How The Blockchain will Change Doing Good Forever (to the better)
Part 1/3 — Money and Financial Instruments for good
We need to talk about the blockchain, folks. Because it will change everything. And there are so few people that understand what it is and where the opportunities lie that the ones who do have a huge edge.
You want that edge.
Even more so in the do-good industry, where the opportunities are enormous, and where shockingly tech-illiterate incumbents struggle every day to roll out the same old interventions following the same antiquated cycles. I want to share a few of the more obvious opportunities right here as we are looking into some of them at Triggerise and/ or are currently pursuing.
This is the first in a series of three posts, each of them addressing a different but related category of opportunities in the do-good space, and looking at possible applications in each. This first post will look at the way the blockchain will change the financial realities in under-served markets and how savvy non-profits and social enterprises could have a critical impact in this area.
First, a super-quick description of the blockchain (skip this section if you have a basic grasp of this technology):
A blockchain is a public, shared record that cannot be modified retroactively and that everyone trusts to be accurate forever. This record could be a list of transactions (as in the blockchain’s flagship application, bitcoin) or it could be any other information that once recorded cannot be modified anymore. It’s basically a ledger kept honest by mathematics, rather than humans or institutions. It is formed out of “blocks” of information that reference each other (“chain”) with newer blocks containing added information on top of older blocks on which information cannot be modified anymore.
Think about how many institutions are out there — some of them widely loathed — that exist simply as formalized witnesses for some sort of data-point in history: Notaries. Banks. Insurance companies. The National Gazette. Passports. Elections. Bookies. Copyright.
In theory, blockchain applications could drive all of these into irrelevance. And I am personally looking forward to see quite a bit of disruption in these spaces in the near future.
But what of the development industry? What about donors and implementers and — lest we forget — the proverbial beneficiary?
- A valuable currency & payment platform. I think this is the most obvious application and one that has been written about extensively. There are plenty of exciting startups in this space — bringing bitcoin and other crypto currencies into low-income markets where millions of unbanked people could enjoy the benefit of a virtual currency that they can save, spend and trade. It would be a powerful way to “bank” the unbanked, without the need of an expensive operational expansion of a traditional banking infrastructure. Additionally, it would offer millions of people a way to hedge against bad fiscal / financial policies if they have the misfortune to be living in a place where such policies are rolled out. There’s more, of course: people fleeing conflict or persecution could store whatever values they have in a crypto currency and access it en route as needed and/ or once they are in a safe place. Today, many refugees leave their belongings behind and/ or get robbed or ripped off by criminals and corrupt officials they encounter during their perilous journey.
- My absolute favourite application in this space: Remittances. Un-banked, hard-working migrants currently pay astronomical fees to the likes of Western Union when they send money home. No more of that — a crypto currency allows instant, no-fee transactions. This can be set up right now, without the need for any single extra line of code. The only thing needed is an extensive operational presence, which many non-profits have and which a nimble social entreprise could set up quickly using a franchise model, for example
- A global, secure, distributed registry for identity. Like a global passport that you can never lose and never expires. All important events — birth, marriage, death, driving license, voting card — can be recorded on a blockchain, forever accessible and indestructible. No-one could have access to this data, unless permitted by the owner who is always in control. There are further opportunities here: Medical records. Credit history. Insurance status. This could help refugee processes in recipient countries speeding up processes and removing doubts about nefarious elements infiltrated among legitimate refugees.
- (Micro)Contracts. (Micro)Credits. One of the more exciting developments in the world of blockchain is the integration within blockchain protocols of secure contracts (“smart contracts”). That means that contract deliverables get scripted into the blockchain and payment happens automatically once deliverables are verified. This has a lot of potential in managing small-amount/ high-volume contracts such as micro-credits or other predictable, simple contracts. It removes a critical barrier and allows small-value contracts to go to scale without the need of a margin-eating middle-man to facilitate trust.
These are just a few possible applications and each of them could have a tremendous impact on local economies. But their combined impact is even higher and it unlocks entirely new categories of opportunities related to local entrepreneurship and economic growth that I will outline in the next post.
Meanwhile, let me know if you know of any other interesting blockchain applications in this space.