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Potential Impact of Blockchain Technology in Developing Countries
The implementation of development agendas at are levels is in itself a challenge for developing countries where state capacity blockchains incipient. The creation and diffusion of innovation in developing countries: a systematic literature review. De Santis, R. What are we waiting for? Due its economies nature, recording new assets on a blockchain can be quite slow, with transaction times good in hours developing even days rather than the seconds that for typical of e-commerce.
De Filippi, P. Two different sets of traits emerge. However, good though blockchain is a viable option developing many businesses blockchains groups, even the United Nationsit is by no means a blanket solution, especially if efficient processes are for in place. Moreover, most of these papers take a sectoral approach focusing on topics such as electoral processes, healthcare, economies education, to menton a few. The NEO blockchain was founded inare it came into existing in with the rebranding of Antshares. The Kenya blockchain taskforce concludes its report.
Blockchains in Developing Economies: The Pre-Banking Foundations
While many believe Bitcoin is becoming less and less of a network for small transactions, Ripple still very much aims to be the cryptocurrency of choice for regular day-to-day payments. For this reason, banks such as Standard Chartered and Santander are utilising Ripple technology for payments and finance use cases. The major differences between Bitcoin and Ripple revolve around control of the network and the supply of coins in circulation. In terms of coin supply, there will only ever be 21 million Bitcoins, while there will be billion XRP tokens in circulation on the Ripple network eventually.
In terms of control, Bitcoin is highly decentralised, but the Ripple blockchain is controlled by a single technology firm of the same name. As a result, cryptocurrency purists do not see Ripple as a true cryptocurrency. EOS uses a Delegated Proof-of-Stake mechanism in its protocol, which means certain members of the network are responsible for agreeing on consensus.
This approach prioritises speed over decentralisation, with a block time of around three seconds vs sections on Ethereum. A wide range of applications exists on the EOS blockchain, from gaming and gambling to knowledge services such as Everipedia. While many now see Bitcoin as more of a store of value asset than as a medium of exchange, Ripple and Stellar are still battling it out as the payments option.
Stellar was created by one of the co-founders of Ripple, Jed McCaleb. However, while Ripple has chosen to partner with major financial institutions, Stellar and its cryptocurrency Lumens is targeted at enabling micro-payments in the developing world and for the unbanked.
Like Ripple, Stellar provides almost free and instant transactions; however, it boasts smart contract functionality, which Ripple does not.
It was launched in and is currently aimed at the digital media and entertainment industries. Instead, Seeders operate in the network to store and distribute content and then be rewarded for doing so.
The blockchain has several use cases including payment splitting automatically sharing revenue among content creators to digital content crowdfunding raising funds for your next content production. You may have heard of Hyperledger as the go-to blockchain technology for enterprise organisations. That is certainly the way that the people behind the project would like it to be seen.
However, when considering it as an option for your organisation, a number of features and their benefits should be considered. The key difference between Hyperledger and the other blockchains on this list is the fact that the others are public and permissionless, making them available for anyone to join. It is often used to decentralise supply chains , as this example of seafood traceability shows. The NEO blockchain was founded in , but it came into existing in with the rebranding of Antshares.
While NEO is like other smart contract platforms in that it uses a Proof of Stake mechanism, it styles itself as being much easier to use for smart contract development. That is because it supports a variety of popular programming languages like JavaScript, Java, Python and Go, rather than only allowing smart contracts to be built in Solidity. NEO has a clear focus on China, which, along with the fact that it is still a very centralised network, causes some enterprises to be wary of it.
NEO recently announced a partnership with fellow blockchain Ontology , which will see the projects build out protocols and components to support a range of digital assets, as well as a decentralised identity framework.
The final smart contract platform on the list is one that was created to combine the smart contract functionality of Ethereum with the security of Bitcoin. Qtum has also implemented a Decentralised Governance Protocol DGP that allows owners of the QTUM token to vote on and make changes to some blockchain parameters, without the need to implement a hard fork.
One unique use case of Qtum, compared to other blockchains, is that the network allows users to have third parties pay for transaction fees. This could be useful for identity systems where the user who needs to identify himself does not want to pay for the transaction. This means that an organisation can now absorb the costs of the transaction without being the owner of that transaction. One final point that all enterprise organisations should consider when choosing a blockchain is how they might go about using it to decentralise their data.
It is not efficient or cost-effective to save large amounts of data on a blockchain, mainly because of the way the data is linked in this format. Instead, organisations should weigh up how they can use decentralised storage solution, such as Storj, Filecoin or IPFS, in tandem with their chosen blockchain to decentralise their data and improve their processes. Decentralised storage solutions are only one component of the ever-growing decentralised ecosystem. Blockchain offers tremendous opportunities for enterprise organisations.
Many different types of blockchains can be used for different use cases. Selecting the right blockchain for your organisation can be challenging, but hopefully, this overview helps a little bit. If I managed to retain your attention to this point, please leave subscribe to my weekly newsletter to receive more of this content:.
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Read More. Here, any node or network user can validate such a block and agree to append it to the existing chain 6. In sum, a blockchain is a programmable digital layer operating within a distributed network, requiring cryptographic tools for access and transaction management, and using consensus algorithms for adding or appending new blocks of transactions to the ledger.
A vast literature on the key traits of blockchain technology already exists. This section presents key blockchain traits based on the contribution that each of its three underlying technologies furnishes. Two different sets of traits emerge. One stems from the unique contribution of each of the base technologies. The other is the result of the integration and interaction among them. Traits in the matrix diagonal represent standalone contributions.
All other boxes are the result of the integration of the three technologies. Resilience : In a distributed network, multiple independent copies of the blockchain can co-exist. There is thus no central point of failure. Pseudonymity : Cryptographic tools enable users to interact with others without having to reveal their real identities or providing any personal data. A relatively high degree of privacy thus exists.
The same however does not apply to transactions that in principle can be viewed by anyone in the network. Immutability : Blocks of transactions in the chain are time-stamped and mathematically linked in sequential order. Changing one block thus requires changing all other blocks. Incentives : Processing transactions and adding new blocks to the chain brings financial benefits to nodes involved miners. Transaction fees and cryptocurrency rewards are the most common forms of income. Traits stemming from the integration of the technologies include:.
Consensus : Transaction processing and block addition are validated by network nodes in all cases. This is algorithmic consensus that should not be confused with human-based consensus. Transparency : User interactions and the resulting data can be viewed by any network member. Confidential information or data has no place here. Security : Resilience, immutability, and consensus substantially increase the level of internal blockchain security.
While still possible, hacking and network attacks are still possible. The standard way of classifying blockchains relies on the distinction between private and public, alongside permission levels.
In this perspective, three different blockchain types emerge public, private, and consortium blockchains e. While relevant for the private sector, such differentiation might not be as effective from a public sector perspective.
The distinction between private and consortium blockchains hinges in part on how many entities control access to the application layer. Governments can also have multiple institutions involved in the deployment of one blockchain platform—as could be the case for government interoperability, is one of the main staples of digital government.
Calling such an arrangement a consortium does not add any value from the public sector perspective. The best way to avoid such potential pitfalls is to go back to the three core blockchain technologies described in section Revisiting Blockchain, Again and suggest an alternative typology that caters to the specific idiosyncrasies of the public sector.
Users either find the door open and walk right in or must first ring the doorbell to be able to enter. Cryptographic tools and consensus algorithms operate at the application layer. Nodes or users accessing such layers are first authenticated and then furnished an authorization to perform specific actions—such as creating a smart contract, mining the blockchain network or developing a Dapp, for example. Table 2 depicts the matrix of options by separating the different layers.
