With cheap and scalable trustless systems, blockchain tech has the ability to drive industry adoption to a new level.
When most people imagine the problems solved and industries disrupted by blockchain technology, the typical use cases come to mind: global currency, store of value and even a way to track goods on an immutable ledger.
A good starting point in understanding what drives the adoption of new technology is to take a deeper look at human psychology and understand what motivates the average person to participate in the cryptocurrency space. As of now, the lion’s share of users who participate in the space do so in the pursuit of riches, not dissimilar to that in the days of the gold rush. Hierarchy of needs creator Abraham Maslow wrote in his book:
“It is as necessary for man to live in beauty rather than ugliness as it is necessary for him to have food for an aching belly or rest for a weary body.”
While this innate drive toward wealth and prosperity is a strong human motivator in itself, there are even stronger human motivations that blockchain can appease. The possible synergies between blockchain technology and philanthropy is best illustrated in The Bottom Billion, a book written by Oxford University professor Paul Collier exploring the reasons why impoverished countries fail to progress despite international aid and support. In the book, Collier argues that there are 60 countries whose combined 1 billion residents experienced little, if any, income growth over the 1980s and 1990s. Although there are several “development traps” explored by Collier that these countries can fall victim to, two in particular can be disrupted using blockchain technology: bad governance and the natural resource trap.
The natural resource trap
As a result of systematic oppression, many of these countries in the bottom billion have governance issues preventing the countries from flourishing. The most glaring governance issue in many of these countries is corruption. A complete lack of transparency of authoritarian governments with little to no democratic values such as freedom of press and speech create a black hole that absorbs all resources coming into the country. In addition to blatant corruption, fiscal policies in some of these countries are poorly formulated by regulators who don’t have the experience or educational background to develop and maintain a sound economic environment.
Blockchain technology is a good solution to both of these issues. By having an immutable ledger that cannot be manipulated by anyone, regardless of power or influence, a country can have a transparent and trustworthy view of their countries’ natural resources and funds. Additionally, using blockchain technology protocols as a store of value could bring economic stability to these types of countries that often face massive inflation, bank runs and strict currency controls. The ability to have a source of value completely separated from their government’s reach and their country’s economic woes would help millions around the world in the fight against poverty.
Tying in with corruption and governance issues is the natural resource trap. Paradoxically, countries that are rich in natural resources are usually worse off than other countries. Natural resources make conflict near-inevitable, as nontransparent government officials often use surpluses for their own benefit. Fortunately, blockchain technology, through the recent explosion in companies exploring the tokenization of assets, provides a workable solution to ensuring that a country’s wealth is being utilized properly for the benefit of everyone, not just a few autocrats.
How does this tie in with philanthropy? The reality is that philanthropic efforts can only reach their true potential in a transparent and trustworthy system. Unfortunately, some pretty ugly stories surrounding forms of aid being misused or stolen have arisen over the past few decades. Often, the opacity of the systems in place prevent philanthropic efforts from ever truly reaching the people in need, with no one ever taking accountability for how the aid was used or where resources went. A great example of how blockchain technology can be used to directly impact philanthropic needs is the work being done by Mercy Corps, a nongovernmental humanitarian aid organization in Uganda.
Blockchain technology’s ability to deliver relatively cheap and scalable trustless systems may be the catalyst that many philanthropic organizations have been waiting for to make bigger strides in their humanitarian efforts. These tools provide a way to ensure that resources end up actually reaching the “bottom billion” who are struggling, and could be a starting point for seeking accountability when resources disappear.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.