Hacking the Social Welfare Protocol
Ripple offers banks a new way to settle international transactions in fractions of the usual time and cost. Australia plans to re-launch its stock market using blockchain technology. Bitcoin continues its meteoric climb in price as the CBOE releases futures trading. 2017 has witnessed a marked rise in blockchain technologies grabbing the headlines, but the more fascinating use cases may be quietly developing in the background.
What do a woman struggling to open a bank account in the Congo, refugees crowding a makeshift camp, and a forest slowly eroding to logging all have in common? They may be the next beneficiaries of blockchain technology.
Silicon Valley technologists are often maligned for creating “the internet of stuff your mom won’t do for you anymore,” and known (sometimes rightly) for focusing on lucrative solutions to first-world problems. The community that has grown around bitcoin sometimes fits eagerly into that mold.
And yet, away from the spotlight, small communities of tech humanitarians are quietly growing, finding each other, and wireframing projects with the potential to kickstart a new era of effective altruism. This is not the story of ICO hucksters, recruiting celebrities to sell ponzi schemes with the veneer of tech. It is the story of an earnest group of nerds, altruists, and coders who want their ‘dent in the universe’ to improve people’s lives where it counts most.
Blockchain has a unique set of features that make it a great fit for more than just financial applications:
1) Immutability, through distributed ledger confirmations, enables a secure record. This has applications across the board in voting, identity, and supply chain.
2) Quick settlement creates a vehicle for remittances and charitable contributions.
3) Appreciation generates new value to motivate socially conscious behavior.
- Immutability: Blockchain’s secret weapon for verifiability
Blockchain’s distributed confirmations enable it to verify authenticity and prevent manipulation by central registries or third parties. In a loose sense, decentralized verification acts like the Track Changes feature in a Google doc: it makes all transactions, and any parties involved in them, visible to all participants. This immutable record makes it an ideal solution in difficult tech areas like proving identity, managing ethical supply chains, and voting.
A secure digital identity
A whole suite of startups are currently tackling the challenge of identity via blockchain. The World Bank estimates that about 2.4 billion people live without any form of official identification, and recently launched the ID4D initiative to resolve this issue. A lack of identity shuts people out of financial systems and eligibility for basic public utilities.
But what if people could gain access to basic services by registering on blockchains? Startups are attacking this issue from many different angles. Blockchain for Change, for instance, just gave homeless New Yorkers digital identities, and HumanIQ offers banking services to users off the financial grid. uPort, Sovrin, and ObjectTech, groups I wrote about before, are building a universal identifier. Imagine being able to migrate to a foreign country for work, receive benefits, use EBT, and remit money back home all with the same digital ID!
The applications in the developing world can’t be overstated. BanQu, featured on an excellent recent a16z podcast, helps establish an economic identity for refugees and extreme poverty agricultural zones. The idea draws on founder Ashish Gadnis’ background working in the Congo, when he saw a local woman denied for a bank account because she had no documents. As he noted, “refugees, displaced, and the poorest in the world today continue to suffer as they can’t prove their economic identity because they have no rights to own, access or monetize their personal data.”
A transparent, ethical supply chain
SlaveFreeTrade is working to record full product supply chains on distributed ledgers. Understanding where products come from will help consumers avoid those that involve some 170 million child laborers worldwide. Creating worker identities could help the enslaved 10-20% of Mauritania’s population emerge from slavery.
Brian Iselin, the group’s founder, notes that “there is a darkness to many parts of the supply chain that self-sovereign digital identity specifically, and the blockchain more broadly, can help shine a light on.” Heavyweights are also getting into supply chain tracking on blockchain. IBM and Everledger recently teamed up to help people track and stop the spread of blood diamonds. Walmart is reportedly now looking into the same technology, which startups like the UK’s Provenance are using to help companies track products’ “stories.”
Voting without corruption and fraud
The recent elections in Kenya, one of east Africa’s most stable democracies, have been heavily contested, leading to protests and deaths. The potential impact of blockchain in voting could be literally life-saving. Voatz is a voting software startup that pairs blockchain with biometric verification. Already, biometric technology is starting to gain proof-of-concept in voting: the disputed territory of Somaliland just became the world’s first nation to use iris verification in its elections, using technologies like BioConnect’s, which Chief Identity Officer Bianca Lopes envisions becoming part of the background of how we conduct all our future business.
Yet one problem remains to be resolved by this these startups: identity establishment and trust. As noted by the Center for Global Development, while blockchain can help create airtight records, it still requires trusted third-parties to verify that those involved are who they say they are. For instance, why couldn’t a sweatshop in Bangladesh just register its goods as child labor-free? For all the decentralization of blockchain, these concepts could still require trusted intermediaries.