Note that blockchains require all users to be authenticated, regardless of access type. The difference between open and closed network access depends on how users are authenticated. In the case of closed access, a third-party one or more entities issues the authentication credentials using cryptographic tools.
Note that open access authentication does not fulfill know-your-customer KYC or anti-money-laundering AML regulations and thus might be less attractive to both governments and businesses bound by them 7.
Once authenticated, nodes will be able to access the application layer. In the case of classic blockchain networks such as Bitcoin and Ethereum, authentication alone grants immediate access to the application layer. Authorization does not exist as a separate instance and thus, no central authority is required. In this case, access to the application layer is fully decentralized. But open access blockchain platforms can also limit access to such layer.
For closed access networks, both authentication and authorization are managed by a central outfit—one single entity private, in the traditional scheme or many working together consortium. However, it is also possible that a closed blockchain platform provides all authenticated nodes full access to the application layer.
This might be relevant to public sector initiatives where all actors within a single ministry or in multiple ministries or public entities work together in a cross-sectoral initiative. A GovChain is similar to a government dedicated network with secure links to external clients.
A GovChain runs on such network but add functionality at the application layer. Finally, this typology highlights the similarities between hybrid open and closed centralized blockchains. In both, the levels of authorization to the application layer are provided by a central outfit. However, since hybrid open networks do not control authentication, all nodes and users still have read access to the full blockchain.
This is not the case in closed blockchain networks. The latter can also introduce more sophisticated access control schemes to assign different roles of nodes in the application layer. Undoubtedly, smart contracts are one of the most touted blockchain features. While the idea itself dates from the end of last century Szabo, , blockchains created the platform for the actual implementation of the idea.
For example, Ethereum provides the software Solidity 8 and platform Ethereum Virtual Machine 9 to program and execute contracts In this fashion, transactions envisaged on a given agreement can be triggered at a pre-established date or by action taken by one of the parties involved.
Contractual transactions are automatically executed and, since the parties have direct access to digital currency, payments occur smoothly. Smart contracts also come in different flavors OSTechNix, The first one mirrors traditional legal contracts which can now be executed on a blockchain platform.
Not limited to financial agreements Murphy, , these type of contracts have attracted most of the attention of both practitioners and academics e. Here, a given community agrees to specific governance arrangements which are then coded into a binding smart contract. DAOs suffered a devastating setback thanks to the well-known hack Falkon, but are still being explored by practitioners and academics e.
Less well-known than the others, ALCs handle multiple smart contracts. Here, the line between contracts and regular computing programming starts to blur. ALCs resemble well-known software gateways that allow communication across different platforms at the application layer.
As with most nascent technologies, smart contracts have limitations. On the technology side, they are prone to coding errors and bugs as the DAO hack shows. This is exacerbated by the fact that programmers must translate legal contracts into code.
Complex contracts might thus yield additional coding errors and bugs. As all nodes have to run and validate the code in smart contracts, code size is limited and thus running complex applications is not possible O'Connell, Again, complex contracts might not be suitable for blockchain execution. While smart contracts reduce transaction costs, which are now executed automatically, costs related to contract breaches, dispute resolution, and redress are much higher Szczerbowski, Smart contracts are also immutable and act as autonomous agents.
In this light, researchers recommend using a hybrid approach where both regular and smart contracts act in sync Levi and Lipton, The question on the legality of the first type of contracts has received plenty of attention Frankenreiter, ; Waltl et al.
More generally, it seems that laws and regulations will need to be changed or updated. In developing countries with weak state capacity and incipient rule of law institutions, this might become a major challenge.
Since its inception, dynamic innovation, backed by top human talent with access to substantial financial resources, has been part of the blockchain ecosystem. The community has thus been able not only to tackle the initial limitations of the technology but also to enhance its core functionality. As seen above, blockchains come in many different formats and more are popping up by the day.
This is a critical consideration for both academics and policymakers. Blockchain technology is not a monolith. On the contrary, blockchains are a moving target. Here, the distinction between blockchains and distributed ledger technologies DLTs is important Dexter, Blockchains are a subset of DLTs. A blockchain is a DLT that mathematically links blocks of data in sequential fashion using cryptographic tools. A DLT is a digital ledger that runs on a distributed network and does not require the use of consensus algorithms for its full operation Just like its digital technology predecessors such as the Internet, both for-profit and non-profit innovators and practitioners continuously showcase the relevance of the new technology to tackle socio-economic, political, and environmental issues.
Here, different layers and different labels appear in the scene. The first layer, which in turn is the most generic, links blockchains to existing and emerging issues without necessarily referencing development or the SDGs—albeit the latter being universal. Labels used to describe this link include blockchain for social good Podder and Venkat, ; BreakerMag, , blockchain for social impact Fernando, , and blockchain for social change Verlhust and Young, , the latter being a research project.
Comprised of close to 50 entities, BSIC mentions the SDGs but has set its own agenda 12 For the most part, blockchain startups working under these labels take the initiative on their own and venture into the field to experiment with the nascent technology.
Pace Kewell 13 , a key issue with this set of initiatives is the lack of a rigorous definition of the concepts being put forward. Social good might have different meanings for different communities, more so if the work is undertaken on a global scale. Furthermore, social change and social impact can also be negative. That is, on the ground projects can also generate change and impact by exacerbating existing gaps despite the best efforts of those doing the implementation.
Indicators and metrics to assess and measure change are missing in most of these efforts. The second layer includes entities directly supporting the achievement of the SDGs.
Three groups comprise this layer. The first works on a global scale and have advocacy and awareness-raising role. The Blockchain Commission, a partnership of three non-profit entities launched at the United Nations in , is a typical example. A second group includes UN agencies and development organizations that work in developing countries.
These entities work on the ground and disburse their own resources as grants to finance projects. Note that these grants go to local innovators and entrepreneurs in developing and not to governments.
Most entities working in the SDG realm select the goals and targets that reflect their own internal mandates. Reach and scale also play a role as covering 18 goals and over targets does require considerable human and financial resources that most do not have.
Last but not least are the organizations working in the humanitarian space. This group also includes UN agencies as well as reputed organizations that have carried out this line of work for many years. Perhaps surprisingly, one of the most well-known examples of apparent blockchain success occurred in this space thanks to WFP refugee program in Jordan Juskalian, ; WFP, , which is now expanding to other regions and thematic areas Baydakova, A recent report details the various initiatives in this space while highlighting some lessons learned so far Coppi, While governments in developing countries are not one of the main overall targets of these groups, very few take a more comprehensive and strategic approach, or explicitly consider the provision of public goods by governments as is the case, for example, of the blockchain for social change research project Verlhust and Young, These authors attempted to delimit the specific application of the emerging technology in the Global South while pushing back on the ongoing hype.
The Asian Development Bank produced a report targeting Asia and provided recommendations based on the analysis of five use cases Ferrarini et al. More recently, an overall blockchain research review included an analysis of the relevance of the technology in the implementation of the SDGs Hughes et al. The authors highlight the goals and targets where blockchains technology could have the most impact while providing a couple of use cases based on selected current development challenges India is facing today.
The current approach to deploy blockchains in support of development is centered on the elaboration of relevant use cases, which might be openly linked to development goals. Once completed, they are then pitched to social ventures, development organizations or even governments in the Global South to secure either funding or support -or both—for small pilots. Given the deluge of publications and academic research on the technology, the above examples show a giant gap when it comes to deploying blockchains in developing country governments.
Furthermore, only a few of these directly link such deployments to digital government policies, strategies, and implementation agendas which, as reported by the United Nations UNDESA, , is ongoing in most countries, including developing nations. The relationship between blockchains and digital government has thus attracted little attention and real case studies are for the most part missing in action Three distinct patterns can however be identified.
