Using blockchain and cryptocurrency to support and empower refugees
According to the UNHCR, as of 2019 there were 79.5 million people who were forcibly displaced worldwide, which includes 26 million refugees. 85% of these individuals are hosted in developing countries and will often end up in refugee camps with poor infrastructure and a lack of access to services.
As climate change intensifies, and new geopolitical conflicts emerge, one can only assume the worst - that the number of individuals who are forcibly displaced from their homes will continue to rise globally. As such, there is an urgent need for international NGOs, governments, and social entrepreneurs to come together and develop accessible technological innovations to support refugee populations.
Blockchain and cryptocurrency technology can play an instrumental role in developing systems and structures to support refugee populations. In previous blog posts, I have highlighted a number of amazing organizations that are implementing real solutions to support refugee populations today, and through this research some key use cases have emerged that will be highlighted in this post.
Access to Financial Instruments
One of the most obvious use cases of blockchain in supporting refugee populations is its ability to create innovative solutions to provide refugees with access to financial instruments.
Given the reasons for displacement, which could include war, natural disaster, and persecution, refugees often must leave their homes quickly, and may not have the opportunity to settle their affairs, including finding a way to safely transport their live savings. This can make it difficult to access their funds after fleeing and could result in individuals losing their life savings. Furthermore, if they are able and decide to withdraw their funds, safely storing and transporting it can be extremely difficult when in transit. They could risk losing their physical funds due to violence or corruption from officials, and may be unable to carry it across the border.
A blockchain-based platform that provides mobile banking services to refugee populations, where they can store their funds in cryptocurrencies, is one potential use case to address this challenge. One company doing this today is Leaf Global Fintech.
Leaf makes use of USSD technology, and is accessible to anyone with a basic phone, regardless of if they have an internet connection. It allows you to store money and send it to friends and family safely and without banking fees, while allowing users to cash in and out using mobile money. It also enables individuals to send money in one currency and receive it in another. This is key as family and friends may be separated when fleeing and could end up in different countries using different currencies.
Users are able to create an account on any mobile phone, and can deposit cash at a local money agent, which includes all major mobile money providers in the countries they’ve launched in. Once the mobile money is in a user’s Leaf wallet, it is easily accessible abroad, and family and friends can even contribute to it. This allows for a much simpler way of storing, sending, receiving, and accessing cash than has traditionally been available.
Another similar project, Kotani Pay, is a start up based out of Kenya whose platform allows for unbanked populations in developing countries to send and receive money via blockchain technology without the need for internet connectivity, a smart phone, or a bank account. Like Leaf Global Fintech, Kotani Pay also makes use of USSD technology.
Essentially, by dialing a short code in their phone, users will be given access to a menu through which they can easily convert crypto to fiat, and vice-versa. Users can use this to move funds between their blockchain and mobile wallet, without the need for public or private keys, simplifying the process for transacting with cryptocurrency.
Kotani Pay makes use of Celo dollars (cUSD), a stablecoin pegged to the U.S. dollar, which is located on the Celo Platform, to protect users against the volatility of traditionally cryptocurrencies. Users can change their cUSD for mobile money in local currencies using Kotani Pay’s digital wallet.
These are two examples of innovative projects making use of cryptocurrency and blockchain to positively disrupt traditional financial services and providing tangible solutions for refugees and vulnerable populations to gain access to these essential financial instruments.
Financial Aid
The unfortunate fact is that many forcibly displaced individuals will have access to only limited or no funds at all and will need urgent financial support. Traditional means of distributing aid to individuals can be overly bureaucratic, outdated, or inaccessible for those most in need. The funds may also have to pass through multiple intermediaries in multiple countries, which could result in high administrative costs and the slow disbursement of funds.
Cryptocurrency, by its very nature, provides a quick and efficient method for transferring funds from point a to point b, with no need for an intermediary. This makes blockchain technology a great fit for projects looking to get aid to those in need as quickly and efficiently as possible, while also addressing one of the main concerns leading to the high levels of bureaucracy we see in traditional aid disbursement methods – a need for auditability.
There are some projects already in the works that clearly demonstrate the ways that blockchain and cryptocurrency can be used to speed up the provision of aid, one of them being Rahat.
The Rahat project uses mobile-based blockchain tokens to manage transactions between beneficiaries, vendors, and aid organizations. Its intuitive platform includes a dashboard, wallet, vendor app, and QR code/SMS based token redemption process which is used by beneficiaries to receive aid. The blockchain behind the platform makes it easy to monitor and view real-time data on the flow of funds, making it highly transparent and leaving an auditable data trail. Furthermore, the efficiency of the underlying blockchain technology allows for rapid aid distribution while cutting down on many of the normal costs such as bank fees, staffing costs, etc.
