Why Charities should pay more attention to the Blockchain technology?

@Vincent_Page_

Charities focus on the Human. We tend to leave them this field. It is sometimes the same for everything that turns around new technologies. We put them in another particular box. Hence, we sometimes think that technological development goes against the development of Human. The theory of man vs. machine appeared during the 1st industrial revolution in the late 1700s when mechanical production equipment appeared and completely disrupted the only known way of life. The introduction of the machine created some changes with some bad effects such as losing jobs, difficulty to adapt for some workers, etc. But, when we look back, we can say that these machines have also offered man the possibility to avoid tasks that can be performed by machines.

We are now in the 4th industrial revolution. It’s about 250 years later. We sometimes tend to still have this mistrust of those machines. However, today’s machines are not the same as before. We have passed the stage where they have helped us to develop mass production. Today, we must see the development of technologies as adaptive machines that develop intelligence. Changes in our lifestyles are likely to be quite significant (Lawler, 2018). And if rather than having distrust and keep their distance, charities would also jumping it?

As we have seen with the development of Internet, new technologies are spreading faster and faster. This often has the effect of shaking up the systems put in place until then. Charities carry humanistic values. It is important that these values are highlighted during this type of change. There is perhaps a need to change some of the thought processes we have and see technology as serving the human being. Not the opposite! In any case, it is only by taking an interest in new technologies and their properties that charities can use them to multiply their actions. In that purpose, this paper proposes to take the example of the blockchain technology.

In an article published in the New York Times on June, 27, 2018, Andrew Ross Sorkin finished it by:

‘The blockchain is ultimately about solving society’s ultimate challenge: trust. Or rather, lack of trust. Blockchain is about using technology to create a shared sense of trust by a group of disparate participants.’

It would seem that people who develop new technologies could have values that are related to human as well. Also, we must not forget that technology is only a tool for a cause. So, we should have a look of what blockchain technology could bring to the common good.

When we want to explain what is the blockchain technology to someone who is not really aware of, we automatically start by saying that it started ten years ago with the Bitcoin. With this bias, we then limit the blockchain to the crypto-currency. The blockchain technology — that for questions of language facility will be called blockchain sometimes in this paper — has been initiated after the subprime crisis but it should not be reduced to monetary exchanges. We now realize that the blockchain has much wider possibilities. It is often said that NGOs are not very engaged with new technologies (Singh, 2018). The purpose of this paper is to demonstrate for those working on solidarity issues that they should pay more attention to this technology.

Knowing that we address to people that are not so aware about the new technologies, it could be interesting to see the history of the blockchain and where it comes from before presenting the founding principles of this technology. Once we have recalled these elements, it will be easier for us to present the concrete applications of what we could call the blockchain for good.

Human representation of a blockchain

History of the blockchain technology

First of all, let’s try to provide a clear and easy to grab definition of the blockchain. The American online dictionary Merriam-Webster defines it as ‘a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network’.

The blockchain has been first initiated by Satoshi Nakamoto, whose true identity is still unknown, in 2008 to develop a peer-to-peer electronic cash system known as Bitcoin. Bictoin should not be seen as the blockchain in itself. Bitcoin was the first application of the blockchain technology to develop a digital currency. Transactions are done without the approval of a government or other financial institutions. The exchange mechanisms are based on the notion of trust essentially related to the large capacity of public data recording.

Another important step in the development of this technology is due to Vitalik Buterin. He is well know for having created the Ethereum blockchain in 2015 and created the notion of ‘Smart Contracts’. It is really from there that we begin to understand that the blockchain is more than an exchange of crypto-currencies. A smart contract is a protocol that will perform tasks if conditions are met. Conditions are defined in advance and only once they are realized can the transactions be executed. These transactions are trackable and irreversible. They are realized without any intermediaries.

We should also briefly mention in the development of the blockchain, the technique whose has been created to ensure the veracity of the information. This must start by defining the objectives and protocols of the ledger. The verification of the information therefore complies with rules that have been defined upstream. We are talking about proof-of-work, proof-of-stake or others. It is not necessary to go into further details on those methods in this discussion. It is enough to say that they are all based on mathematical calculations and therefore objective. It is interesting to note, however, that this information is not verified by a centralized organization but by a large number of users.

Now that we have seen the first uses of the blockchain, it is important that we focus on its founding principles. We need to understand these elements because this technology should not be seen as an end but as a tool. It is therefore important to understand the principles that led this technology to develop.