First, blockchains are positioned as support infrastructure for ongoing e-government platforms and initiatives. Here, the emphasis is on the technology and innovation part of the equation, and not on the institutional benefits, thus drastically reducing its transformational potential Second, blockchains are seen as a threat, sometimes lethal, to public institutions as they seem to demand dramatic changes in the way they are run—to the point that might put their existence into question.
And third, on the ground evidence from blockchain deployments within governments is incipient at best. While many blockchain pilots and projects are taking place in developing countries, some even involving the public sector, only a few are actually led by governments. This subsection highlights some of these cases, bearing in mind that keeping track of all such initiatives is a complex task. Estonia is often cited as a best practice for blockchain deployment Sullivan and Burger, ; Guarda, and an example to follow.
Estonia gained its independence in and rapidly gained a legitimate reputation of a country able to harness ICTs to promote overall human development. E-governance became its main staple. Nowadays, the country provides assistance in this area to many others almost on a global scale. The cyber-attacks on Estonia's overall infostructure opened the door for further innovation in the area of security. That same year a company called Guardtime was launched, offering government a solution called KSI Keyless Service Infrastructure , which allowed for the decentralized verification of public records, data, and access points without having to use a digital signature.
Instead, KSI uses one-way hashing and a decentralized ledger. Deployed in , KSI does resemble blockchain technology sans one of its core components: consensus algorithms.
Being that as it may, the key point of the Estonia example is the role KSI played in supporting existing e-governance platforms and services.
It furnished a new solution to a major digital challenge that could perhaps not be solved otherwise. While the company claims it beat Nakamoto by a couple of years 16 , KSI is not in the same ballpark as Bitcoin or Ethereum Technological replication of the Estonia case using a different platform might thus be more complex than expected.
While not a country, Dubai is certainly larger in population than Estonia and hosts over nationalities. The Dubai Emirate also operates almost like a city-state and has its own policies and institutions in addition to federal ones. Back in , the Prime Minister of the Emirate announced the launching of a blockchain strategy planned to be fully implemented by Gulf News, Spearheaded by Smart Dubai, a local entity that oversees the strategic deployment of new technologies and innovation in close collaboration with the private sector, the strategy set three core goals: foster government efficiency; create new business opportunities and startups; and assume a leadership position on blockchain technologies Bishr, In terms of efficiency, two key priorities have been identified: a paperless government and a blockchain-based payments system Jones, Note that both themes were already part of the overall policy agenda of Smart Dubai, which also happens to host the Smart Dubai Government initiative The second theme focusing on startups is also part of the Smart Dubai agenda.
More recently, Smart Dubai launched a decentralized open data initiative, yet another local priority previously identified, in partnership with a blockchain company Andrikopoulos, While getting updated information on the evolution of these projects is cumbersome, the core lesson from Dubai is similar to that of Estonia: blockchains are brought in to support existing digital government issues and priorities and are effectively deployed to address related challenges.
But in the case of Dubai, the Emirate has developed a strategy and created an international multi-stakeholder board to oversee its implementation Berryhill et al. Kenya seems to be following these same steps. Early last year the government announced the creation of a blockchain task force under the leadership of the Ministry of ICT. The task force prepared a report which was submitted to the Minister last November.
While the report is apparently not publicly, press reports suggest that its contents are fully aligned with Kenya's development priorities Kenyan Wallstreet, ; Tanui, Perhaps coincidentally, the government announced a program to provide affordable housing a month before Alexandre, Countries such as Georgia and Peru have taken a more sectoral approach. Georgia is one of the leaders in the use of blockchains for land title registration which has already been the subject of critical academic research Lemieux, ; Thomas, Recently, Peru announced a new government procurement system based on blockchain technology in partnership with a local blockchain startup and the Inter American Development Bank IADB.
Public procurement is one of the main sources of corruption and a traditional priority of e-government initiatives. In any event, neither of these two countries have an overall blockchain strategy. In principle then, the results and outcomes of ongoing sectoral initiatives can provide fertile ground for such development.
A counterexample for the developed world can also offer additional insights. Illinois became the first US state to embrace blockchain technology. Launched at the end of , the initiative was part of the broader Smarter State initiative sponsored by the Department of Innovation and Technology. The blockchain project has three overall targets: increase government efficiency by integrating services; develop a local ecosystem; and modernize governance to handle a distributed economy Illinois Blockchain Initiative, Pilots on land titles and self-sovereign identity were launched a few months later.
However, by the beginning of , the project seems to have fizzled. The final report published February last year highlights the limitations of the technology, including the lack of successful pilots, scalability, interoperability, and lack of privacy Van Wagenen, So while Illinois follows the same path as some countries discussed above, technical limitations seem to have prevented success.
In addition, the fact that the project was requesting specific legislative changes at the state level might have also ruffled some feathers. The intersections between development, ICTs and developing country governments provide the fodder for the conceptual framework developed in this paper. Figure 2 below depicts such interconnections.
Governments play various roles when it comes to sustainable development and ICTs, and are not limited to the digital government sphere per se. But governments should lead to promote digital government within a sustainable development context. On the flip side, the traditional approach to e-government centers on the relation between the public sector and technology while assuming development outcomes are either the natural and automatic.
For example, the standard e-government transactional approach that emphasizes G2B, G2C, and G2G interactions—depicted in Figure 2 by the intersection between government and ICTs, has limited scope for targeting specific development gaps as the onus is on interactions among key sectors and stakeholders. Having governments as part and parcel of the overall equation also demands serious consideration of the relationship between state capacity and both development and digital technologies.
The dynamics between these three can be complex, bearing in mind that sustainable development itself encompasses four pillars governance included while digital government comprises three, as discussed in section Conceptual Framework above.
Nevertheless, the essential point is that state capacity is both a means to promote digital government and sustainable development and a goal in itself, as clearly established by the UN SDG agenda. For starters, and like most digital technologies, blockchains are exogenous to the national ecosystems of developing countries. Governments thus continuously play catch-up with such technologies.
A core issue here is the lack of local capacity to effectively harness the new entrant, even if the platform is Open Source and thus has no per-user licensing costs. Such capacity is not merely technical but also scientific and managerial as governments and partners should fully comprehend the inner workings of the technology to, for example, launch public bidding processes calling for the adoption of blockchains to support specific digital government priorities or gaps.
In this regard, blockchains are not at all different from previous digital technologies migrating into developing nations. While the complexity of blockchains might add additional entry barriers, governments are probably better off focusing on both the three underlying technologies that support it and the different types of blockchains, DLTs included, that are available.
Regarding the former, many countries in the Global South lack adequate cryptographic expertise, have weak public key infrastructures PKIs in place, and are not very familiar with consensus algorithms. Furthermore, while peer-to-peer networking is readily available, limited Internet access will surely pose constraints to widespread utilization. As described in section Characterizing Blockchain Technology for the Public Sector above, developing country governments can choose among different types of blockchains and DLTs.
However, the first question they need to ask is if blockchain technology is the most optimal solution for the issue at stake. Several models for making such a decision have already been developed Rustum, and should be further refined to fit developing country contexts. Selecting the adequate platform will mostly depend on the type of digital government priority under the radar screen. It is however possible to conclude that, in general, governments should opt for private or closed blockchains Atzori, , hybrids included.
On the other hand, in terms of the dissemination of public documents, information, and data, public or open blockchains can provide the right vehicle as they guarantee immutability, integrity, and transparency while ensuring pseudonymous access—or access based on self-sovereign identity, if available.
The cases discussed in the country examples subsection yielded essential insights for deploying blockchains within governments. The evidence compiled so far, which is still incipient, suggests that the technology can deliver when explicitly linked to both digital government institutional instances and digital government priorities and gaps.
