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Design dilemmas in blockchain solutions
for international aid and development.
Marina Visintini
December 7, 2022
Introduction
The decentralized, transparent and traceable nature blockchain technologies makes them
good candidates to tackle some of the challenges in the international aid and development
sector. Using the design dilemmas model by Cila and co-authors (2020) I aim to assess how
current blockchain applications perform in terms of achieving truly decentralized design,
operations, and governance.
Blockchain and civic society
Blockchain was first introduced in a paper published pseudonymously by Satoshi
Nakamoto in 2008 (Di Pierro, 2017). It is based on Distributed Ledger Technology, a
system whereby multiple parties hold a record of the same transaction. Every transaction is
ordered, timestamped and immutable, as transactions can only be verified unanimously by
all the distributed records. Even though it was created for finance use cases, this technology
is applicable to any other industry that involves transactions (Di Pierro, 2017).
Blockchain is operated as a decentralised network. Decentralised networks are different
from centralised networks, which are governed by a central authority (Source:
101Blockchains). Centralized networks are prevalent today, they are owned by public
entities or private companies, and nearly all the technological artifacts we use are built on
them. In decentralized networks, power is distributed among participants. The use of
centralized networks in civic society has long been a subject for debate. According to
Feldman (2018) such networks hinder distribution of power by enforcing “hierarchies of
control”. Furthermore, they raise questions around surveillance, privacy and manipulation
(Feldman, 2018). In a later publication Feldman (2020) suggests that the shortcomings of
centralized networks can be overcome by developing technologies that (1) Serve groups who
want to act collectively, rather than individually; (2) Sustain “an iterative, participatory
design process and just and sustainable life cycles for “common good” technologies”; (3)
Allow scalability on-par with existing models.
Blockchain technology has the potential to fulfil most of these requirements. First, since
they store immutable records, they create trust, and they reduce coordination and
reconciliation costs. Second, the fact that records are distributed increases their resiliency,
and allows for a decentralized governance, which in turn increases transparency and
facilitates coordination of different parties. Lastly, they are built on a fast, scalable, flexible,
robust architecture that can be repurposed for many use cases (Dumitriu, 2020). Given its
decentralized nature, in theory, Blockchain technology is also attractive in a civic society
context due to the fact that its governance is enforced from its source code, which is not
easily modified – even for its developers. In practice, this is often a barrier to adoption from
international companies and governments, since it would imply forfeiting control (Meunier,
2018).
Blockchain adoption in international aid and development
The international aid and development sector represents an interesting use case for
blockchain, as it operates an exchange of resources in an uncertain environment -
disbursements, in money or in kind, which are challenging to track once they have left the
donors. In some situations, it becomes virtually impossible to determine exactly who
received aid, how it was used, and the results and impact it generated. The use of
blockchain based solutions could increase transparency and reduce costs and inefficiencies
related to transfer of resources, thus reducing corruption and making results and impact
more evident (Galen, 2018).
The United Nations (UN), which according to Forbes is one of the top 50 organizations
in the world pioneering the use of blockchain technologies (Pollock, 2020), has identified
blockchain applications to address all of the Sustainable Development Goals (Dumitriu,
2020). Thirteen projects were running within the UN between 2017-2020 and many more
are being planned (See Table 1).
Table 1. Current and identified Blockchain applications by the UN (Dumitriu, 2020)
Considering the fact that Blockchain technology has been around for over 10 years,
thirteen projects appear to be a limited implementation scope. Several implementation
challenges of blockchain technologies have been identified and summarized in Table 2.
Many of these challenges are rooted in uncertainty, since very few implementations have
been tested on the field (Hunt et al., 2020). This hinders the creation of design framework
and guidelines that might help mitigate some of these challenges.
Table 2. Main challenges to broad Blockchain adoption
Designing blockchain solutions for international aid and development
Baharmand et al. (2020) attempted to develop a requirement-based framework to the
design of humanitarian blockchain projects from a requirements/operations perspective,
drawing input from literature and qualitative interviews. He states: “One of the main
hurdles in adopting technologies in a humanitarian context is a difference between
humanitarian values and the factors that aspire to technological development. The growth of
the economy has been a driving force in the advancement of technology” (Baharmand et al.,
2020).
Being developed and governed according to different principles and governance
structures than the norm (centralized networks), blockchain technology carries important
values that are relevant in international aid and development. Some of the values
represented within blockchain are conflicting, leaving its designers and the communities
they design for the task to identify the appropriate balance for each use case. Cila et al.
(2020) identify 3 different mechanisms that need to be designed for their use in civic society,
and the design dilemmas that occur within each, summarized in Figure 1.
Figure 1. Design dilemmas (from Cila et al.,2020)
Tracking
Keeping track of transactions and transactor is necessary for participants to hold each
other accountable. Transparency is essential to achieve this goal, but it should not come at
the expense of privacy (Cila et al., 2020).
Managing
Establishing rules for transactions is an essential prerequisite for decentralized
management of the blockchain. Such transactions are facilitated by the use of tokens, which
are assigned value (monetary or otherwise). The value of this token must be recognized and
agreed upon by all participants in the blockchain. In a civic society, recognized value is
often not economic, but social, which might be difficult to measure objectively. Being a
technology based on algorithms, blockchain favors quantified values over qualified ones.
