Trust and money, two ancient concepts that spin the economic wheels, are at the dawn of a fundamental change, on a scale that we have never seen before.
Internet has reduced the costs of research, collaborating and exchanging information and virtually transformed the world into a global village. Yet, as Peter Steiner says in his famous cartoon: "On the internet, nobody knows you're a dog." We can not yet trust others online when we make transactions, since the Internet was created to move information, not by value. This is where third parties come into play, such as financial service providers, governments and technology companies.
Although intermediaries do a great job solving the problem of trust, relying on them has become incredibly inefficient, leading to risks, decreased speed, increased costs – and sometimes even fraud. Blockchain can solve this problem by making a network responsible for creating trust, as opposed to centralized intermediaries, and by giving them tools, mass collaboration and smart code to do so. This could reduce our dependence on third parties and significantly improve efficiency.
The original use of the blockchain was to store and monitor cryptocurrency transactions. However, new initiatives are emerging for the benefit of society in general. They include the creation of secure digital identities, the fight against corruption, the cadastre and the coordination of food deliveries.
As such, some of these initiatives can be used to support the United Nations Sustainable Development Goals (SDGs) in ways.
SDGs cover a wide range of social and economic development problems. Although many organizations are targeting the SDGs, achieving this would cost a huge effort, which is not just about funding, but also the strategies that should be used.
Recent estimates released by the World Bank reveal that 1 billion people live on less than $ 1.90 a day. The ability of these people to escape poverty is strongly influenced by several factors and financial inclusion seems to be one. One of the biggest gaps for the success of the SDGs is simply the lack of access to resources and funding. According to a report from the United Nations Development Program, "we need 1.4 trillion dollars a year to reach global goals for the world's poorest."
At this time, billions of individuals are disbanded for a variety of reasons. While a large part of the global population may not have adequate access to financial services, smartphone penetration rates are increasing. In some countries, more people have cell phones than drinking water, electricity and / or toilets.
By exploiting blockchain technology, those without formal identification might have the opportunity to obtain a digital identity directly from their mobile phones. In combination with cheaper blockchain remittance services, low-income individuals and families can be enabled to save and pay more.
Ant Financial, for example a subsidiary of Alibaba, is testing remittances of the tandem blockchain with Standard Chartered and GCash, while Sovrin and uPort are trying to establish and manage digital identities by implementing blockchain technology.
As stated by the United Nations Food and the Agriculture Organization (FAO), "about a third of the world's food for human consumption each year, about 1.3 billion tons, it is lost or lost ". This is a staggering figure. Consumer behavior plays an important role. However, the study also found a lack of coordination between actors in food supply chains as an important contributing factor. Most companies still register their products in closed databases or even on paper.
According to the IBM Food Trust initiative, the use of blockchain technology could create more efficient food supply chains, reduce costs, improve shelf-life management and help reduce food waste.
The World Food Program (WFP), the UN Food Assistance Agency, distributes 3.5 million tonnes of food assistance annually to 90 million people in 80 countries. This is happening through a large and very complex supply chain. WFP is currently studying and exploring how to benefit from blockchain technology for traceability and optimization of its physical resources.
In addition to distributing food, WFP always distributes money or vouchers to those who need it, so that they can buy food for themselves. Especially when food is available on the local market, but too expensive for the poor to buy, money and vouchers offer a solution without distortion of the local economy.
However, this creates some risks of fraud and security and requires expensive intermediaries. Blockchain could play an important role in solving this.
That's why WFP conducted a pilot project called Building Blocks in the Jordanian refugee camp of Azraq, where 10,000 refugees redeem their digital coupons and pay for their food through a blockchain-based system.
The results are positive. It enabled WFP to improve security, increase the privacy of the beneficiaries, reduce the possibility of risks and put every Jordanian dinar spared on transaction fees in the hands of refugees. The next phase of the pilot project aims to provide support to all 500,000 Syrian refugees in Jordan.
The initiatives mentioned above are just some examples of the advantages that the use of blockchain can create. There are more projects out there and possibilities beyond our imagination. Catching them, however, will not happen overnight.
Blockchain technology could pave the way for global progress in implementing SDGs, which requires both macroeconomic and microeconomic approaches. However, one thing to note is that blockchain is not a singular solution.
Collaborative efforts among stakeholders, combined with the use of other technological advances, are crucial for the implementation of the SDGs.
Badreddine Tazrouti is a blockchain and trainer specialist based in the Netherlands. Namira Samir is a researcher at the Bank of Indonesia. All opinions expressed are personal.
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official position of The Jakarta Post.