For the most part, successful blockchain implementation in emerging countries have either complemented existing digital government platforms and initiatives or provided a new solution to vexing issues that could not be solved otherwise.
In both cases, the technology was not deployed in a standalone fashion. Integration with other digital technologies was also part of the process. This is perhaps a crucial point as blockchains seem to add real value when brought in as a new member of an existing technology team. In this light, it is possible to suggest that smart contracts could become really intelligent if they could effectively interact with Deep Learning algorithms and platforms, for example Salah et al.
While not having a happy ending, the Illinois experience sheds light on the risks of deploying blockchains. Technical limitations of the blockchain platforms selected for the various pilots helped stall the project. The initiative also attempted to address its governance implications. Consequently, specific legislative changes were requested to the local assembly, including biometric-based notarization, self-notarization of documents and several other measures to improve the management of public land records State of Illinois, While having potential for increasing state capacity, demands for institutional change, grounded mostly on technological grounds, might not take off if local decision-makers have not been involved in the process from the start.
Surely, this is not unique to blockchains. But the fact that the technology is also touted as governance and institutional changer e. As discussed in subsection Blockchains, Development and Governments, blockchain deployment in developing country governments is still in its infancy. Hype, complexity, lack of successful implementation, and an overemphasis on cryptocurrencies and new financial markets are factors that might help explain this state of affairs—not to forget the fact that blockchain technology is still maturing.
The conceptual framework presented in this paper targets this gap by providing governments and development practitioners with potential entry points to explore the effective deployment of blockchain technology systematically. If governments are the main target of blockchain technology initiatives, then digital government and state capacity must take center stage. Early evidence suggests that blockchains can make a difference when aligned with existing digital government institutions, strategies, priorities, and platforms.
This, in turn, indicates that a more nuanced approach to the interplay between blockchains and key digital government components is required. For starters, governments in the Global South should capitalize on existing South-South and North-South cooperation agreements and networks to extract more information on ongoing blockchain deployments in the public sector. Collaboration across government peers on a global scale could add more value than published reports and thus help avoid pitfalls that pioneers in the sector have unexpectedly faced.
Looking at the way blockchains can tackle core digital government themes and bottlenecks will be as important, if not more. For example, government interoperability has traditionally been one of such issues. More often than not, public entities happen to run their own technology platforms that almost never talk to each other. On the other hand, citizens and stakeholders will surely benefit from having one-stop shops to undertake all the business they do with government.
To reach this point, government platforms must be able to converse among themselves. Governments have thus developed government interoperability frameworks that promote public sector integration. This is accomplished by the development of digital gateways that mediate the conversations across different public platforms. Having a blockchain platform to support and enhance interoperability by ensuring the integrity and transparency of the public sector certainly has enormous potential El-dosuky and El-adl, The same goes for many of the other core areas of traditional e-government.
Blockchains can also have potential in enhancing state capacity. Many developing countries have designed decentralization or devolution strategies where both policymaking and fiscal management shifts from central governments to those in regions, states, and municipalities. Implementation of such policies has however been challenging, particularly in low-income countries.
Lack of overall capacity has been one of the main challenges local governments face accompanied by a potential decrease in fiscal resources.
Enter blockchains. For example, governments could set up one blockchain platform, a GovChain, to cater to all local governments. Financial resources could thus flow within the Gov-chan vis smart contacts, while local government offices can use the platform to support other government activities such as public information disclosure. This is an area that might have great potential but remains largely unexplored De Santis, Along the same lines, it is possible to make a case for distributed policymaking.
Many developing countries are characterized by socio-economic, cultural and geographical diversity that comprehensive national policies tend to ignore for the sake of universality. At the same time, many countries also have national, regional, and local development plans that, for the most part, are not necessarily in sync.
Finding a middle of the road approach where local diversity shines but, at the same time, falls within broader development policies set at higher levels of government is feasible. Again, a GovChain could make a key difference here. While complex, the challenges for adopting blockchains in the public sector of developing countries are not insurmountable. On the other hand, the opportunities are just starting to pop-up and could be harnessed in the short-term if the links between technology, sustainability and government institutions are brought to the fore.
Developing countries are, for the most part, playing catch-up when attempting to harness the latest digital technologies such as blockchains, among many others.
This set of countries has also endorsed internationally-agreed development goals while devising their own national and subnational development plans. While juggling such agendas is not simple, governments can play an important role in promoting the link between technology and development while enticing all other actors and sectors to act in concert.
Undoubtedly, governments should lead when it comes to the modernization of public institutions, the deployment of digital government and the provision of public goods.
This paper develops a conceptual framework aimed at grasping the dynamics between sustainable development, governments in the Global South and ICTs, introducing state capacity as both a means and an end. State capacity is required to achieve the various development goals and harness ICTs effectively.
Building state capacity is also a goal that will ensure development gains can be sustained in the long haul.
The framework is then used to assess the relevance of blockchain technologies in such dynamics While still technologically evolving, blockchains offer unique traits and benefits that could make a difference if deployed strategically within governments in developing countries. Unfortunately, on the ground evidence of blockchain implementation is still emerging while a closer examination of its relationship with digital government is almost absent. Use cases still dominate the scene and the core assumption is that blockchains will prevail as the overall disruptor with no partners in sight.
However, early evidence suggests that blockchains can add value when deployed as part of a team of digital technologies working in sync. Early implementations also indicate that adequate institutional support and endorsement are critical, especially from the public entities promoting digital government that had already identified a range of priorities as key targets.
Nevertheless, risks still abound, stemming from the limitations of the technology itself and its complexity, and calls for rapid institutional change which could push back existing political will.
In addition, issues related to implementation costs and actual project management need further exploration. The distributed nature of blockchain technology and its implications for governance systems has also upstaged digital government concerns. While linked to ongoing discussions on algorithmic governance concerning Artificial Intelligence and all its cousins, a blockchain-based perspective connecting these dots is missing in action.
Developing countries with low capacity states and nascent capitalist development might find such new governance options less palatable given pressing sustainable development demands and calls to sustain democratic governance regimes. If it is a real institutional technology, then blockchain technology should be a critical enabler for innovative institutional development. Blockchains could also deliver the goods within existing institutional settings, thus making institutional change a matter of human agency, not technology.
And that would undoubtedly be a critical achievement that could contribute to resilient long-term sustainable development. Publicly available datasets were analyzed in this study. The author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Instead, the concept includes nation-states that are at various stages of development as measured for example by the World Bank country income or lending categories, or the UNDP human development index, among others. Furthermore, development is a moving target as countries can and should travel across the various development categories in the medium-term, with some even transferring into the industrialized-country team, eventually.
The latter has grown exponentially since the late s and propelled economic growth in industrialized countries McKinsey, Governments however cannot outsource such functions so easily. Ethereum smart contracts have their own blockchain accounts which function in distinct fashion vis-a-vis user accounts.
For example, the latest literature review on the subject published last Summer was only able to identify twenty one relevant papers Batubara et al.
Only six were published in academic journals. Moreover, most of these papers take a sectoral approach focusing on topics such as electoral processes, healthcare, and education, to menton a few. Alexandre, A. Kenyan gov't to use blockchain in new affordable housing project. Google Scholar. Andreasson, K. Andrikopoulos, V. Asadullah, M. Poverty reduction during — did millennium development goals adoption and state capacity matter?
World Dev. Atzori, M. Batubara, F. Baydakova, A. UN food program to expand blockchain testing to african supply chain. CoinDesk blog. Berryhill, J. Blockchains Unchained. Beyer, S. PubMed Abstract Google Scholar. Bishr, A. Dubai: a city powered by blockchain. Innovations 12, 4—8.
