Blockchain Technology and Human Development revisited

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I was invited to Canada to discuss my blockchain technology paper. Here are my opening remarks at the panel organized by Government Affairs and IDRC.

Speaking about a seemingly complex subject such as blockchains poses a challenge not only for me but also for you, the audience. More so when the time is scarce. It is probably not the same challenge, however. So perhaps the best way to start this conversation is to take a step back and start with technological innovation. Technological innovation has been around longer than you and me, for sure. But what has changed nowadays is the frequency in which innovation is happening, especially since the dawn of digital computing and electronics.

The Internet is no doubt the best example here. Initially conceived with government support and public funding, the Internet is now all over the place. Yet, only 50% of the world’s population is connected to the network of networks. Nevertheless, the Internet has become that apparently infinite space where a wide variety of applications now reside; the Web, e-commerce, e-government, e-all essentially, in the beginning. More recently, social media and social networks, mobile technologies, reincarnations of both artificial intelligence and machine learning and, in 2009, blockchain technology.

In a nutshell, blockchain technology is the result of the smart combination and integration of already existing technologies under one single platform. Such technologies include peer-to-peer (or distributed) networks, cryptography and consensus algorithms. It is thus a bit like the iPhone, the first ever smartphone created. However, unlike a smartphone, one cannot grab blockchains or use them regularly – at least not yet. Regardless, when it comes to innovation blockchains are way up there, almost at the top. But again, unlike smartphones, speaking about blockchains usually means talking about the technologies behind it, and not about its features.

The reason for this is perhaps not that complex. Blockchains are still an emerging technology and, as such, we have yet to see the development of a full range of relevant applications. Look back at the Internet again. Before the Web was created, email was the so-called killer app. In the case of blockchains, Bitcoin was its first killer-app. It will not stop there, and I expect other applications that have little to no relation to cryptocurrencies to develop and lead the race. In this context, blockchains are the innovation space where a wide variety of new applications could eventually live and thrive.

Does this mean blockchains will replace the Internet? Not at all. On the contrary, blockchains need the Internet to function. But that is another long story we cannot discuss here.

The IDRC paper takes first and foremost an innovation perspective. It argues that BCT is indeed quite innovative. It then asks a fundamental question: How can blockchains be deployed and harnessed to enhance human development?

Indeed, this is not the first time we ask such a question. After all, the so-called ICT for Development field, which emerged in the 1980s and which IDRC supported back then, has been around for almost 30 years. The impact of the Internet on human development has been analyzed and distilled by many researchers and practitioners. And while there is no agreement on its actual impact, we already have a good body of knowledge that can help us assess the effect on blockchains in development. This is why the paper uses an ICT for Development analytical framework to trace the actual and potential social impact of blockchains. Note that such framework is not defined by technology alone. It also incorporates issues related to capacity building, policies and institutional development, areas that are fundamental to the development and innovation work that we do.

In this light, the paper has four goals. The first one is the daunting challenge of explaining to development practitioners and policymakers, its core audience, blockchain technology. Here, we explore the main traits and limitations of the technology. Keep in mind that blockchain innovation is very agile and dynamic and some challenges discussed in the paper are already being addressed by the community.

With this in hand, the paper then explores the actual use of the technology in development contexts introducing in the process the distinction between public and private goods. While most development programmes focus on the provision of public goods and services, private goods such as banking, financial services, and access to food are also part of the equation given glaring disparities. In the blockchain space, the idea of use cases is pervasive. These are merely the areas in which the technology could be used in theory. And the list is immense. Finding on the ground examples was a bit more challenging, especially during the first semester of last year when I wrote and finished the paper. Also, finding detailed project information and documentation about these initiatives was also complex, as complicated as blockchain itself, if not more.

Using the ICT for Development framework discussed earlier, the third goal is to take stock of the blockchain pilots and programmes compiled and present opportunities and challenges. One interesting dimension of blockchains is its governance component and the use of governance concepts such as trust, privacy, consensus, integrity, transparency, and accountability, among others. In most cases, the blockchain definition of these concepts is not quite the same as that we development practitioners use. So we ready to ask the relevant questions when they are mentioned in the blockchain arena.

The fourth and final goal is the development of a series of recommendations grouped under three categories. The first one focus on further research in a field that is it still merging. Second, the paper provides suggestions to implement pilots or prototypes in developing countries. And third, the paper recommends ways to build new partnerships and foster networking among blockchain practitioners working in human development.

Let me finish by making a few points of where we are today regarding blockchain technology.

First, it is critical that we can distinguish between Bitcoin and blockchains. Bitcoin is one of the applications that run on the blockchain space as email was the first Internet application massively adopted. But it does not have a monopoly. Other applications are emerging. Perhaps the best is yet to come.

Second, blockchains are still taking baby steps. It is still early days so expect further innovation. As this happens in the next couple of years the seeming complexity of blockchain will become irrelevant as what in the end matters is its application to development contexts.

Third, many blockchain initiatives are being deployed in developing countries. This applies to both private goods such as remittances and access to banking services but also to public ones such as birth registration, land titles and provisioning of some legal ID to marginalized populations. The critical issue here is their medium and long-term overall sustainability.

Fourth, developing countries will face the same challenges they did with previous technologies. Adoption and adaption of the new technologies will not be linear or straightforward, and impact on crucial development gaps might be uneven. They will also need to develop policies and institutional capacities to harness blockchains if they want to use the technology to tackle the SDGs and other development priorities. The complexity of blockchains might end adding additional hurdles.

And fifth, while seemingly complicated and technical, blockchain technology is here to stay. In five years or so, it might not look the look the same as today. It will probably be a very different animal then, albeit less wild than the one we see today. The same happened to the Internet. In 25 years or so of existence is has changed dramatically in socio-economic and political terms. The technology behind it, however, has not changed much since. It is still based on a now relatively old protocol that continues to deliver today.

All in all, to enhance human development blockchains should cease to be a solution in search of problems. Instead, blockchain practitioners should explicitly focus on existing and well-known development issues and gaps. And for that to happen, they will need to work closely together with development practitioners.