How blockchains can bring
about social impact?
In
a recent report, the World Economic Forum defined blockchain technology as a
‘mega-trend’ that will shape society and the economy in the next decade.
Grand
View Research, a market research company, estimates the total global market
size for blockchain technology at $7.74 billion in 2024. According to the Swiss
financial institution UBS, blockchain technology will add as much as $300
billion to $400 billion of annual economic value globally by 2027.
Global
investments in blockchain technology are on the rise as the successful
implementation of use cases demonstrates the disruptive potential of the
technology across various industries. In parallel, international institutions,
governments, incubators and accelerators, as well as private companies and
non-profits, are discovering how the technology can bring about positive social
impact in multiple ways:
First, by creating trusted
permanent records. Consider identity management. According to the World Bank,
over a billion people are not officially recognized by any government today.
This means they cannot enjoy the protection and services afforded to citizens
of a state. Microsoft and Accenture are addressing this issue under the
framework of Identity 2020, a private-public partnership promoted by the United
Nations. These two companies have created a tool that processes biometric data
and creates a permanent and universal identity by registering it on the
blockchain. In other applications, trusted permanent records can positively
impact sectors such as land regulation.
In India, the Governments of Telangana
and Andhra Pradesh have launched pilots aiming to record land ownership in the
blockchain, with the aim of resolving issues related to the acknowledgment of
land rights and land property disputes.
Second, by transforming
the way international aid is distributed. When a government is unable to
provide essential services to its population due to a natural disaster or a
civil war, the international community catalyzes funds to bring relief to the
affected communities.
Despite this noble aim, foreign aid is often subject to
scrutiny by civil society due to numerous cases of financial leakages, high
cost of operations and lack of transparency about how funds are spent.
Blockchain technology provides this much needed transparency and ease of
operations.
In a refugee camp in Jordan, a startup graduated from the World
Food Program accelerator is applying blockchain technology to distribute food
rations to Syrian refugees. In real
time, the technology tracks the cost of the aid program, informs donors on how
their money is spent and guarantees that the rations are distributed to the
right beneficiaries. The same solution is being deployed in another camp in
Pakistan and aims to scale to 100,000 recipients by the end of the year.
The
blockchain technology improves the efficiency of the program and enhances the
reputation of the international aid agency, thanks to the transparency offered
to its donors.
Third, by making financial
inclusion truly universal. Microfinance has proved to be a fantastic tool to
bring large sections of the unbanked population into the realm of financial
services. However, high rates of interest and operation costs associated with
the disbursement and repayment of the loans, along with cumbersome procedures
to assess identity and credit-risk, have still left more than two billion
people unbanked according to World Bank figures. Blockchain technology can
support financial inclusion by using verified individual data to assess
identity and creditworthiness, hence making opening and operating a bank
account fast, easy and cost-effective.
Additionally, blockchain technology can
unleash new business models based on micro-payments due to low transaction costs
and reduced settlement time, thus facilitating the creation of new products and
services in segments such as insurance, loans, savings and investments.
In
India, blockchains are attracting the interest of both government and the
private sector. In the public sector, Niti Aayog has recently announced that it
is building IndiaChain, a blockchain network infrastructure that would
complement IndiaStack and could even use Aadhaar. The announcement is extremely
welcome as it puts the country on a similar path as that of the most advanced
nations. Estonia, for example, has built its competitive advantage on its
blockchain infrastructure and the public services offered through it.
In
the private sector, Indian and international banks have come together under the
BankChain Consortium to explore, build and implement blockchain-based
solutions. The consortium is focusing on developing use cases for KYC
identification, contract management, loan syndication and peer-to-peer
payments, among others.
The
Indian market presents unique opportunities to identify globally scalable
solutions, such as in the remittances sector. India is the largest recipient of
personal remittances in the world, and at YES BANK, we are looking at
blockchain technology to make international transfers fast, secure and
affordable for all. To achieve this goal, we are partnering with Ripple, a
US-based company, to realize the enhanced efficiencies of blockchain for
real-time cross-border payments.
Blockchains
will bring about a massive transformation in traditional business models and
generate new opportunities to create social impact.
Through progressive
government initiatives such as IndiaChain and the ethos of D.I.C.E. (Design,
Innovation and Creativity-led Entrepreneurship), India has the opportunity to
leverage its unique characteristics as a large, fast-growing, emerging economy,
its immense IT talent, and the potential of the blockchain technology to
achieve a more inclusive and sustainable economic growth for the coming decade.
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