BreakerMag BreakerMag blog. Brown, A. How much evidence is there really? Mapping the evidence base for ICT4D interventions. Casey, M. New York, NY: St. Martin's Press. Comin, D. If technology has arrived everywhere, why has income diverged? Coppi, G.
Cozzens, S. Davidson, S. Blockchains and the Economic Institutions of Capitalism. De Filippi, P. Blockchain and the Law: The Rule of Code. De Santis, R. Dexter, S. Mango Research blog. Diallo, N. Dutton, T. Dwyer, R. El-dosuky, M. GIZAChain: e-government interoperability zone alignment, based on blockchain technology.
The Top 11 Blockchains for Enterprise Organisations, and Why
It was created in and is often referred to as a third-generation blockchain. One of its main differentiators to Ethereum is its use of a Proof-of-Stake mechanism for consensus from its inception whereas Ethereum is transitioning to Proof-of-Stake from Proof-of-Work. Most of the project has gone through a peer-review process to ensure the quality and efficiency of the network.
However, a Cardano cryptocurrency card was launched in South Korea last year. Other use cases include tokenising assets to share ownership of it or helping developing countries improve their society. While many believe Bitcoin is becoming less and less of a network for small transactions, Ripple still very much aims to be the cryptocurrency of choice for regular day-to-day payments.
For this reason, banks such as Standard Chartered and Santander are utilising Ripple technology for payments and finance use cases. The major differences between Bitcoin and Ripple revolve around control of the network and the supply of coins in circulation.
In terms of coin supply, there will only ever be 21 million Bitcoins, while there will be billion XRP tokens in circulation on the Ripple network eventually. In terms of control, Bitcoin is highly decentralised, but the Ripple blockchain is controlled by a single technology firm of the same name. As a result, cryptocurrency purists do not see Ripple as a true cryptocurrency. EOS uses a Delegated Proof-of-Stake mechanism in its protocol, which means certain members of the network are responsible for agreeing on consensus.
This approach prioritises speed over decentralisation, with a block time of around three seconds vs sections on Ethereum. A wide range of applications exists on the EOS blockchain, from gaming and gambling to knowledge services such as Everipedia.
While many now see Bitcoin as more of a store of value asset than as a medium of exchange, Ripple and Stellar are still battling it out as the payments option. Stellar was created by one of the co-founders of Ripple, Jed McCaleb. However, while Ripple has chosen to partner with major financial institutions, Stellar and its cryptocurrency Lumens is targeted at enabling micro-payments in the developing world and for the unbanked.
Like Ripple, Stellar provides almost free and instant transactions; however, it boasts smart contract functionality, which Ripple does not. It was launched in and is currently aimed at the digital media and entertainment industries. Instead, Seeders operate in the network to store and distribute content and then be rewarded for doing so. The blockchain has several use cases including payment splitting automatically sharing revenue among content creators to digital content crowdfunding raising funds for your next content production.
You may have heard of Hyperledger as the go-to blockchain technology for enterprise organisations. That is certainly the way that the people behind the project would like it to be seen. However, when considering it as an option for your organisation, a number of features and their benefits should be considered.
The key difference between Hyperledger and the other blockchains on this list is the fact that the others are public and permissionless, making them available for anyone to join. It is often used to decentralise supply chains , as this example of seafood traceability shows. The NEO blockchain was founded in , but it came into existing in with the rebranding of Antshares. While NEO is like other smart contract platforms in that it uses a Proof of Stake mechanism, it styles itself as being much easier to use for smart contract development.
That is because it supports a variety of popular programming languages like JavaScript, Java, Python and Go, rather than only allowing smart contracts to be built in Solidity. NEO has a clear focus on China, which, along with the fact that it is still a very centralised network, causes some enterprises to be wary of it. NEO recently announced a partnership with fellow blockchain Ontology , which will see the projects build out protocols and components to support a range of digital assets, as well as a decentralised identity framework.
The final smart contract platform on the list is one that was created to combine the smart contract functionality of Ethereum with the security of Bitcoin. Qtum has also implemented a Decentralised Governance Protocol DGP that allows owners of the QTUM token to vote on and make changes to some blockchain parameters, without the need to implement a hard fork. One unique use case of Qtum, compared to other blockchains, is that the network allows users to have third parties pay for transaction fees.
This could be useful for identity systems where the user who needs to identify himself does not want to pay for the transaction. This means that an organisation can now absorb the costs of the transaction without being the owner of that transaction.
One final point that all enterprise organisations should consider when choosing a blockchain is how they might go about using it to decentralise their data. It is not efficient or cost-effective to save large amounts of data on a blockchain, mainly because of the way the data is linked in this format. Instead, organisations should weigh up how they can use decentralised storage solution, such as Storj, Filecoin or IPFS, in tandem with their chosen blockchain to decentralise their data and improve their processes.
Decentralised storage solutions are only one component of the ever-growing decentralised ecosystem. Blockchain offers tremendous opportunities for enterprise organisations. The recipe for tackling poverty is simple according to proponents in this corner of the globe:. This might sound reductive, but this has been the pitch for many "financial inclusion" oriented start-ups leveraging blockchains since early That is not to say that each startup does not have the best intentions because ultimately no entrepreneur targeting financial inclusion is doing it because it will be easy.
They are doing it because they want to change the world and help integrate every person on earth into the financial system to improve their lives. This is a noble and honourable goal. We hope that by providing some historical context and a few key learnings, startups can better meet the needs of the excluded and we can all achieve the goal of financial inclusion faster.
One of the earliest learnings in blockchain backed financial inclusion came from Btcjam. The start-up had made its entry to market as early as and was backed by the likes of Ribbit, Pantera and start-ups.
The promise was simple:. Although the idea worked on paper, the start-up had to shut shop due to low repayment rates and a substantial number of investors losing money.
There was even a marketplace for individuals seeking to " sell verified, credit worthy " accounts to conduct fraud. The issues here were: centralized reputation and identity management combined with a lack of collateral and means to recover money lead to a high rate of fraud within the ecosystem.
The next batch of start-ups born between — oriented towards financial inclusion through cheaper payments and remittance. Notable survivors from this era are Rebit and Bitpesa.
The value proposition was to combine bitcoin's low cost of remittance with minimum requirements for banking infrastructure. This in turn allows individuals to send and receive money at a fraction of the cost charged by traditional enterprises.
Bitpesa pioneered the model with the help of telephone based remittances. While metrics are limited, crunching numbers from Bitpesa's landing page reveal the challenge of getting traction. This is likely not enough to support a growing business, and it makes sense that BitPesa as well as others have evolved their offerings to include exchanges. From a functional perspective, this increases liquidity and drives new revenues, but more importantly it aggregates the payment and exchange layer of the value chain.
As Marc Andreessen says: "only two ways to make money in business: One is to bundle; the other is unbundle. The current generation of start-ups What we are now calling the post ICO era working towards financial inclusion take things one step further. Instead of relying on bitcoin, they use ethereum to issue tokens that are then usually used for payments settlements. Instead of centralising reputation management, they store it on a distributed ledger which cannot be erased.
Most importantly, they combine network effects and incentives in a new fashion. WeTrust allows individuals to create lending circles with the help of smart contracts. This allows communities to pool money and settle loans internally atop a trustless ledger. Humaniq on the other hand aims to "issue" coins for early adopters of the platform and create financial infrastructure with the help of biometric scanners and mobile devices. It is too early to call either of them a success as they have alot of work to do to achieve their stated goals.
The case with many of these startups is not their will or motivations, but rather the practicalities on the ground make financial inclusion very difficult. On a parting note made by BtcJam dated 25 May, , the start-up left the key reasons behind it's closure: " The regulatory challenges around Bitcoin and the difficulties we faced in introducing Bitcoin technology to poor communities around the world are simply beyond our capacity.
