By Dr Jane Thomason
Humanitarian settings are a vital digital frontier. Humanitarian blockchain pioneers, Sofie Blakstad (hiveonline); Adam Bornstein (Danish Red Cross); Ric Shreves (Mercy Corps) and Josh Hallwright (Oxfam) at the frontier of the future, working with new technologies on the ground, have newly released a report on Blockchain for Good. These people and organisations are pushing the boundaries in blockchain particularly how to consider ways that improve the effectiveness and efficiency of humanitarian interventions.
“We think that humanitarian assistance can actually be put into a box. I think that there are certain functions with the right data, the right validation, that you can automate and put the control and the agency back into the hands of the community”. (Adam Bornstein, Danish Red Cross)
So what can go in the box?
A Platform - A lot of the early projects were started on Ethereum, which is a perfectly good blockchain, but it's not necessarily very suitable for the sector, because it's so low throughput, and high cost and uses proof of work, which uses a lot of energy. We need a solution which could be a blockchain or distributed ledger, which is a safe space for organisations like the Red Cross to operate to scale and not worry about gas and which has a very solid governance structure, and has scalability. It can work on digital ID, it can work on transfer funds and may have a scalable token or stable coin.
A Fit for Purpose Cost Model - This technology gives huge opportunities to collaborate across the sector. However, the current payment models don’t work with the way that donor funded projects run by the humanitarian sector work.
Payments Infrastructure - 17% of NGO funding goes to cash transfers today, if we could cut out the cost of moving money around for that, that's going to be massive.
There are some interesting examples with traceability of donor funds through blockchain, and that has reduced a lot of efficient friction and increased efficiency. We can increase the amount of the donation that goes to the intervention, and we have the opportunity to trace the use of funds all the way through to the beneficiary, which is really critical.
“Imagine, we had a low volatility low cost coin that was acceptable globally. How could that impact our work, and in many ways, it could impact our work from everything. From back office operations, you know, us moving money into difficult places to actually doing direct distributions to our programme participants, there's a number of really compelling use cases for that technology.“ (Ric Shreves)
Central Bank Digital Currencies also present opportunities. For example: in the Bahamas they have launched the Sand Dollar. The Bahamas is hurricane prone. All the Bahamian citizens have digital wallets on their phones. Direct assistance can be done using the digital currency now instead of doing a physical or manual distribution. So that's just a simple example that shows how in one case, we can use that tech and we see a number of use cases in this field. Digital payments, in humanitarian disasters, are incredibly important.
“I think that looking forward in terms of how it would impact direct operations and programming, then we're talking really about how digital tools can allow us to be more efficient and effective in our work, and decrease costs of things like audits and monitoring and evaluation programmes, which is one of the areas where we've seen a big upside to the use of distributed ledger tech, we're held to very high audit standards by our donors, and rightfully so. So anything we can do to lower those costs and put more money towards the mission is, is super important.”
Beyond Cash Transfers - “During COVID communities had multiple issues like physical health, mental health, liquidity problems, all those issues that come with some kind of pandemic. Is it possible to move from a community inclusion currency platform to one that addresses multiple needs? We had one combination of about 45,000 families in Kenya, which is equivalent to over 200,000 individuals, plus 60,000 Red Cross volunteers in the ground or on the ground. The technology that allows us to transfer funding, and then not just transfer it, but also track it, and to pinpoint exactly which communities need support. Before COVID. The majority of people were using these tokens that we work with, for savings groups, after we started focusing more on code response, we saw 110% increase for food and water. And then we saw 110% increase in other sanitation devices. Then once we start to get that information, and we can do some predictive analytics, so that our community health workers on the ground can see exactly what's working, what's not working. The next layer after that, where we're transitioning to now is to think about machine learning and AI. So that eventually, we can take this combination of a kind of real time streaming data, put it through some systems and come up with some predictive analytics, and then stream different types of funding better parametric based, for example, trigger based.” (Adam Bornstein)
Choices - The system can be built with the ability for people to opt in. When working with communities it's usually a collective decision by the community to join these to join these savings groups and these kinds of tokenized collectives. The decision is on their hands to basically opt in. It’s moving more to a distributed net, data coops, and data communities where the individual communities owning that data, they make the decisions in terms of how they want to use it, and how to modify and how to monetize it, if they so choose.
