Five ways blockchain will revolutionize humanitarian aid delivery
Imagine a world where humanitarian aid delivery is more efficient, transparent, and accessible than ever before. Welcome to the future of aid distribution, powered by blockchain technology. In this article, we'll explore the revolutionary impact of blockchain on humanitarian aid and how it will transform the way we support those in need around the globe.
We'll explore how blockchain and cryptocurrency can help:
Increase transparency and traceability in aid distribution,
Reduce operational costs and enable faster transactions,
Ensure greater accountability and reduced corruption,
Provide direct access to aid for beneficiaries, and
Enable innovative Web3 fundraising opportunities for humanitarian projects.
Increased transparency and traceability
Blockchain can help increase transparency and traceability in humanitarian aid delivery. By leveraging a decentralized and tamper-proof digital ledger, all transactions related to aid distribution can be recorded and tracked in real-time. This not only reduces the risk of mismanagement and corruption, but also instills confidence in donors and beneficiaries, knowing that their contributions and support are reaching the intended recipients.
A great example of this can be seen with impactMarket, a decentralized poverty alleviation protocol that provides Unconditional Basic Income (UBI) to vulnerable populations around the world. To date, they have distributed over $3M USD in UBI to nearly 45,000 beneficiaries in 25 countries. All transactions are on chain and are tracked in realtime on impactMarket's Global Dashboard, allowing donors to see the impact of their donations.
Reduced costs and faster transactions
Blockchain technology has the potential to significantly reduce costs and enable faster transactions in humanitarian aid delivery. By leveraging a decentralized, transparent, and secure digital ledger, intermediaries can be eliminated, resulting in more direct and efficient distribution of resources.
A great case study on the ability of blockchain to get aid to those in need, as quickly as possible, can be seen in the Web3 community’s response to Russia's invasion of Ukraine in February 2022. Following Russia’s invasion, several Web3 fundraising initiatives were launched to support humanitarian organizations working on the ground, including Ukraine DAO, as well as special funds from Endaoment and The Giving Block. Also, for the first time ever, we saw a government appeal directly to the international community for donations, with the Ukrainian Government posting their wallet address to twitter to accept direct donations in BTC, ETH, and USDT. This enabled them to instantly receive donations from basically anywhere in the world, without the need for an intermediary. As a result, humanitarian organizations in Ukraine, as well as the Ukrainian Government, quickly received over $100 million dollars in cryptocurrency donations in the months following the invasion.
Greater accountability and reduced corruption
Blockchain can help increase accountability and reduce corruption in humanitarian aid delivery by creating a transparent, immutable, and decentralized record of transactions. This allows for real-time tracking of aid distribution and eliminates the possibility of tampering with records, as the immutable nature of blockchain makes it basically impossible to tamper with. Additionally, smart contracts can be used to automate aid disbursement based on predefined conditions, ensuring that funds are released only when specific milestones are met. As a result, blockchain can minimize mismanagement and fraud, leading to more effective and efficient humanitarian aid delivery.
One example of how smart contracts can be used to increase accountability and monitor impact can be found in Hypercerts, a new token standard for tracking and rewarding positive impact. Each Hypercert is a semi-fungible token that stores data related to the impact of a project, making it easier to monitor impacts over time. We recently had the pleasure of interviewing Carl Cevone from Hypercerts on the Crypto Altruism podcast for a great ELI5 of Hypercerts. Protocols like Hypercerts can be used to monitor humanitarian aid projects, ensuring that they are having their intended impact, and that the funds are getting to those in need. Although the project is in it's early stages, it has the potential to completely revolutionize how we monitor the impacts of humanitarian projects, and can inform how we allocate funds.
Direct access to aid for beneficiaries
By eliminating intermediaries, such as banks and government agencies, and using novel blockchain tools like stablecoins, aid can be distributed quickly and securely to those who need it most. This innovative approach not only streamlines the process but also increases transparency and accountability.
A great example of this can be found in the recent partnership with the United Nations High Commission for Refugees (UNHCR) and the Stellar Development Foundation. This partnership enables the delivery of cash assistance directly to Ukrainian refugees via the USDC stablecoin, which is redeemable at any MoneyGram location. Although the project is still in the early stages, it is believed that it will make it easier for refugees to access essential cash assistance regardless of if they have a bank account or not.
Enabling innovative Web3 fundraising opportunities
Blockchain technology has paved the way for innovative Web3 fundraising opportunities for humanitarian organizations. The Web3 community is truly global, in every sense of the word, which provides humanitarian organizations with an opportunity to connect with a global and engaged audience, and to leverage this to fundraise for their cause. This is primarily done through crypto philanthropy platforms such as Endaoment or The Giving Block, which allow Nonprofit organizations to receive donations in hundreds of different cryptocurrencies. Additionally, unique Web3 tools like Quadratic Funding can help maximize the impact of individual contributions. In short, Quadratic Funding is a donation matching mechanism that provides greater funding to the projects with the most unique donations received, instead of those with the most dollars received, helping ensure wealthier donors don't have an oversized impact. For a deeper dive into Quadratic Funding, check out our article highlighting how quadratic funding will revolutionize crowdfunding.
A great example of a humanitarian organization leveraging Web3 crowdfunding opportunities can be found in UNICEF's collaboration with Gitcoin, a decentralized public goods funding protocol. For this collaboration, UNICEF chose 10 projects building open-source Web3 solutions that have a positive impact on children and the world, and launched a Quadratic Funding round on the Gitcoin Grants Stack. UNICEF committed 50 ETH (approximately $90k at time of writing) in matching funds for the funding round, which received nearly an additional $100K in donations from community members.
Conclusion
In conclusion, blockchain technology has the potential to revolutionize humanitarian aid delivery by increasing cost efficiency, transparency, auditability, and speed, and providing humanitarian organizations with innovative new tools to raise funds. This innovative approach is poised to transform the way aid organizations operate, resulting in a more effective use of resources and an enhanced ability to respond to crises. As the world continues to face unprecedented humanitarian challenges, embracing blockchain technology could prove to be a game-changer in providing timely and reliable assistance to those in need.
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