The main challenges were: trust, incentives, and on-boarding. Individuals that were in remote regions with only fiat holdings for savings due to lack of banks were left estranged for months until the new notes became commonly available. Over people died across the nation between waiting in lines for the new notes and being unable to pay for medical bills Let that sink in for just a moment. This was the case with state backed currency in one of the world's fastest growing super powers.
Observations from the capital markets of growing economies shows that individuals tend to invest in physical assets such as gold or real estate over currency or equity markets due to the lack of faith in a third party handling their money.
In this scenario, saying "blockchains" and "digital money" can save their lives doesn't resonate the way some people think. Banking relationships in emerging economies are often built over generations. Monetary flow from physical currency to the digital realm would require individuals putting their complete faith in technology they can't understand and individuals they cannot see.
The "unbanked" often do not have income they can experiment with. The cost of losing money could often be chronic hunger. In such a scenario, the promise of a token economy amongst the world's poor remains weak. Changing the world's poor from using physical currency to blockchain based tokens would require incentivising them sufficiently to make the change. Any practice that requires a change of habit would have to be forcefully enforced or have an obvious advantage visibly present. While cheaper remittance, better security and immutable records have their advantages, none of these might motivate individuals to switch just yet.
As an example for this, consider Muhumud Yunus' experience setting up Grameen Bank. Through his memoir titled " Banker To The Poor " the Nobel Prize winner explains how the poor did not believe someone would offer cheap loans to begin with. In order to on-board individuals to the token economy, communities would have to be activated locally with incentives.
Taming the Beast: Harnessing Blockchains in Developing Country Governments
However, when considering it as an option for your organisation, a number of features and their benefits should be considered. Nevertheless, developing countries became the preferred economies for many blockchains the first Bitcoin and blockchain developing pilots, starting in Zambrano, for First, blockchains are positioned as support infrastructure for ongoing e-government platforms and initiatives. Are was launched in and is currently aimed at the digital media and entertainment industries. The framework is then used to assess the relevance of blockchain technologies in such dynamics CultHub good.
The trust machine The Economist, The Internet of value Tapscott and Tapscott, These are some of the names coined by different authors, academic and pundits to capture the complexity of the technology in one phrase. While catchy, they fall short from elucidating the benefits of the technology from a public sector perspective. Almost 10 years after its birth, publication after publication continues to explore ways to explain the inner workings of the technology to the average person e.
Technology diffusion does not depend on the level of technology comprehension by the public Kapoor et al. In this section, blockchain technology is characterized from the perspective of the public sector in developing countries, using the conceptual framework presented in the previous section as a guide.
A blockchain is a digital ledger supported by the smart integration of three existing technologies: peer-to-peer distributed networks; cryptography; and consensus algorithms.
Blockchain technology complexity stems in part from the fact that its supporting technologies have been hanging out at the fringes of the global network.
While the concept of digital raises little doubt, the same cannot be said about the ledger nature of blockchains. Despite the increasing popularity of spreadsheets, accountants are perhaps the group most familiar with ledgers as they continuously use them for business purposes. In that world, ledgers are analog or digital books where a series of transactions, mostly credits and debits, are sequentially recorded.
Not surprisingly, some have suggested that blockchains are indeed a form of triple accounting Simoyama et al. Being that as it may, the key point here is that blockchains are not part of the relational database technology family. Blockchains are thus not designed to store big data, for example.
Moreover, and unlike traditional accounting ledgers, blockchain technology provides an open avenue for skilled users to write native computer code. Developing applications that operate within the platform or interact with external sources and resources is thus a key feature. Usually presented under the umbrella of smart contracts, programming in blockchains is not limited to them, as discussed below. The underlying peer-to-peer or distributed network should not be confused with a decentralized one.
Although the terms are used as synonyms in much of the literature, the latter allows for local centralization. That is, a group of nodes close together depend on central local one which in turn provides the link to other node clusters operating under similar arrangements.
In a truly distributed network like blockchain, all nodes are equal and live independently. One and two-way encryption tools are extensively used in blockchains. The first is known as hashing and creates an irreversible and unique digital signature for every transaction, a group of transactions, and blocks added to the existing chain.
The second is asymmetric public key cryptography that generates public and private keys for end users. Users share their public keys while keeping their private keys in a safe space, digital or analog.
Most of the data recorded on a blockchain are thus comprised of hashes and public keys. Two types of consensus take place in blockchain technology Beyer, The first one occurs when the specialized nodes working on adding a new block of transactions to the chain, the so-called miners, agree on which transactions should be included in such block.
This is known as Nakamoto consensus. The second happens when the new block of transactions is actually added to the chain. Here, any node or network user can validate such a block and agree to append it to the existing chain 6. In sum, a blockchain is a programmable digital layer operating within a distributed network, requiring cryptographic tools for access and transaction management, and using consensus algorithms for adding or appending new blocks of transactions to the ledger.
A vast literature on the key traits of blockchain technology already exists. This section presents key blockchain traits based on the contribution that each of its three underlying technologies furnishes. Two different sets of traits emerge. One stems from the unique contribution of each of the base technologies. The other is the result of the integration and interaction among them. Traits in the matrix diagonal represent standalone contributions.
All other boxes are the result of the integration of the three technologies. Resilience : In a distributed network, multiple independent copies of the blockchain can co-exist.
There is thus no central point of failure. Pseudonymity : Cryptographic tools enable users to interact with others without having to reveal their real identities or providing any personal data. A relatively high degree of privacy thus exists. The same however does not apply to transactions that in principle can be viewed by anyone in the network.
Immutability : Blocks of transactions in the chain are time-stamped and mathematically linked in sequential order. Changing one block thus requires changing all other blocks. Incentives : Processing transactions and adding new blocks to the chain brings financial benefits to nodes involved miners.
Transaction fees and cryptocurrency rewards are the most common forms of income. Traits stemming from the integration of the technologies include:. Consensus : Transaction processing and block addition are validated by network nodes in all cases.
This is algorithmic consensus that should not be confused with human-based consensus. Transparency : User interactions and the resulting data can be viewed by any network member. Confidential information or data has no place here. Security : Resilience, immutability, and consensus substantially increase the level of internal blockchain security. While still possible, hacking and network attacks are still possible.
The standard way of classifying blockchains relies on the distinction between private and public, alongside permission levels. In this perspective, three different blockchain types emerge public, private, and consortium blockchains e. While relevant for the private sector, such differentiation might not be as effective from a public sector perspective. The distinction between private and consortium blockchains hinges in part on how many entities control access to the application layer.
Governments can also have multiple institutions involved in the deployment of one blockchain platform—as could be the case for government interoperability, is one of the main staples of digital government. Calling such an arrangement a consortium does not add any value from the public sector perspective.
The best way to avoid such potential pitfalls is to go back to the three core blockchain technologies described in section Revisiting Blockchain, Again and suggest an alternative typology that caters to the specific idiosyncrasies of the public sector.
Users either find the door open and walk right in or must first ring the doorbell to be able to enter. Cryptographic tools and consensus algorithms operate at the application layer.
Nodes or users accessing such layers are first authenticated and then furnished an authorization to perform specific actions—such as creating a smart contract, mining the blockchain network or developing a Dapp, for example.
Table 2 depicts the matrix of options by separating the different layers. Note that blockchains require all users to be authenticated, regardless of access type. The difference between open and closed network access depends on how users are authenticated.
In the case of closed access, a third-party one or more entities issues the authentication credentials using cryptographic tools. Note that open access authentication does not fulfill know-your-customer KYC or anti-money-laundering AML regulations and thus might be less attractive to both governments and businesses bound by them 7.