This is a good safeguard from human subjectivity, but risks constraining formalization of
informal social values (Cila, 2020). Furthermore, it should not be forgotten that people
carry different interests and motivations when participating in civic society. Blockchain can
support such interest and motivations, but it should incentivize rather than manipulate
participants. Lastly, since human action is subject to a tradeoff between private and
collective interest, both must be respected to some extent (Cila, 2020).
Negotiating
As mentioned above, the governance of blockchain is algorithmic. Human action, on the
other hand often encompasses decisions that are not entirely rational, and when deviations
from the rules can be accepted. Should algorithmic governance allow for no exceptions?
Immutable blockchain contracts will be enforced no matter the circumstances. Defining
acceptable exceptions is crucial in creating a system that respects the social tradeoffs of
civic society (Cila, 2020).
Building Blocks – A Case study
The objective of this essay is to analyze a blockchain-based case study within
international aid and development according to the design dilemmas framework, to assess
how current blockchain applications perform in terms of reaching truly decentralized design,
operations, and governance. The case study identified is Building Blocks, arguably the most
high-profile application of blockchain in the humanitarian sector, run by the World Food
Program (WFP).
The WFP is a UN organization that seeks to eliminate world hunger by distributing aid
in kind or cash-based transfers in the form of vouchers and prepaid credit cards (Zambrano,
2018). Cash-based transfers are less logistically challenging than in-kind donations, but
require the involvement of financial intermediaries, who in turn generate transaction costs
and fees. Furthermore, in order to interact with financial intermediaries, proof of identity
needs be provided, which can prove challenging in some contexts. The Building Blocks
program seeks to overcome these challenges by introducing blockchain-based transfers,
whereby identity is proven using biometric data. A retina scan can verify identity and
provide access to resources for refugees in camps (Zambrano, 2018). Besides eliminating the
need for financial intermediaries, Building Blocks can also facilitate the interaction between
the multiple organizations coming together to respond to a crisis or emergency. The
program is running in Jordan, Bangladesh and Lebanon (Source: World Food Program). In
the long run, the vision for Building Blocks is to turn it into “a platform for providing
foundational IDs” that can be used in multiple domains (Zambrano, 2018).
Not enough publicly available information on the governance and design of the Building
Blocks program exists to allow a thorough overview of each design dilemma individually,
but a short analysis of each mechanism is provided in the following sections.
Tracking
In the Building Blocks program, transactions are tracked based on biometric data of
refugees, which can be cause for concern. While increasing transparency and traceability in
transactions, collecting biometric data creates a privacy risk. Prior to the implementation of
the blockchain-based solution, personal information was managed by financial
intermediaries, which also involved privacy risk; the new system is transferring the risk
rather than eliminating it. Even if this data is not made publicly available, it could be
accessible by unintended parties (Zambrano, 2018). The design tradeoff between privacy
and transparency is likely to not have taken into account the preferences or refugees, who
might not be knowledgeable enough on the technology and its implications.
Managing
Building blocks was built on a private blockchain that is operated by the WFP alone. It
does not represent an example of decentralized control, since its operator has power over all
contracts (Baharmand, Saeed, et al., 2021) and defines the (economic) value of its tokens.
This defies some of the biggest benefits of using blockchain technology, and reinforces those
“hierarchies of control” that it seeks to eliminate. There is no publicly available information
on how such value is established, quantified, and whether social and qualitative factors are
considered. Hunt (2021) argues that within a humanitarian context, this is inevitable, since
“in response to a malicious attack or system failure, there needs to be an organization (or a
consortium of organizations) that takes responsibility and accountability. Further, if an
incorrect record is posted in the blockchain, the system owner should be responsible for
tracking and resolving the issue.” As more organizations are joining the Building Blocks
program, such as UN Women, governance is becoming more distributed (Perlitt, 2022), but
it is still far away from being decentralized to all participants.
The question of incentivization versus manipulation is particularly interesting within
Building Blocks. Some reports have circulated about episodes in which people were
communicated they would risk losing assistance if they refused to give their biometric data
(Smit, 2020). This is a clear example of how lack of agreement in value during the
tokenization process creates a misalignment that turns an incentive into a manipulation.
Negotiating
Hierarchies of control within the Building Blocks project also affect negotiations. Not
much publicly available information exists on the governance structures of the projects.
What is known is that no consensus algorithm is in place (Jutel, 2021). Some argue whether
this solution could have been replaced by a “simple” centralized database, without
employing blockchain technology (Zambrano, 2018).
Conclusions
It is evident that, in order to mitigate some of the challenges related to the adoption of
blockchain technologies, the WFP has created a non-decentralized blockchain approach to
cash-based disbursement. Until decentralization in governance is achieved, the power
exercised by the WFP creates hierarchies of control that defies some of the benefits that
blockchain technology brings about. As noted previously, the lack of control over
blockchain-based solutions has been a hindrance to its widespread adoption (see “Blockchain
and civic society” section) and this can be reflected in Building Blocks too. On the other
hand, it can be argued that humanitarian crises might not be the best playground for
lengthy processes of participatory design and stakeholder agreement, as suggested by Hunt
(2021). Nevertheless, what can be unequivocally stated is that the more field evidence we
collect, the more we can learn to develop optimal solutions in the future.
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