If we say blockchain, you might think of bitcoin – the digital currency most well-known for applying blockchain technology. While bitcoin has slowly stirred up a storm in the investment community since its release in 2009, interest in it has never been greater, as its value just soared to a record-high of more than $17,000 USD per virtual coin.
But blockchain is so much more than investment speculation, and both the private and public sectors globally have opened their eyes to the technology’s enormous potential to turn whole industries upside down. A few months ago, the Ministry of Foreign Affairs of Denmark invited Sustainia to delve deeper into how blockchain could positively disrupt the Danish development industry and make aid easier, safer and more impactful.
We teamed up with the cryptocurrency platform Coinify, and today we proudly present the report titled “Hack the Future of Development Aid.” It offers four recommendations, or so-called hacks, for disrupting development aid using blockchain technology. For example, by using blockchain-based cryptocurrencies, humanitarian organizations can transfer aid money faster and more safely to the hotspots of the world. Furthermore, blockchain can digitalize other legal papers, such as land rights and identity papers, to combat corruption, ensure more effective development aid, and ensure better protection of rights of marginalized groups.
Here are some of the key takeaways from the report:
1. Cryptocurrencies increase speed of development and emergency aid
Aid is slow money passing through a chain of intermediaries such as banks and organizations, all harvesting fees and slowing down delivery. Crypto aid, on the other hand, can be transferred directly to beneficiaries.
2. Crypto is new money to reach the UN Sustainable Development Goals
The price tag for reaching the Sustainable Development Goals (SDGs) for the poorest is 1.4 trillion USD. Now, donors can mobilize an entirely new category of money to help reach the target – cryptocurrencies. Development agencies can establish crypto SDG funds, develop infrastructure for crypto crowdfunding or help incubate solutions for crypto investments.
3. Disruption of development aid is coming
Blockchain can disrupt the current aid model where money flows through a value chain of organizations and banks before reaching the ones in need. Blockchain can replace this value chain with a digital platform – “aid as a service” – onto which start-ups, local organizations, NGOs etc. can upload their aid offerings.
4. The future of aid is smart and automated
On the blockchain, legal documents can be translated into code – a so-called smart contract which can self-execute and trigger payments when certain criteria are met. Aid agreements with ministries, organizations or multi-donor funds can gradually shift from paper contracts into smart contracts.
5. Programmable aid money can beat corruption
When using cryptocurrencies in a smart contract it is possible to program aid only to be spent on particular items. It makes the blockchain a tool to beat corruption. Aid to ministries in developing countries can be confined to agreed services without heavy monitoring costs.
6. Code is the new weapon to fight for human rights
Blockchain technology can be applied to deliver rights, such as land rights and proof of identity, directly to people on their phones, which makes paper-based systems unnecessary and corruption difficult.
Where can I get the report?
The report is freely available on the website of the Ministry of Foreign Affairs of Denmark via this link: https://goo.gl/aZNJhE
What is blockchain?
Long associated with the cryptocurrency bitcoin, blockchain is managed by a decentralized and open computer network in which everyone can participate.
Any transaction of information or money is distributed across the whole network and is verified by the network participants, also called miners. Thereafter the information becomes irreversibly packed and cryptographically timestamped, which makes blockchain a particularly efficient, safe and transparent technology for any information exchange.
Want to learn more about how blockchain can help fight inequality? Check out the market “Clever Codes Disrupt Inequality” right here on the Global Opportunity Explorer.