Blockchain Adoption
Since the creation of the Bitcoin network in 2009, blockchain has seen unparalleled adoption across many sectors of society. Despite this recent growth in the general awareness of distributed ledger technology, most are only aware of a fraction of its capabilities.
Its decentralized nature holds many advantages for countries with less than stable economies. In this article, we will explore these advantages and how they can benefit the populations of developing nations and introduce some real-world cases where blockchain technology has already been utilized to improve the quality of life of their citizens.
Combatting Corruption
Blockchain technology offers transparency that can’t be found within traditional financial systems. Distributed ledger technology prevents alterations to transactional history by distributing digital assets rather than copying or transferring them, creating an immutable or unchanging record of that asset. The use of blockchain and the transparency that comes with it could be especially useful in combatting corruption during public procurement and the process of governments acquiring goods, services, and works. Procurement is particularly susceptible to corruption due to interactions between public officials and businesses often willing to take shortcuts to secure government contracts.
The public procurement process has four stages: planning, bidding, bid evaluation, and implementation and monitoring. There are currently many opportunities for corruption at each step in the process, such as altering bids or changing evaluation criteria.
The threat of corruption would be addressed by using blockchain as any changes to evaluation criteria or proposals would be public, as would the person’s identity who made those changes. Blockchain would remove the “hiding place” for corrupt officials and offer citizens full transparency on how public funds are being spent. The World Economic Forum has previously trialed blockchain technology in corruption-prone government processes. The project created a proof of concept (PoC) software that was tested in a live procurement auction in Colombia back in 2020.
Helping Refugees/ Displaced Persons
The current systems that offer aid to refugees and other displaced people are subject to the significant issues of inefficiency, fraud, and the misallocation of resources. Fees can account for up to 3.5% of an aid transaction, and 30% of developmental funds fail to reach their intended target due to corruption and mismanagement.
Donors can use blockchain to ensure that their donations reach their intended recipients. For example, the UN’s World Food Program has used blockchain technology to pay money directly to merchants via their Building Blocks scheme. No banks are involved, and those in need receive goods directly from merchants.
Since 2017, the WFP has issued cryptographically unique coupons to supermarkets in Jordanian refugee camps. Cashiers use iris scanners to identify beneficiaries and verify payments, with all transactions recorded on Building Block’s ledger. WFP’s primary goal in creating Building Blocks is to speed up aid to remote or disaster-stricken areas where banks aren’t functioning normally or without ATMs. In some cases, local currencies may be scarce, and blockchain allows aid organizations and merchants to exchange funds quickly and electronically.
Hedge Against Inflation
Cryptocurrencies have increased in popularity in nations where the local currency is experiencing hyperinflation. Brazil and South Africa have seen their local currencies experience 218% and 103% devaluations against the USD between 2011 and 2021. According to Gemini’s 2022 Global State of Crypto report, inhabitants of countries that have experienced a more than 50% devaluation of their local currencies were more than five times more likely to say that they plan on buying cryptocurrency within the following year.
The same survey showed that residents of these countries with the worst hyperinflation were more likely to support the view that cryptocurrencies are the future of money. “The majority of respondents in Latin America (59%) and Africa (58%), where many have experienced long-term hyperinflation, say that crypto is the future of money.” The instability of local currencies and the lack of proper banking services in these regions have led to waves of people seeking alternatives to fiat currencies.
Considering how dramatically it could improve millions of lives, it is crucial to focus on bringing solutions to the masses. Instead of waiting for issues to arise, it’s up to the builders to pre-emptively address problems. Aid groups and other charities may not be as familiar with the technology’s potential and will require prompting from developers. Blockchain experts need to be proactive in addressing the issues that they’re aware of and care about. Unfortunately, corruption, wars, and environmental crises are a part of life for many, and solutions that mitigate the consequences of these tragedies should be developed beforehand.
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