Identity and Certification - A key challenge is to get a state actor to recognise an ID issued by non-state third party non state. Digital ID is vital to all of these solutions, it's an absolute necessary building block, whether it's the programme participants having an ID, or whether it's the NGO having the credentials that allows them to interact with the distributed ledger.
Humanitarian agencies are experimenting with digital reputation and triangulating information about people who have no reliable identity data. They don't know how old they are, they don't have an address. For example in Indonesia, working with lenders, where most people have no access to financial services, or identity, we are trialling reputation data based on blockchain based data. This is much better than what the government has.
If you have Humanitarian Agency certification, for a vulnerable person in a disaster situation, they should be able to use that identity, use that reputation, use that certification, and go and open a bank account with it, and then go and get a job with it. Later on they may be able to buy a house with it. Right now, there is no persistent use for these identities beyond the immediate need. The next stage is to use those identities and certifications across multi agencies, but what if it could persist and be used for the rest of their life? This would mean that vulnerable individuals can control their identities and their certifications, and could use those identities and certifications for non humanitarian real world scenarios.
“This technology offers an opportunity to make people's lives easier, not just when they need immediate disaster relief, but for the rest of their lives.”
As an example of this in Vanuatu, Oxfam has worked to create digital assets that are used to provide cash assistance to do disaster response in Vanuatu. Oxfam has been doing a lot of preparedness work with blockchain and laying the groundwork for setting up the infrastructure in the response phases with the volcano in the north. It has been used as a cash disposal distribution network. Now different line ministries are exploring using that same platform for a social protection system, and integrating that with financial inclusion issues. This collaboration has led to changes in the national legislation around and the acceptable use of cryptocurrencies in that country. And a lot of the relationship work, the dialogue with communities, authorities, lawmakers, ministries, and the coordination, the human has led to ministries come to us to say, “Your identity card for the cash project, can we effectively use that as a credentialing?”
And the Future?
“The baby steps that they've taken have actually demonstrated such great benefits already, that taking the next step is necessarily going to be an even more systemic and systemically important transformation, in cost reduction, and increased transparency. So we're really looking forward to what's happening next.” (Sofie Blakstaad)
Advocacy remains important because there's a huge kind of education, envisioning, advocacy component with the international organisations and governments. Regulatory challenges will need to be overcome. Blockchain is by its very nature not owned or controlled by anyone. So nobody is responsible for that regulation. Blockchain assets, digital assets, a lot of the subject to regulation. So you have regulations in many, many territories. They're different in every territory, they're emerging very fast. And often, regulators and governments don't really understand the technology either.
“I tend to be an optimist about the potential for impact of technology on the sector. it just makes plain sense.NGOs are massively resource stretched, and we're confronting these global problems that are not getting smaller, so the ability to use technology in such a fashion that we can leverage our impact and expand our reach is very compelling.“ (Ric Shreves)
In conclusion, Sofie Blakstaad reflected: “On balance, we're starting to see some of the real world impact of the technology in the humanitarian space through various different organisations, pilot cases and trying to get some of those successful ones to scale. That is a massive improvement on three years ago. And so I'm really excited to see what the next three years bring. We're going to have more humanitarian crises, sadly, as a result of COVID. And we're also going to have less money. So now is the moment to really use tech to prove how we can deliver these goals more cheaply”.
About the Author:
Dr Jane Thomason is an author and thought leader in the applications of blockchain technology for social transformation. She is Co-Founder of the British Blockchain and Frontier Technology Association, Section Chief Editor, Frontiers in Blockchain, and Member of the Advisory Board of the Kerala Blockchain Academy. She is lead author of “Blockchain Technologies For Global Social Change” (2019), of "Blockchain-Powering and Empowering the Poor in Developing Countries" in Transforming Climate Finance and Green Investment with Blockchain (2018) Editor Alastair Marke; and of "Technology and healthcare opportunities in emerging markets" in "HealthTech. Law and Regulation" (2020) Editor Jelena Madir. In 2019-2020, she convened London Fintech Week, London Blockchain Week and London Digital Impact Week. She is a regular blockchain hackathon judge and mentor and mentors social impact startups.