The founding principles of the blockchain technology

Blockchains are immutable digital ledger systems implemented in a distributed fashion (i.e., without a central repository) and usually without a central authority. At its most basic level, they enable a community of users to record transactions in a ledger public to that community such that no transaction can be changed once published (NIST Blockchain Technology Overview Draft NISTIR8202, January 23, 2018).

The definition of the blockchain given above by NIST allows us to point some of the main founding principles of this technology. The National Institute of Standards and Technology (NIST) is a physical sciences laboratory, and a non-regulatory agency of the United States Department of Commerce.

It is important that we take the time to discover these principles so that charities can well integrate this model and at the same time understand that this new technology is based on values that can sometimes be quite close to those carried within their programs.

Trust

As an illustration, the organization called BC4G — Blockchain For Good — created ten principles in relation to the blockchain technology. In the Article 1, it goes so far as to say that ‘Blockchain is trust, and trust is at the heart of the blockchain’. Following the presentation of the other founding principles that we will make below, we will understand why BC4G can state it like that.

Decentralization

In our current system, we have a public or financial organization that centralizes the validation of our transactions. The application of the blockchain makes it possible to replace this centralized system with a decentralized validation mechanism. It is the approval by different users that is worth validation.

Disintermediation

The Blockchain technology has been created 10 years ago to exchange a crypto-currency without intermediaries. The wish was to create peer-to-peer exchanges. After the subprime crisis, the willingness was to set up a system that would not use the rules of capitalism (Bheemaiah, 2017). It is therefore the entire community who is responsible for the proper implementation of the value chain. Everyone is an actor in this technology.

Security

The mechanism for recording information is such that it can not be modified. It is also not possible to delete or remove them. In addition, the fact that the information is validated by several users makes the validation mechanism more secure. This can avoid mistakes because of information crossover.

Transparency

A great importance is given to access to information and transaction tracking. Transparency is indeed a way to guarantee the security of the transactions. Each user is able to go and check information on the blockchain. The information is accessible to all.

Integrity

If the validation of transactions is no longer based on the agreement of a person but refers to the execution of a smart contract, we make the system more objective. Each transaction is executed according to the conditions defined.

During this paragraph, we saw how the blockchain grew up and also its pillars. In order for charities to better understand this technology, it is interesting now that we take the time to present some applications implemented for the common good.

Illustration of the blockchain project of Oxfam: Blocrice

The Blockchain For Good — Applications

Accenture Labs studied 30 cases of blockchain used for solving social challenges. The study published in 2017 was based on the analysis of social innovation organizations. The general results highlight four main objectives of the use of blockchain technology: Enhance Transparency, Increase Efficiency, Promote Sustainability and Achieve Scalability. It also appears from this study that the cases studied are generally at a very early stage of development. This is mainly due to a lack of sufficient visibility into how a pilot scheme can be scaled up, and how blockchain can be used to ensure a larger transformation of the organization.

Thanks to this in-depth study, we can discover that the use of this technology is not only used for the exchange of crypto-currencies. The elements highlighted by Accenture show that the blockchain can support programs with objectives generally implemented by charities. In order to facilitate the understanding of this technology for the common good, it may be interesting to provide few concrete examples of activities that are carried out as part of the blockchain for good.

Supply Chain

If we go back to some principles mentioned above, we quickly realize that the blockchain can also be useful to favor a more transparent transfer of goods where the local producer and the consumer take a central position. Indeed, thanks to smart contracts it is possible to provide much more traceability of a product from its confection to the plate of the consumer if we make the example of an agricultural product.

To illustrate this, we will quickly present two programs implemented by two well-known NGOs. Oxfam has just set up a pilot project in Cambodia for the market rice. The program is called Blocrice. It wants to provide more transparency to local producers so that they can better negotiate the selling price of their goods. Thanks to blockchain technology, the local producer will have more visibility on current rice buying prices by intermediaries and will be able to better negotiate to his advantage.

In addition, WWF has set up a program supported by the blockchain in New Zealand for the traceability of tuna fishing. Thanks to a stamp that will follow the tuna from its catch to the supermarket slab, the consumer will know where it comes from just by flashing a QR code. This program aims to reduce illegal fishing and human rights abuses.

