Deep dive: blockchain’s potential impact in developing countries

8 May, 2019

While 2019 continues to be an explosive year for blockchain development around the world, determining which industries and community groups most benefit from current blockchain technology is still a highly debated and evolving topic. Blockchain is already poised to improve finance, government, and healthcare in developed nations, but it’s also important to examine what it can do for developing countries.

If one of the key issues with blockchain adoption is earning the trust that the technology can do what it claims, another is convincing governments in the developing world that blockchain can significantly decrease the costs and length of time involved in establishing industry infrastructure.

According to David Crosbie, a University of Pennsylvania lecturer, blockchain technology has the potential to be more convenient while cheaply automating work to levels we take for granted in more technologically advanced countries. For this reason, he believes blockchain will have a greater impact on developing countries than anywhere else in the world. And because blockchain is so secure, he points out, it could easily establish trust between users in developing parts of the world where the public sector doesn’t have as strong a history of gaining citizens’ trust.

Leapfrog effect in developing nations

You might think of developing areas of the world as emerging markets, which is to say there isn’t currently as much modern infrastructure but there is still widespread demand for various industrial products and services. And there’s a silver lining: with this lack of technological infrastructure, developing countries can leapfrog into the most advanced industry methods without having to endure the transitional costs of phasing out their old systems.

In the Harvard Business Review, Vinay Gupta and Rob Knight point out that Kenya and South Africa are already showing this principle at play, with each country’s planned cell phone coverage skyrocketing to above 80 percent without first installing large underground phone cables from another time. Both countries have provided internet access to the majority of their citizens via cellular networks and phones instead of personal computers, and South Africa’s telecoms minister has stated that the country aims to decrease the high cost of communications technology.

Making it happen

Getting the right technology and education to developing countries isn’t always easy, so alternate routes must be found. Many people in developing countries don’t have access to WiFi or even personal computers, and where they do, internet connection stability isn’t guaranteed.

Since most of the citizens in developing countries who do use computer technology have cell phones instead of PCs, David Crosbie recommends sticking to blockchain development for devices on 3G networks, the most widely available speed for cell phone owners in these areas. This comes with its own problems, however, the most significant probably being that cell phones don’t always have adequate storage space for more advanced needs. But as technology progresses, so too does device storage capacity and alternative ways to access blockchain services.

Blockchain technology really can meet the needs of people in the developing world. For instance, India’s Aadhaar biometric identification system has over one billion users, but it can only go so far in terms of security since it is vulnerable to hacking. The decentralized nature of blockchain makes the process of verifying someone’s identity much more reliable since the blockchain can store all of a person’s identity information without needing to access a server farm with comparably slower processing times and security vulnerabilities. (In fact, identity verification is a core component of our work at Veritoken, including initiatives to reach unbanked populations in developing nations.)

Blockchain for governments

Countries around the world are quickly learning that blockchain technology can make many kinds of government services more efficient. As a current leader in blockchain development, Dubai has positioned itself as a technology center specializing in making government operations more efficient and less costly. Part of their goal is to transfer every government document to the blockchain by 2020. These efforts constitute a model that other areas would do well to emulate for the benefit of citizens.

Peruvian economist Hernando de Soto estimates that about five billion people around the world don’t have access to adequate public recordkeeping. This prevents the average citizen from maintaining reliable information about real estate ownership, income, asset management, and even birth certificates. The lack of documentation means they can’t obtain insurance, for example, and may be in a worse bargaining position for employment compared to someone with more reliable records.

Hernando de Soto has been an anti-poverty activist since long before blockchain development began. He has extensive experience transferring citizens from “informal economies”—which don’t include all, or often even most, of their official information—into paperwork systems, but this work has been incredibly time consuming and difficult. The process involves going door to door and sifting through paper records that are often inaccurate or disintegrating. Fortunately, blockchain technology presents a viable solution.

Why blockchain specifically?

The nature of blockchain—as we described in a previous blog post—involves a constant updating of the decentralized public transaction ledger, where all information is recorded in a time-stamped fashion. Every transaction adds to the record, and the history can never be deleted. If someone tries to tamper with the blockchain ledger, all time-stamped entries after the tampered one will be distorted, showing the fraud. This shows the blockchain’s immutability: a record that can’t be deleted, doesn’t lose integrity over time, and whose data remains completely open and uncontrolled by any one central authority. These are ideal features for developing areas of the world where trust may be in short supply, governments may be inefficient or corrupt, and where current recordkeeping systems are lacking.

Blockchain is still an emerging technology that will have to constantly prove itself to both public and private entities. But it’s already helped so many. For instance, the United Nations World Food Program is using blockchain to build records for refugees fleeing to Jordan so they can buy food for their families at local grocery stores without penalty. If blockchain technology scales this well for underserved populations, businesses, and governments, it promises to make millions—if not billions—of people’s lives better.




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