his government ID, and access to financial accounts — all linked through a blockchain-based identity system.
Refugees using such a system could regain legal identities that were lost along with their documents and assets when they fled their homes. In this scenario, Bassam could easily prove his educational credentials, demonstrate his relationship to his children, and get a loan to start a business. (In most countries, without an ID you can’t get a bank account, and without a bank account, you can’t get a place to live or a legal job.)
With such a wallet, when Bassam left the camp he could much more easily enter the world economy. He would have a place for an employer to deposit his pay, for a mainstream bank to see his credit history, and for a border or immigration agent to check his identity.
What’s next?
In responding to a crisis or emergency, multiple organizations are likely to assist the same people with food, health, shelter, protection programming, often using many different systems and processes to carry out their goals. Building Blocks creates an opportunity for various organizations to collaborate these efforts, improving efficiency and transparency of assistance.
Through Blockchain’s immutable database, multiple organizations can maintain up-to-date records of the services provided to people, helping to ensure that they are not duplicating efforts, wasting valuable resources, or excluding individuals from receiving assistance, ultimately delivering effective and well-targeted support.
TL;DR (too long, didn’t read)
- Blockchain technology can be used for humanitarian aid
- Financial intermediaries pose many challenges such as cost, efficiency, and privacy, ultimately occupying time, money, and resources.
- The world food program (WFP) utilizes Parity Ethereum to create a Blockchain network to mitigate these issues
- Proof of Authority Consensus Mechanism is used to ensure data privacy
- Smart contracts are used to remove intermediaries
- In the future, this technology will be used to secure identity and provide a collaborated network of assistance programs to help people around the world efficiently.
Thanks for reading!! My name is Aleeza, I am a 16-year-old, interested in world-changing applications of Blockchain Technology. Feel free to connect with me on Linkedin, and subscribe to my monthly newsletter!