Rahat’s online dashboard makes it simple to include both vendors and beneficiaries, including traditionally hard to reach unbanked populations. To receive aid, beneficiaries would need to only have access to a mobile phone. In essence, beneficiaries receive their tokens via SMS message, and can spend their tokens at local vendors for cash or goods. On the other end, vendors can then change their tokens for local currencies via the aid agencies or participating financial institutions.
Another common theme in the provision of aid, is the use of Universal Basic Income (UBI). Blockchain and cryptocurrency lend well to UBI, as systems can be built in to the project through Smart Contracts to allow for the disbursement of aid at regular intervals, and as a means for safely storing that aid after it has been disbursed. There are multiple projects currently underway that make use of blockchain to provide UBI to vulnerable populations including refugees.
One of these projects, Building Blocks, has been successfully implemented by the World Food Programme, the worlds largest food security NGO. The Building Blocks program makes use of blockchain and biometrics technology to provide aid to 100,000 refugees in two settlements in Jordan. Due to this innovative project, Syrian refugees now have the ability to purchase groceries using aid provided by the WFP by simply scanning their iris at checkout. This program is built on a private, permissioned blockchain, and integrated with pre-existing biometrics’ technology utilized by the UNHCR, enabling them to easily keep track of every transaction for monitoring and evaluation purposes. This simple process enables beneficiaries to no longer worry about safely storing and keeping track of cash or food vouchers, so they needn’t stress about losing them or having them stolen. Furthermore, whereas other blockchain-based platforms for marginalized populations often require a mobile phone to receive or spend aid, Building Blocks does not, thus increasing accessibility for those most in need.
Another project operated by the Refugee Integration Organisation (RIO), is using the innovations of blockchain and cryptocurrency to provide UBI to individuals residing in three refugee camps. This project makes use of the Celo cryptocurrency to provide $1.50 of daily UBI to refugees, which is delivered in local currencies with no need for repayment. The project is housed on ImpactMarket, a “decentralized anti-poverty system”, and makes use of USSD technology to ensure it is accessible to the most vulnerable refugees, regardless of if they have access to a smartphone or the internet.
Through this project, over $71,000 USD has already been distributed to over 2,500 refugees, as of August 2021. Recipients are able to make use of the funds to purchase life essentials, helping transition refugee camps to self-sustaining communities.
Whether it’s through one-off transfers of aid, or a UBI program, it is clear that the potential is there for blockchain to play a leading role in technological solutions to provide aid to refugees and vulnerable populations efficiently, securely, and transparently.
Identification
Using blockchain to facilitate permissionless digital identification is not a new concept. The World Economic Forum acknowledges that there is a lack of valid identity documents for refugees, and that a blockchain-based platform could help address this by providing “a transparent infrastructure that governments and NGOs alike could easily adopt and share… it could easily launch as a local initiative and then quickly develop into a global solution.”
They highlight many benefits to such a platform, including:
End-to-end efficiency
A secure platform with maximum privacy
Easier data collection for the number of refugees assisted
It can help produce a more efficient system for locating lost families
The new, immutable ID provides them with an immediate means of identification, and additional use cases down the road
There are some projects already underway exploring the creation of digital identification systems that could potentially be scaled to this context. One of these projects, which is a partnership between Cardano and the Ethiopian government, is looking to make use of the Atala PRISM technology to “create a national attainment recording system; to verify grades, monitor school performance, and boost nationwide education.” While this project isn’t for refugees, it could certainly act as a proof of concept and could be applied to other contexts, such as developing identification systems for refugees.
Conclusion
Unfortunately, the refugee crisis will not be solved any time soon, and one can reasonably expect it may worsen as the devastating effects of climate change and new geopolitical conflicts take hold. That being said, it is essential that structures are in place to support those forcibly displaced.
In and of itself, blockchain isn’t the solution, but it can be part of a much bigger strategy for supporting refugees which will require a combination of innovative systems, funding, and support from governments, NGOs, and corporations. However, blockchain and cryptocurrency can and should be a huge part of the equation, as there are significant use cases for the technology that could have a significant positive impact on refugees and vulnerable populations. This includes blockchain-based platforms to provide refugees with access to important financial instruments, efficient and accessible aid, and a reliable means of identification.
What are some other ways that blockchain and cryptocurrency can help support refugees and vulnerable populations? Tweet us at @Crypto_Altruism, we’d love to hear from you!
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