Technology Salon


Sponsored by

a discussion at the intersection of technology and development

Is Blockchain Ready to be Applied to Asia’s Development Challenges?

Blockchain for International Development

While the hype builds to a crescendo, blockchain use is still very much in its infancy, especially within the international development field. When we talk about blockchain, “we’re in the 1996-2000 stage,” said one participant of the Bangkok Technology Salon on How to Use Blockchain in International Development?

In a discussion led by mobile financial services expert Heidi Berg and South Pole Group co-founder Ingo Puhl, participants focused very much on potential of blockchain – both positive and negative – as a tool for addressing development challenges in Asia.

Four areas of potential on which the discussion touched included:

1. Eliminating the middleman

One of blockchain’s most appealing features is its ability to cut out the many levels in markets, each of which consume resources. In the past, the need to feed those different levels meant the small transactions that dominate in developing countries were unprofitable.

But because it is a distributed validator of transactions that is owned by no single entity, blockchain can reduce the costs of transactions to near zero, making microtransactions possible. ‘Why would you need to go into a bank branch?’ asked one participant. The blockchain makes physical financial infrastructure redundant, and brings in many who currently lack access to financial services.

2. Tracking resources and reducing corruption risk.

The blockchain can also be applied to information – tracking development resources through each step of their use. This could reduce the need for the many intermediaries in the development field whose work is now largely concerned with tracking the use of development funding and reporting to donors.

By removing ownership of the ledger, blockchain can also dramatically reduce corruption risk. It addresses the ‘single-database problem’ because it is nearly impossible to fake or alter transactions that have already occurred.

3. Currencies denominated in social good.

Blockchain can incentivize directing resources to public goods. Some examples shared during the discussion included include SolarCoin, which issues tokens to people who can prove they have created solar energy.

A major power utility from Saudi Arabia recently bought into the currency. Another is WomenCoin, which is meant to tokenize the improvement of women’s lives. It is backed by the Bank of England and has the potential to extend creditworthiness to others family members, like children.

4. Creating a ‘self-sovereign identity’.

When combined with biometrics, blockchain can be used by individuals to manage their identity, independently of any government agency or control. In an era of increased migration, this allows an individual to take their identity with them wherever they go.

Some of the applications in the region discussed during the Salon included applying blockchain to rice marketing, allowing farmers to avoid taking on traditional debt burdens from seed suppliers and brokers, and using blockchain to certify identities, preventing trafficking and forced labor in the fishing industry.

Blockchain Usage is Nascent

There was consensus among participants that right now, blockchain doesn’t quite live up to its potential. Especially in a region with strong central governments, ways must be worked out to bring governments on board with ceding control in certain areas. One of blockchain’s biggest advantages is that it takes out the middleman, but in many cases, the government is the middleman.

Blockchain is a ‘power-free’ technology, as there is no central authority. The guarantee of data integrity is distributed among all participants in the chain. Governments are generally reluctant to give up that power or authorize a system outside their control to take over government functions.

Some countries, like India, require data collected from citizens to remain in the country, something difficult to reconcile with blockchain technology.

The technology and knowledge requirements for using blockchain on the ground are often beyond the capacity of people in communities where there is limited electricity, connectivity, and education. Is it possible to obtain ‘informed consent’ under these conditions?

In these cases, there is a need for someone knowledgeable to help you maintain your identity until you can manage your own. But does employing such a ‘data guardian’ only open up another area of rent-seeking?

The blockchain community is made up now of a lot of brilliant minds, but programmers are often far from real-life problems. There is a need to build bridges between the geek community and those working in the field who understand problems and contexts.

As one participant noted, this is just the beginning: “Over the next couple years, there will be a lot of good and a lot of crap.”


Comments are closed.