Humanitarians are using blockchain - but it's not (yet) as transformative as we thought

Distributed ledger technologies (DLTs), such as blockchain, are the subject of enormous hype in humanitarian circles. Multiple operational agencies and donors have set up pilots or units dedicated to exploring its potential, and most large humanitarian actors have announced a DLT venture or partnership, or at least a position on the technology. Yet evidence of impact is more elusive… What has happened with all of those planned interventions and pilot projects?

To examine, this question, GAHI commissioned ODI’s Humanitarian Policy Group to look into the potential, impact and challenges of existing DLT pilots and programmes in the humanitarian sector. The researchers interviewed practitioners and sifted through project documentation normally kept private. Being able to digest and collate learning from different humanitarian actors strengthened the research, and allowed the agencies providing the material to benefit from the experiences of others without the risks of publicly sharing their progress and challenges.

So what did the HPG report find, and how does GAHI propose to address these challenges? We share a selection of these insights here.

A series of challenges hamper the development and implementation of DLT projects at the project, policy, and system level. The researchers found that organisations were motivated by the potential of DLTs to increase transparency, accountability and efficiency, as well as the attraction of being at the forefront of testing new technologies. Yet the actual benefits from using DLT relate to process improvements and back-end efficiencies, such as reducing paperwork, removing intermediaries and facilitating audits. The full financial advantages remain to be proven, especially at scale. As with other technologies, the challenges of implementation are often linked to internal hurdles which may result in delays and additional costs that can undermine efforts to develop projects and make them sustainable.

What are DLTs?

Distributed ledger technologies (DLTs) are essentially ledgers – collections of accounts of information that are often but not exclusively financial – that are independently and identically replicated (or ‘distributed’) across multiple computing devices or entities, known as ‘nodes’. As a result, each ledger is copied again and again, creating multiple, identical copies of the ledger. Data stored via DLTs are not stored in a centralised way but instead are decentralised across nodes and independently updated.

What is blockchain?

Blockchain is a type of DLT and provides a way to share information and transfer digital assets in a fast, tracked and secure way. Originally created to transfer financial value, blockchain is now viewed as having the potential to be an efficient and secure way to transfer or share any type of information or asset. According to OCHA, it has the potential to transform the humanitarian sector by providing cost savings and traceability of information flows, and by reducing transaction times.

How have DLTs helped humanitarian programmes?

For example, several of the case studies, such as WFP’s Building Blocks project and World Vision International’s Sikka programme, utilise DLTs to administer and distribute digital vouchers for affected populations. These systems save in transaction costs, with clear savings in administration time. In this way, they are built to serve the needs of organisations, with only indirect benefits for affected populations. Although the system is more accountable due to improved data capture, this information is not directly available to communities: indeed, in most cases, recipients of assistance were not necessarily aware that DLTs were in use at all.

Blockchain challenges and next steps

Another challenge is that while public blockchains are open and transparent by nature, many of the humanitarian projects use private chains, which thereby replicate the siloed nature of the humanitarian system. Because they are not open, it is more difficult to build upon or link existing efforts. Although interviewees cited data protection and privacy concerns as critical, most organisations

Humanitarians are using blockchain - but it's not _yet_ as transformative as we thought

Photo credit: Flickr/Kevin Doncaster

seemed unclear about how to comprehensively address these concerns. Instead, projects tended to limit the amount of personal data stored on DLTs, which in turn limits the type and kind of services a DLT system can provide.

Nevertheless, the DLT projects featured in the report represent first steps, and explicitly intend to test and understand the new technology. The START Network test run with Disberse experimented with international bank transfers, while the Sikka pilot has built its system with interoperability and scalability in mind from the beginning. The WFP Building Blocks project has already added one additional agency to its network, welcoming UN Women to the pilot early in 2019.

It is therefore to be expected that, at a system level, these use cases so far do not embody the transformative potential of DLTs to increase security, transparency and trust. Instead, there was a lack of meaningful consent and engagement in project design from end users. This is due to the nature of the projects – most of which were designed to meet organisational needs – and the constraints within which projects are implemented. The risk is that this approach exacerbates power imbalances between aid organisations and those on the receiving end of assistance.

Indeed, most projects end up serving the status quo and reproduced many of the underlying power dynamics, hierarchical structures, funding flows and deployment strategies that already exist in traditional humanitarian programmes. Embracing a DLT vision for the humanitarian future implies designing from the outset a new equilibrium that distributes power more equally.

The first step towards this goal is to open a public and inclusive discussion over how this could and should be done.

In addition to the report’s recommendations, GAHI proposes immediate four next steps for the sector:

  • supporting research to identify opportunities to improve back-end systems through innovations like DLTs
  • testing a sector-wide public feedback tracking ledger, such as for a consolidated cash mechanism, that will move the community further towards the transformative potential of DLTs to increase accountability to affected communities and civil society
  • increasing the sector's awareness of and investment in the Principles for Digital Development, which already have a number of significant humanitarian adopters and help to address some of the policy and system-level challenges
  • taking significant steps forward on data ethics to strategise on ways to tackle privacy and data protection as well as meaningful consent

DLTs offer a significant opportunity to transform the humanitarian system into a more distributed and fair system, with local communities and partners in primary roles and new ways of helping people affected by crises. Yet they will never reach this potential while capacity gaps hamstring the sector and organisations remain reluctant to change standard operating procedures. At present, as a high-profile example of the challenges that face technology innovations in the humanitarian sector, DLTs more strongly illustrate the need for systemic change and investment rather than what they are able to achieve in their direct application.