2018 will probably be remembered as the bust of the blockchain hype. Yet even as crypto currencies continue to sink in value and popular interest, the potential of using blockchain technologies to achieve social ends remains important to consider but poorly understood.
In 2019, business will continue to explore blockchain for sectors as disparate as finance, agriculture, logistics and healthcare. Policymakers and social innovators should also leverage 2019 to become more sophisticated about blockchain’s real promise, limitations and current practice.
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In a recent report I prepared with Andrew Young, with the support of the Rockefeller Foundation, we looked at the potential risks and challenges of using blockchain for social change — or “Blockchan.ge.” A number of implementations and platforms are already demonstrating potential social impact.
In an illustration of the breadth of current experimentation, Stanford’s Center for Social Innovation recently analysed and mapped nearly 200 organisations and projects trying to create positive social change using blockchain. Likewise, the GovLab is developing a mapping of blockchange implementations across regions and topic areas; it currently contains 60 entries.
All these examples provide impressive — and hopeful — proof of concept. Yet despite the very clear potential of blockchain, there has been little systematic analysis. For what types of social impact is it best suited? Under what conditions is it most likely to lead to real social change? What challenges does blockchain face, what risks does it pose and how should these be confronted and mitigated?
These are just some of the questions our report, which builds its analysis on 10 case studies assembled through original research, seeks to address.
While the report is focused on identity management, it contains a number of lessons and insights that are applicable more generally to the subject of blockchange.
In particular, it contains seven design principles that can guide individuals or organisations considering the use of blockchain for social impact. We call these the Genesis principles, and they are outlined at the end of this article.
Three use cases for social impact
Based on our research, we have identified three broad ways in which blockchain is most likely to achieve genuine and lasting social impact. They include:
Track and trace: This refers to blockchain’s capacity to improve the traceability of tangible and intangible objects as they are shared by parties or travel across supply chains. This happens by immutably recording various steps in an object’s life cycle. Limiting the possibility of duplicate or illicit products could increase consumer safety. Public interest groups (e.g., transparency watchdogs) and consumers could track the provenance of goods, leveraging the power of information to make more informed choices.
- Verisart creates verifiable, digital certificates for art and collectibles, which helps buyers ensure each piece’s provenance.
- Grass Roots Cooperative and Heifer USA created a blockchain-powered app that allows every package of chicken marketed and sold by Grassroots to be traced on the Ethereum blockchain, contributing to greater consumer confidence and safety.
- Everledger works with stakeholders across the diamond supply chain to track diamonds from mine to store.
- Ripe is working with Sweetgreen to use blockchain and Internet of Things sensors to track crop growth, yielding higher-quality produce and providing better information for farmers, food distributors, restaurants and consumers.
Identity: Lack of verifiable, self-sovereign identities is emerging as a major shortcoming of the information age, with a range of resulting social harms — from identity theft to privacy violations, surveillance and fraud. Citizens don’t control their online presences, eroding long-term trust in the data ecosystem. Blockchain provides a potential solution: a distributed, immutable system of trusted identifiers that can help confirm and authenticate identities of people and objects.
- The State of Illinois is working with Evernym to pilot digitisation for birth certificates to test the feasibility of giving individuals a digital identity from birth.
- BanQu creates an economic passport for previously unbanked populations by using blockchain to record economic and financial transactions, purchase goods and prove their existence in global supply chains.
- In 2015, AID:Tech piloted a project working with Syrian refugees in Lebanon to distribute over 500 donor aid cards that were tied to non-forgeable identities.
- uPort provides digital identities for residents of Zug, Switzerland to use for accessing government services.
Smart Contracts: In automated contracts, predefined actions are triggered when other predefined actions are executed and confirmed by blockchain nodes. Much has been made of this in business. But smart contracting’s potential extends to the public sector: it could dramatically alter relationships among citizens and between governments and citizens, particularly if security concerns are addressed. It could, for example, automate compliance and enforcement of laws and regulations. And, it could transform the way government contracts are allocated and administered, ensuring greater transparency and efficiency.
- In Indonesia, Carbon Conservation and Dappbase have created smart contracts that will distribute rewards to villages that can prove reduction in incidences of forest fires.
- Alice has built Ethereum-based smart contracts for a pilot donation project that supports 15 homeless people in London. The smart contracts ensure donations are released only when pre-determined project goals are met and aims to test a new and more transparent approach for donation platforms.
- Bext360 uses smart contracts to pay coffee farmers fairly and immediately based on a price determined through weighing and analysing beans by the Bext360 machine at source.
- BitLumens uses smart contracts and solar panels to provide energy to areas lacking operational power grids where costs would otherwise be prohibitive.
Seven design principles for blockchange
Based on our research, and informed by examples and case studies, we have developed seven design principles that can serve as a framework for blockchange projects. These principles are foundational; they need to be built into the architecture of projects, from the very beginning. Hence, we call them the GENESIS principles. A more fleshed-out description can be found in the report.
Governance legitimacy: Ensuring a transparent, accountable and participatory process is essential to building trusted and legitimate applications and platforms. It is essential that project holders develop data responsibility policies and principles from the outset. Decision making should be transparent, with clearly defined processes.
Ethically sound: The ethics of blockchange projects must also be considered to ensure trust and build legitimacy. Ethical issues are particularly important in identity-based applications as they may involve questions of access and individual rights.
Not technologies, but solutions to real problems: Like many new technologies, blockchain is often treated as the proverbial hammer in search of a nail. While experimentation is a worthy aim, a clear and actionable understanding of the problem is essential to creating lasting solutions. Decision makers should remain open to non-blockchain solutions and make every effort to articulate the real value proposition of their proposed approaches.
Ecological footprint: Most blockchains have a massive and growing ecological footprint due to the high levels of energy required to process and validate activities. This necessitates solutions that do not contribute to global warming. For example, project designers should consider the ideal transaction validation mechanism and avoid highly energy-dependent proof-of-work mining approaches.
Synchronised with existing initiatives: Project designers should resist the temptation to reinvent the wheel. A multitude of blockchange platforms already exist, and there are often advantages to joining resources and learning from previous experiences. Some ways to ensure that projects work together and build on existing knowledge include conducting proper due diligence and research at the outset and engaging existing experts.
Interoperability and open standards: Much current blockchange activity is being driven by the private sector. This may have advantages in terms of funding and innovation. But government and civil society must avoid long-term vendor lock-in and patenting of essential protocols. Ensuring the interoperability of different systems and the development of open technical standards will be key to ensuring long term usability and accessibility.
Securing first block accuracy: While blockchain’s attributes of immutability and integrity ensure accuracy for on-chain information, the first block in the chain remains an important single point of failure. It is fair to say that the blockchain is only as good as the genesis block. Project creators and designers must ensure the accuracy of this first block, such as by seeking out processes and intermediaries to validate and cross-check information; and establishing mechanisms for vetting and quality control.
This is a young and still developing field
Together, these seven foundational design principles can serve as a guide or toolkit for individuals, organisations or governments considering blockchange projects. Blockchain can be a powerful tool for positive social impact, but it is essential to do it right.
Of course, this is a young and still developing field; there are many lessons remaining to be learned. We welcome your suggestions and input — on the above, or on the field more generally. — Stefaan Verhulst
(Picture credit: Unsplash)