Once authenticated, nodes will be able to access the application layer. In the case of classic blockchain networks such as Bitcoin and Ethereum, authentication alone grants immediate access to the application layer. Authorization does not exist as a separate instance and thus, no central authority is required. In this case, access to the application layer is fully decentralized. But open access blockchain platforms can also limit access to such layer.
For closed access networks, both authentication and authorization are managed by a central outfit—one single entity private, in the traditional scheme or many working together consortium. However, it is also possible that a closed blockchain platform provides all authenticated nodes full access to the application layer. This might be relevant to public sector initiatives where all actors within a single ministry or in multiple ministries or public entities work together in a cross-sectoral initiative.
A GovChain is similar to a government dedicated network with secure links to external clients. A GovChain runs on such network but add functionality at the application layer. Finally, this typology highlights the similarities between hybrid open and closed centralized blockchains. In both, the levels of authorization to the application layer are provided by a central outfit.
However, since hybrid open networks do not control authentication, all nodes and users still have read access to the full blockchain.
This is not the case in closed blockchain networks. The latter can also introduce more sophisticated access control schemes to assign different roles of nodes in the application layer. Undoubtedly, smart contracts are one of the most touted blockchain features. While the idea itself dates from the end of last century Szabo, , blockchains created the platform for the actual implementation of the idea. For example, Ethereum provides the software Solidity 8 and platform Ethereum Virtual Machine 9 to program and execute contracts In this fashion, transactions envisaged on a given agreement can be triggered at a pre-established date or by action taken by one of the parties involved.
Contractual transactions are automatically executed and, since the parties have direct access to digital currency, payments occur smoothly. Smart contracts also come in different flavors OSTechNix, The first one mirrors traditional legal contracts which can now be executed on a blockchain platform. Not limited to financial agreements Murphy, , these type of contracts have attracted most of the attention of both practitioners and academics e. Here, a given community agrees to specific governance arrangements which are then coded into a binding smart contract.
DAOs suffered a devastating setback thanks to the well-known hack Falkon, but are still being explored by practitioners and academics e. Less well-known than the others, ALCs handle multiple smart contracts. Here, the line between contracts and regular computing programming starts to blur.
ALCs resemble well-known software gateways that allow communication across different platforms at the application layer.
As with most nascent technologies, smart contracts have limitations. On the technology side, they are prone to coding errors and bugs as the DAO hack shows. This is exacerbated by the fact that programmers must translate legal contracts into code. Complex contracts might thus yield additional coding errors and bugs. As all nodes have to run and validate the code in smart contracts, code size is limited and thus running complex applications is not possible O'Connell, Again, complex contracts might not be suitable for blockchain execution.
While smart contracts reduce transaction costs, which are now executed automatically, costs related to contract breaches, dispute resolution, and redress are much higher Szczerbowski, Smart contracts are also immutable and act as autonomous agents.
In this light, researchers recommend using a hybrid approach where both regular and smart contracts act in sync Levi and Lipton, The question on the legality of the first type of contracts has received plenty of attention Frankenreiter, ; Waltl et al. More generally, it seems that laws and regulations will need to be changed or updated.
In developing countries with weak state capacity and incipient rule of law institutions, this might become a major challenge. Since its inception, dynamic innovation, backed by top human talent with access to substantial financial resources, has been part of the blockchain ecosystem. The community has thus been able not only to tackle the initial limitations of the technology but also to enhance its core functionality.
As seen above, blockchains come in many different formats and more are popping up by the day. This is a critical consideration for both academics and policymakers.
Blockchain technology is not a monolith. On the contrary, blockchains are a moving target. Here, the distinction between blockchains and distributed ledger technologies DLTs is important Dexter, Blockchains are a subset of DLTs. A blockchain is a DLT that mathematically links blocks of data in sequential fashion using cryptographic tools.
A DLT is a digital ledger that runs on a distributed network and does not require the use of consensus algorithms for its full operation Just like its digital technology predecessors such as the Internet, both for-profit and non-profit innovators and practitioners continuously showcase the relevance of the new technology to tackle socio-economic, political, and environmental issues.
Here, different layers and different labels appear in the scene. The first layer, which in turn is the most generic, links blockchains to existing and emerging issues without necessarily referencing development or the SDGs—albeit the latter being universal. Labels used to describe this link include blockchain for social good Podder and Venkat, ; BreakerMag, , blockchain for social impact Fernando, , and blockchain for social change Verlhust and Young, , the latter being a research project.
Comprised of close to 50 entities, BSIC mentions the SDGs but has set its own agenda 12 For the most part, blockchain startups working under these labels take the initiative on their own and venture into the field to experiment with the nascent technology. Pace Kewell 13 , a key issue with this set of initiatives is the lack of a rigorous definition of the concepts being put forward. Social good might have different meanings for different communities, more so if the work is undertaken on a global scale.
Furthermore, social change and social impact can also be negative. That is, on the ground projects can also generate change and impact by exacerbating existing gaps despite the best efforts of those doing the implementation. Indicators and metrics to assess and measure change are missing in most of these efforts. The second layer includes entities directly supporting the achievement of the SDGs. Three groups comprise this layer.
The first works on a global scale and have advocacy and awareness-raising role. The Blockchain Commission, a partnership of three non-profit entities launched at the United Nations in , is a typical example. A second group includes UN agencies and development organizations that work in developing countries.
These entities work on the ground and disburse their own resources as grants to finance projects. Note that these grants go to local innovators and entrepreneurs in developing and not to governments. Most entities working in the SDG realm select the goals and targets that reflect their own internal mandates. Reach and scale also play a role as covering 18 goals and over targets does require considerable human and financial resources that most do not have.
Last but not least are the organizations working in the humanitarian space. This group also includes UN agencies as well as reputed organizations that have carried out this line of work for many years. Perhaps surprisingly, one of the most well-known examples of apparent blockchain success occurred in this space thanks to WFP refugee program in Jordan Juskalian, ; WFP, , which is now expanding to other regions and thematic areas Baydakova, A recent report details the various initiatives in this space while highlighting some lessons learned so far Coppi, While governments in developing countries are not one of the main overall targets of these groups, very few take a more comprehensive and strategic approach, or explicitly consider the provision of public goods by governments as is the case, for example, of the blockchain for social change research project Verlhust and Young, These authors attempted to delimit the specific application of the emerging technology in the Global South while pushing back on the ongoing hype.
The Asian Development Bank produced a report targeting Asia and provided recommendations based on the analysis of five use cases Ferrarini et al.
More recently, an overall blockchain research review included an analysis of the relevance of the technology in the implementation of the SDGs Hughes et al. The authors highlight the goals and targets where blockchains technology could have the most impact while providing a couple of use cases based on selected current development challenges India is facing today. The current approach to deploy blockchains in support of development is centered on the elaboration of relevant use cases, which might be openly linked to development goals.
Once completed, they are then pitched to social ventures, development organizations or even governments in the Global South to secure either funding or support -or both—for small pilots. Given the deluge of publications and academic research on the technology, the above examples show a giant gap when it comes to deploying blockchains in developing country governments.
Furthermore, only a few of these directly link such deployments to digital government policies, strategies, and implementation agendas which, as reported by the United Nations UNDESA, , is ongoing in most countries, including developing nations. The relationship between blockchains and digital government has thus attracted little attention and real case studies are for the most part missing in action Three distinct patterns can however be identified. First, blockchains are positioned as support infrastructure for ongoing e-government platforms and initiatives.
Here, the emphasis is on the technology and innovation part of the equation, and not on the institutional benefits, thus drastically reducing its transformational potential Second, blockchains are seen as a threat, sometimes lethal, to public institutions as they seem to demand dramatic changes in the way they are run—to the point that might put their existence into question.
