The Truth Machine: The Blockchain and the Future of Everything. Paul Vigna
authority. This means two things: nobody can alter the data to suit their own ends, and everybody has greater control over their own data. You can see how this could be an empowering idea for millions of Syrians living a scorched-earth existence.
Just as the blockchain-distributed ledger is used to assure bitcoin users that others aren’t “double-spending” their currency holdings—in other words, to prevent what would otherwise be rampant digital counterfeiting—the Azraq blockchain pilot ensures that people aren’t double-spending their food entitlements. That’s a pretty important requirement in refugee camps, where supplies are limited and where organized crime outfits have been known to steal and hoard food for profit. And it means that refugees like Najah will always be able to prove that their accounts are legitimate. That would end the periodic and disturbing disruption to provisions that many have experienced under the cash-voucher system. In that system, any inconsistency tends to flag a concern to administrators, who often feel compelled to cut off the person’s access to food until it is resolved.
Under this new pilot, all that’s needed to institute a payment with a food merchant is a scan of a refugee’s iris. In effect, the eye becomes a kind of digital wallet, obviating the need for cash, vouchers, debit cards, or smartphones, which reduces the danger of theft. (You may have some privacy concerns related to that iris scan—we’ll get to that below.) For the WFP, making these transfers digital results in millions of dollars in saved fees as they cut out middlemen such as money transmitters and the bankers that formerly processed the overall payments system.
So whenever a refugee spends some level of his or her digital “cash” to buy flour, that transaction automatically registers on a transparent ledger that can’t be tampered with. That ever-present, ever-updating, extremely reliable record-keeping model means WFP administrators can have full visibility of the flow of transactions at any time, even though the WFP has no centralized record of its own. The organization can support a camp-wide payment system without having to take on the centralized role of a bank or payment processor.
By contrast, the UNHCR’s identity program, which is integrated into the WFP’s blockchain solution, is maintained as a centralized database. That has raised some concerns among critics. Such systems are susceptible to hacking because, by accumulating large amounts of data in one big “honeypot,” they offer what’s known as a single attack vector. In this case, such risks could in theory put this particularly vulnerable group of human beings at risk—it’s not hard to imagine the worst if a database of biometric identifiers ever fell into the hands of an ethnic cleansing–minded institution like ISIS. People in the blockchain space, who are often fierce advocates of privacy, are among the most vocal about these concerns, and some are trying to figure out how to use the same technology to decentralize control over self-identifying information so that people aren’t vulnerable to break-ins of these big data honeypots. But until such “self-sovereign” solutions are available, the WFP and the UNHCR have made a determination that the risks are for now outweighed by the benefits of a seamless, cashless system.
According to WFP spokesman Alex Sloan, the pilot has already shown success: it has saved money and created a much more efficient way of dealing with inconsistencies in refugees’ accounts. It’s so successful, in fact, that the agency is looking to extend the service to a larger population of 100,000 refugees. In the not too distant future, Sloan says, 20 million food program beneficiaries who receive disbursements in cash could be eligible for the blockchain program. With the world facing the biggest refugee crisis in history, a result of greed, of the brutal pursuit of self-serving power, and of failed Western policies to contain it, we owe it to these people to bring some security back into their lives—to provide them with a platform of trust upon which to rebuild. Perhaps blockchain technology offers the best chance of delivering that.
The World Food Program’s Azraq experiment is just one example of how international agencies are exploring blockchain solutions to the problems of the world’s neediest. In early 2017, a group of blockchain enthusiasts at the UN’s New York headquarters launched a Web site calling on other UN employees to work with them. The group rapidly grew to eighty-five UN staffers worldwide, and they are now working on multiple pilots addressing blockchain for development, in partnership with governments such as Norway’s. At the World Bank, a new blockchain lab was created with fresh funding in June 2017 to explore how the technology could tackle poverty alleviation through incorruptible property registries and secure digital identities. The Inter-American Development, in concert with MIT Media Lab’s Digital Currency Initiative, is looking at how poor Latin American farmers might be able to obtain credit on the basis of reliable, blockchain-proven records from commodity warehouses. Non-profit international organizations such as the World Economic Forum and the Rockefeller Foundation are also diving into this area.
What do these decades-old international organizations see in an arcane digital technology built by the crypto-libertarians and Cypherpunks who gave us Bitcoin? It’s the prospect that this decentralized computing system could resolve the issue of social capital deficits that we discussed in the context of the Azraq refugee camp. By creating a common record of a community’s transactions and activities that no single person or intermediating institution has the power to change, the UN’s blockchain provides a foundation for people to trust that they can securely interact and exchange value with each other. It’s a new, more powerful solution to the age-old problem of human mistrust, which means it could help societies build social capital. That’s an especially appealing idea for many underdeveloped countries as it would enable their economies to function more like those of developed countries—low-income homeowners could get mortgages, for example; street vendors could get insurance. It could give billions of people their first opening into the economic opportunities that the rest of us take for granted.
But it’s not just in developing countries, or in the realm of non-profit charity and development work, that blockchain technology shows potential. Far from it. In the developed world, too, and within the boardrooms of plenty of Fortune 500 for-profit companies, there is a scramble to unleash what many believe could be a major force for economic growth. That’s because the blockchain is seen as capable of supplanting our outdated, centralized model of trust management, which goes to the heart of how societies and economies function.
Until now, we have relied on institutions such as banks, government registries, and countless other intermediaries to sit in the middle of our economic exchanges with each other. These “trusted third parties” maintain records on our behalf so that the rest of us have enough trust in the system to interact, exchange items of value, and, hopefully, build vibrant, functioning societies. The problem is that these fee-charging institutions, which act as gatekeepers, dictating who can and cannot engage in commercial interactions, add cost and friction to our economic activities. They also have a habit of failing us—we can think of the crisis of 2008 as a case of banks breaching their duty to maintain honest records—or of exploiting their toll-collecting power to price gouge and demand exorbitant rents. What’s more, there are plenty of situations in which it’s simply not economically viable for these costly, inefficient institutions to resolve whatever particular trust deficit is preventing people from doing business with each other. So, if we bypass those intermediaries, we will not only save money but also open up previously impossible business models.
The Internet put us on this disintermediating path some time ago, well before the blockchain came along. But it’s worth noting that at the heart of each new Internet application that cuts out some incumbent middleman there has typically been a technology that helps humans deal with their perennial mistrust issues. Who would have thought a decade ago that people would feel comfortable riding in the car of some stranger they’d just discovered on their phones? Well, Uber and Lyft got us over that trust barrier by incorporating a reputation scoring system for both drivers and passengers, one that was only made possible because of the expansion of social networks and communication. Their model showed that if we can resolve our trust issues with technology and give people confidence to transact, those people are willing and able to go into direct exchanges with complete strangers. These ideas are setting us on a path to a peer-to-peer economy.
What blockchain technology says is, “Why stop at Uber?” Why do we