Inclusivity

The blockchain redefines the notion of identity. This is an element that is very interesting for people who have been put apart from our current system. Our conventional and centralized system requires a certain formalism that can distance some people from the banking system for example. It is usually requested certain forms and verifiable means of income to be able to open a bank account. Not everyone has the right documents to provide proof of their identity.

The banking system is not the only one that encounters certain difficulties in relation to the proof of the veracity of a document and the person who owns it. In order to fight against the claim of false title deeds, the organization Land Layby offers a distributed shared ledger for recording land buying and selling transactions. The information integrated within the blockchain are not inherently altered, corrupted, forged or replicated in error. It is no longer possible to claim a land that does not belong to you. The pilot project was developed in Kenya in 2014 and is now operating in many other countries. The purpose of the organization: ‘Without adequate guarantees, such as land, it is particularly difficult for small farmers to obtain loans from local banks’. People can thus reintegrate the system thanks to the veracity of the documents.

Empowerment

This is not usually an end in itself, but generally the social programs of the blockchain allow an empowerment of the people they work for. With the goal of diminish intermediaries, the local producer would be able to easily contact the end buyers of his products. On the other hand, whoever can now prove his identity will be able to be integrated into the system (Sandner, 2017).

The start-up Follow my Vote proposes a system vote based on the blockchain. It presents its activities as follow: ‘By casting votes as transactions, we can create a blockchain which keeps track of the tallies of the votes. This way, everyone can agree on the final count because they can count the votes themselves, and because of the blockchain audit trail, they can verify that no votes were changed or removed, and no illegitimate votes were added’.

Programs based on blockchain could therefore allow some people to claim some of their inalienable rights.

There are still many other examples of blockchain implementation that can bring social solutions to our daily transactions and exchanges. For example, microcredit or fundraising issues have not been brought in this analysis. It was indeed intended to provide concrete applications that do not take into account financial issues. The goal was to bring a fresh look at the blockchain that is not confused with crypto-currencies.

Conclusion

We have been able to demonstrate that the charity manager programs must be interested in this new technology in order to multiply their actions. We have seen that the blockchain and its founding principles can in some extent correspond to programs developed by NGOs.

There are already a certain number of projects using this technology. It is possible that it invites some of the readers to think differently their actions including a more global and systemic approach to their actions. In any case, it is important not to let others advance on the subject.

For example, it is still common to see some papers that try to apply blockchain technology to the charities themselves and not for the benefit of their beneficiaries. It is indeed important to look at the traceability of funds that are donated and see their use. It could also be interesting to facilitate the link between donors and beneficiaries (Fenech, 2018). However, charities must seize the subject in order to use this new technology for the benefit of their actions and not only in terms of their economic model (Singh, 2018).

It is still difficult to evaluate the extent of the blockchain’s implementation knowing that we are at the very beginning. There is inevitably a risk that is inherent in the implementation of new methods of work. It is important, however, that charities do not miss out on this new era. They must remain actors of changes and use all the opportunities available to them. It should not be forgotten that beyond a new currency exchange channel, the blockchain was first created to offer another system of exchange of values.

@Vincent_Page_

References

1. Sorkin, A. (2018) Demystifying the Blockchain, The New York Times, link

2. Singh, A. (2018) Nothing To Lose (but your chains), Charity Futures, link

3. Bheemaiah, K. (2017) The Blockchain Alternative, Springer Science+Business Media New York

4. Podder, S., Roy, S., Tanguturi, P. and Kumar Sinh, S. (2017) Blockchain For Good — 4 guidelines for transforming Social Innovation Organizations, Accenture Labs, Accenture, link

5. Ten Principles, Blockchain For Good (BC4G), link

6. Lawler, B. (2018) Humanity Through technology, Amazon

7. New Blockchain Project has potential to revolutionize seafood industry (2018) WWF NZ, link

8. BlockChain For Livelihoods From Organic Cambodian Rice (BlocRice) Project, Oxfam in Cambodia, link

9. Land LayBY Blockchain iT, Land LayBY, link

10. Sandner, P. (2017) Solving Challenges in Developing Countries with Blockchain Technology, Frankfurt School Blockchain Center, link

11. Blockchain Technology in Online Voting, Follow My Vote, link

12. Fenech, G. (2018) How the “Blockchain for Good” Promise can Become a Reality, Forbes, link

13. Supply chain, traçabilité & blockchain (2018) Blockchain Partner, link



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