And third, on the ground evidence from blockchain deployments within governments is incipient at best. While many blockchain pilots and projects are taking place in developing countries, some even involving the public sector, only a few are actually led by governments. This subsection highlights some of these cases, bearing in mind that keeping track of all such initiatives is a complex task.
Estonia is often cited as a best practice for blockchain deployment Sullivan and Burger, ; Guarda, and an example to follow. Estonia gained its independence in and rapidly gained a legitimate reputation of a country able to harness ICTs to promote overall human development.
E-governance became its main staple. Nowadays, the country provides assistance in this area to many others almost on a global scale. The cyber-attacks on Estonia's overall infostructure opened the door for further innovation in the area of security. That same year a company called Guardtime was launched, offering government a solution called KSI Keyless Service Infrastructure , which allowed for the decentralized verification of public records, data, and access points without having to use a digital signature.
Instead, KSI uses one-way hashing and a decentralized ledger. Deployed in , KSI does resemble blockchain technology sans one of its core components: consensus algorithms. Being that as it may, the key point of the Estonia example is the role KSI played in supporting existing e-governance platforms and services.
It furnished a new solution to a major digital challenge that could perhaps not be solved otherwise. While the company claims it beat Nakamoto by a couple of years 16 , KSI is not in the same ballpark as Bitcoin or Ethereum Technological replication of the Estonia case using a different platform might thus be more complex than expected. While not a country, Dubai is certainly larger in population than Estonia and hosts over nationalities.
The Dubai Emirate also operates almost like a city-state and has its own policies and institutions in addition to federal ones. Back in , the Prime Minister of the Emirate announced the launching of a blockchain strategy planned to be fully implemented by Gulf News, Spearheaded by Smart Dubai, a local entity that oversees the strategic deployment of new technologies and innovation in close collaboration with the private sector, the strategy set three core goals: foster government efficiency; create new business opportunities and startups; and assume a leadership position on blockchain technologies Bishr, In terms of efficiency, two key priorities have been identified: a paperless government and a blockchain-based payments system Jones, Note that both themes were already part of the overall policy agenda of Smart Dubai, which also happens to host the Smart Dubai Government initiative The second theme focusing on startups is also part of the Smart Dubai agenda.
More recently, Smart Dubai launched a decentralized open data initiative, yet another local priority previously identified, in partnership with a blockchain company Andrikopoulos, While getting updated information on the evolution of these projects is cumbersome, the core lesson from Dubai is similar to that of Estonia: blockchains are brought in to support existing digital government issues and priorities and are effectively deployed to address related challenges.
But in the case of Dubai, the Emirate has developed a strategy and created an international multi-stakeholder board to oversee its implementation Berryhill et al. Kenya seems to be following these same steps. Early last year the government announced the creation of a blockchain task force under the leadership of the Ministry of ICT. The task force prepared a report which was submitted to the Minister last November. While the report is apparently not publicly, press reports suggest that its contents are fully aligned with Kenya's development priorities Kenyan Wallstreet, ; Tanui, Perhaps coincidentally, the government announced a program to provide affordable housing a month before Alexandre, Countries such as Georgia and Peru have taken a more sectoral approach.
Georgia is one of the leaders in the use of blockchains for land title registration which has already been the subject of critical academic research Lemieux, ; Thomas, Recently, Peru announced a new government procurement system based on blockchain technology in partnership with a local blockchain startup and the Inter American Development Bank IADB. Public procurement is one of the main sources of corruption and a traditional priority of e-government initiatives.
In any event, neither of these two countries have an overall blockchain strategy. In principle then, the results and outcomes of ongoing sectoral initiatives can provide fertile ground for such development. A counterexample for the developed world can also offer additional insights. Illinois became the first US state to embrace blockchain technology. Launched at the end of , the initiative was part of the broader Smarter State initiative sponsored by the Department of Innovation and Technology.
The blockchain project has three overall targets: increase government efficiency by integrating services; develop a local ecosystem; and modernize governance to handle a distributed economy Illinois Blockchain Initiative, Pilots on land titles and self-sovereign identity were launched a few months later.
However, by the beginning of , the project seems to have fizzled. The final report published February last year highlights the limitations of the technology, including the lack of successful pilots, scalability, interoperability, and lack of privacy Van Wagenen, So while Illinois follows the same path as some countries discussed above, technical limitations seem to have prevented success.
In addition, the fact that the project was requesting specific legislative changes at the state level might have also ruffled some feathers. The intersections between development, ICTs and developing country governments provide the fodder for the conceptual framework developed in this paper.
Figure 2 below depicts such interconnections. Governments play various roles when it comes to sustainable development and ICTs, and are not limited to the digital government sphere per se.
But governments should lead to promote digital government within a sustainable development context. On the flip side, the traditional approach to e-government centers on the relation between the public sector and technology while assuming development outcomes are either the natural and automatic.
For example, the standard e-government transactional approach that emphasizes G2B, G2C, and G2G interactions—depicted in Figure 2 by the intersection between government and ICTs, has limited scope for targeting specific development gaps as the onus is on interactions among key sectors and stakeholders.
Having governments as part and parcel of the overall equation also demands serious consideration of the relationship between state capacity and both development and digital technologies.
The dynamics between these three can be complex, bearing in mind that sustainable development itself encompasses four pillars governance included while digital government comprises three, as discussed in section Conceptual Framework above. Like the Bitcoin ecosystem, power in the United States is decentralized among many groups. Therefore, acceptance of the blockchain will be decided by the natural forces of federalism.
Inevitably, though, the blockchain will gain general acceptance. Businesses must implement the blockchain to increase profits. So, corporations already lobby for blockchain-friendly legislation. Also, governments must implement the blockchain to cut expenses. The State of Vermont blessed blockchains as admissible evidence in Vermont Courts. The State of Arizona officially ordained smart contracts. The State of Nevada expressly preempted its local governments from taxing or regulating blockchain transactions.
Even the State of Delaware is about to edit its beloved General Corporate Law to allow corporations to maintain blockchain records. These laws are symbolic and superficial. In fact, all of those laws were unnecessary, because the courts should have reached the same conclusions applying their existing legal frameworks. Factom Inc. As a result, Factom Inc. Chains of title can be encoded and verified, and compiled, without altering any of the existing system.
In summation, developed real estate sectors will likely superimpose the blockchain onto existing property transactions, since the blockchain has less to offer in a healthy, modern economy.
Up until now, I may have sounded pessimistic. The blockchain will eviscerate transaction costs—which are evil. So in a sense, the blockchain is removing artificial constraints of human potential. Also, the blockchain increases equity, by making information more accessible.
All the improvements discussed up to this point will benefit everyone in this article. Additional, unique benefits for underdeveloped economies are discussed below. In developing economies, the blockchain will improve the real estate industry in two ways. First, blockchains attract external capital. Second, blockchains free up internal capital. As a result, developing countries will have more capital to invest.
The blockchain provides an inexpensive way of securing property rights. In developing countries, legal, political, and social systems have settled enough to attract outside capital.
Sophisticated investors, however, demand enforceable property rights. Especially when they live on another continent. If property rights are less than fully enforceable, then the rational business person invests less than the full value of the property.
Corruption is a deadweight loss of social welfare. The blockchain fights public and private corruption. I consent to my submitted data being collected and stored. Bitcoin has faced a strong correction over the past week.
The Bank of Lithuania announced that it had completed the research phase of its blockchain project called LBChain. The central bank now plans to deploy the platform by the end of Interestingly, the move comes amid a All Rights Reserved. We use cookies to give you the best online experience. By agreeing you accept the use of cookies in accordance with our cookie policy. Share Tweet Send Share. Prev Next. Tags: blockchain technology , cryptocurrencies , Developing countries , emerging markets , Ethereum Blockchain , smart contract.
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