I recently met with colleagues who are keen to use blockchain for global development. As you might guess, our conversation started with key question: Is blockchain the right technical solution for us?

Simply put, blockchain is a secured, shared and distributed ledger. Blockchain has been praised to become next disruptive technology which can change the way we trade and interact. Key attributes including public variability, transparency, privacy and integrity are what makes blockchain appealing than centrally managed database; despite its downsides (higher energy consumption, lower efficiency, and perhaps higher cost).

Permissionless blockchains like bitcoin allow anyone to write and read the blockchain/database; no central entity manages the membership. In contrast, permissioned blockchains only allow a limited number of participants to have access (write and read) to the database.

Donors, non-profit organisations and tech companies are exploring (designing, testing and researching) blockchain technology for development. BanQu use blockchain to create digital identity for refugees. The Start Network and Disberse are experimenting blockchain for transferring grants. UNICEF Innovation will fund blockchain startups. More use cases of blockchain for development will likely to emerge as its popularity (or hype?) increases.

Do we need blockchain in the first place? 

Blockchain is “a machine for building trust“, it can provide high degree of accountability. Using blockchain, in principle, “only makes sense when multiple mutually mistrusting entities want to interact and change the state of a system”. And, when an online middleman – in blockchain it usually called as a Trusted Third Party (TTP) – is not available to facilitate the interaction.

Blockchain is also a form of database. Therefore, blockchain is only suitable and/or can add much value for project that requires a database.

The flow chart below helps to determine whether blockchain is the appropriate for our project. Writers correspond to entities or consensus participants with write access to the database. If a TTP is available but usually offline, it can act as a certificate authority in a permissioned blockchain. If the writers are known and mutually trust each other, a centrally managed database with shared write access is best suited.

Flow chart: Do we need blockchains? (source: Wüst and Gervais, 20172)

What are other factors to consider?

When implementing technology intervention, we need to look at enabling environment including factors that might accelerate or hinder project implementation. Some questions worth considering are:

• What are the skills and capacities of project implementer to initiate and maintain blockchain technology (in the long run)?
• What and how government policies and regulations can impact blockchain adoption?
• What ethical consideration of testing blockchain to vulnerable citizens?
• What are the potential outputs, outcomes and development impacts – both positive and negative – of blockchain technology? Who would get the most benefit from blockchain application?
• If blockchain technology eliminates or reduces the roles of TTP, what would be the implications for key stakeholders (end-users, organisations, government and private companies)?
• How blockchain application will not exacerbate the digital divide?
• How blockchain technology can solve challenges in standard and interoperability?

Where to look for more information?

In the UK, the newly established Charities Working Group on Distributed Ledger Technology meet regularly, once a month, to identify practical steps of blockchain application in the sector. The upcoming Bond Annual Conference 2018 and MERL Tech London 2018 will have sessions on how blockchain might have impacts on development.

In addition, reports from GSMA, Open Data Institute and Institute Development Studies provide guidance for non-technical audience who seek to understand blockchain in policy context.

Blockchain is a new and complex technology. Its application provides both opportunities and challenges. Some organisations might want to seize the momentum by developing proof of concept. Others might wait until the technology has become more mature. Regardless the decision, we need to avoid the hype, and look carefully of its suitability (what pros and cons of blockchain application).

Reference 

Wüst, K. and Gervais, A., 2017. Do you need a Blockchain?. IACR Cryptology ePrint Archive, 2017, p.375

Featured image credit: Descryptive.com, CC BY 2.0