2. Faster, more secure, direct transactions in the developing world
Remittances are a core case of blockchain’s potential development impact. The remittance system has evolved over time from flying physical vouchers to immediate transfers using basic cell phones. The charity analysis group GiveWell has ranked unconditional direct cash transfers as one of the strongest possible development interventions outside of healthcare.
Startups like Bitpesa (bitcoin mobile payments), Bitspark (cash-out services in the developing world), and Everex (microlending) use blockchain to streamline a variety of challenges traditionally associated with this space. Moeda takes it a step further with a cooperative banking system that lets people in the developing world accept remittances and loans.
Some similar problems remain yet to be solved by these services. Can a lender verify a recipient without depending on an MFI? Can mobile payment requests be forged by stealing phones or two-factor hacking? Are these currency systems more secure than traditional banks? Establishing trust is, as always, a pervasive thorn in the side of these trustless systems, but early signs are promising: in Somalia, for instance, 73% of people use mobile money while only 15% hold bank accounts, because mobile money is harder to steal.
3. Better incentives through blockchain
Last, the opportunity for the creation and appreciation of niche currencies gives altruistic giving and incentive platforms a powerful tool to increase their impact.
Bail Bloc, a New York-based blockchain enterprise, lets participants harness their excess computing power to mine a cryptocurrency - Monero - in the background while they work. At the end of the month, that currency is in-turn donated to the Bronx Freedom Fund to help poor arrestees afford bail and avoid jeopardizing their livelihoods.
One of the more surprising currency applications of blockchain is in the area of deforestation, where groups like ecosphere+ are innovating. A new concept would let individuals sign up to protect sections of forest, whose impact on carbon dioxide levels would be measured by satellite. If levels go down, users are rewarded with a ‘forest coin’ that they can later redeem for cash, if levels go up, they are debited.
Overall, there is a menagerie of services built to upend the dynamics that have traditionally stymied various social causes. Some consolidate tech for refugees. Some offer crowdfunding for non-profits, others work on smart cities and energy grids. Some seek to create environmentally-friendly ‘natural capital,’ some aim to fight child trafficking.
The long road ahead for blockchain and social enterprise
I wrote a year ago about the dream that blockchain could empower those at the bottom of the pyramid. At a small tech salon at the time entitled “Can Financial Technology Revolutionize Banking in Developing Countries?” the consensus the discussion was ‘yes,’ but just how so was an open question. In the year that’s followed, the Cambrian explosion of ingenuity in the space gives us many perspectives on what that could look like. If even just a few of these kernels grew into something larger, they could revolutionize the lives of millions.
The recent Blockchain for Social Impact Conference in New York gave an early look into many of these concepts. The conference was a small celebration of ingenuity in the face of humanitarian issues, featuring a cross-section of engineers and social entrepreneurs intent on leveraging blockchain for altruistic purposes.
I got a chance to talk to two of the organizers, Vanessa Grellet and Ben Siegel. Hired to start the Ethereum Enterprise Alliance, Grellet helped organize Hack for Climates at the UN Sustainable Innovation Forum’s Cop23 event. She has created partnerships between the Consensys ethereum group and the World Bank, MIT, and various NGO’s to work on issues ranging from lowering the massive energy consumption of bitcoin mining to reducing plastic consumption. Siegel worked at Consensys to launch both the conference and the Blockchain for Social Impact project, which led a 60-team hackathon for social welfare.
Talking about the future, Ms. Grellet outlined her vision for the conference’s call to action: to obtain hard-and-fast commitments for a better world from its participants, similar to those of the Clinton Global Initiative. In my past life (at the fintech company Funding Circle), I wrote and updated our ongoing Clinton Global Impact commitment. It became apparent that making the commitment is the easy part - the difficult part is delivering.
Realistically, many of these projects may die out. For those who accept the Carlota Perez technological cycle, it seems only natural that irrational exuberance will overextend some of these concepts. Yet, if this youthful optimism carries some to their conclusion, they could be truly world-changing.
Much now stands to be done. As demonstrated by the trust issues with some of these new technologies, there is a phenomenal gap between coding new technologies and actually deploying them. The latter requires understanding the entrenched systems that exist today and frustrate efforts to empower people. It requires knowing how to change and motivate human behavior. It requires quick iteration when adoption takes paths that were not anticipated.
In 20 or 30 years, it will seem barbaric that we allowed the imbalances of misery and quality of life that exist today. Or at least, that is the hope of the young coders and entrepreneurs who seek to hack social good. Time will tell.