What’s blockchain got to do with it?
Undoubtedly, blockchain has become a subject of great interest and a field of booming innovations. While still in the ‘early adopter’ phase, blockchain has huge potential as a tool to accelerate social innovation around the globe.
In this article, we briefly explain the concepts behind the blockchain, as well as present opportunities for Blockchain to become an additional force for social and environmental progress.
What is blockchain and how does it work?
Let’s first clear a misconception: blockchain and bitcoin are merely types of what’s known as distributed ledger technology (DLT).
According to experts, a distributed ledger is a distributed database that maintains a continuously growing list of ordered records. Each participant in the network maintains a copy of the database, and as the database is updated, changes are propagated across the network in near real time. Throughout the process, security is maintained by the use of encryption and digital signatures.
So instead of one central actor maintaining a copy of a particular ledger (e.g. a bank), there are thousands of copies being continually updated by distributed “nodes”, providing for greater transparency and resilience for the ledger and effectively eliminating the middleman in a peer-to-peer network.
This video produced by The Guardian also highlights the inner workings of Bitcoin, one of the first forms of cryptocurrency on a blockchain:
The most crucial element of the technology is that every transaction on a block incorporates a previous block, forming a chain of blocks (hence the term blockchain). This feature makes the blockchain highly secure and very difficult to hack. It also allows for the instant transfer of funds or information without the need for an intermediary, like banking services or currency exchanges. This makes the transaction of currencies or information more efficient, affordable, and secure.
Blockchain – a force for social and environmental progress?
Despite being a rather new technology, there are already many cases in which Blockchain is used to foster social and environmental progress. To give you only few examples:
In May 2017, the United Nations sent funds to more than 10,000 people in Syria through the Ethereum cryptocurrency platform. Sending aid using cryptocurrency permits guaranteeing that the money will get to those it is intended for (traceability is one of the great strengths of Blockchain) but in such a way that nobody apart from the interested parties can know who sent the money and who receives it (the security of the encryption is the other strength that makes this protocol superior to the ones we knew before). In an environment where being identified as a recipient of UN aid is a death sentence, Blockchain has allowed local aid initiatives to remain afloat for those still trapped in wars. This is a case of applying Blockhain to the social sector.
Aid:Tech in Lebanon provides e-vouchers on a blockchain to Syrian refugees in camps, allowing them to purchase goods in a localized refugee-economy and increasing the likelihood for self-reliance in the camp.
TrustChain is the latest effort by the jewelry industry to use blockchain — a digital ledger that is immutable — to prove to consumers that their purchases don’t include blood diamonds or conflict metals and are ethically sourced. IBM has also been actively helping form a slew of blockchain-focused companies and industry initiatives around various supply chains. For example, it’s working with companies like retailer Walmart Inc. to trace food products, and earlier this year helped start an effort to track international cargo.
Another example in the energy and social sector relates is Bitlumens. They distribute solar power devices in areas without a power-grid and connect them to the blockchain. By using the devices, people build up credit scores. Banks can access the data by using BitLumens own token BLS and use it to issue microcredits to those who urgently need them. Thereby offering clean zero-emission electricity devices, and creating data that the people can chose to share with banks for microcredits or other financial services. In the future, the devices can be interconnected to form micro power-grids in places without electricity, allowing people to trade energy within their communities.
Needless to say, the potential for Blockchain as a tool for social change is overwhelming! However, so are the possible complications and challenges that may arise in using the technology within marginalized communities. Critical reflection and examination is essential if we are to ensure the technology serves the needs of the people before interests of companies and the questions are many.