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Blockchain for Social Impact: A Quick Overview of The Industry

Over the past century, scientific and technological progress has enabled unforeseen avenues for the global developmental paradigm. While innovations in medical sciences are saving millions of lives around the world, the average levels of income and education have also increased significantly. Furthermore, globalization has brought people closer to one another, especially with regard to welfare endeavors and opportunities. However, the progress that we have witnessed over the past century has been very unequally distributed. As a result, existing socio-economic divides have worsened further and have led to growing uncertainties among the world’s deprived population.

Some sections of society have access to more resources than they actually need, while others have remained structurally incapable of meeting even the basic necessities for sustenance. In other words, there has been an abnormal accumulation of resources and power in the hands of a few. 

One of the major factors abetting such inequality is the siloed and centralized nature of our existing institutions and processes. The lack of transparency, privacy and users’ autonomy are some of the pertinent issues that make these systems inefficient. In turn, this is causing a dwindling of trust across social flanks. 

As a decentralized, trustless and globally accessible framework, blockchain technology promises to solve these issues and assures greater social impact of welfare endeavors and other world-changing innovations. In this article, we discuss some of the ways in which this is possible, as well as look at how the RSK blockchain is supporting a range of social impact projects globally. 

 

Index

Blockchain for Social Impact — The Vision for a Better World
Social Impact & Dwindling Trust
Blockchain Technology for Trustless Social Impact
Transparency & Innovation in Philanthropy
Crypto-economic Charity
Faster & Relevant Aid Disbursement
Accountability in Governance
Decentralized Identity & Social Data
Auditable Social Services
Micro-Funding for Public Service
Fostering Inclusion with Blockchain Technology
The RSK Blockchain — Supporting a Better Tomorrow

  • Charity
  • Governance
  • OS City
  • Enargas

Conclusion

Social Impact & Dwindling Trust

Starting from substantial research works for understanding needs and demands, to innovative and dedicated projects, a lot is being done globally for a better world. On the one hand, philanthropists and other categories of humanitarian activists are working hard to put resources in the hands of the deprived. On the other hand, businesses are becoming more aware of the need to “give back”, driven both by regulations and consumer demands. In all, there is a growing consciousness surrounding the social impact of our actions, alongside the pressing need to ensure positive social change. 

However, the impact of most contemporary endeavors is highly undermined by the very nature and structure of our traditional systems. Despite their positive intent, most welfare projects face practical barriers while trying to reach their deserving beneficiaries. Usually, the givers and receivers of welfare are vastly separated either by physical distance or the technological divide. Moreover, the involvement of multiple intermediaries with often-conflicting interests results in corruption and other vices.

Given the lack of transparency and accountability, people have many times lost faith in philanthropic endeavors, especially when they are conducted online. Coupled with inefficient processes, the dwindling of trust has presently emerged as one of the biggest hindrances to achieving adequate social impact. 

Blockchain Technology for Trustless Social Impact

Blockchain is a decentralized, peer-to-peer, shared ledger technology that uses globally distributed networks of computers. In the case of public blockchains, the network is fully transparent and auditable. Not only can anyone join these permissionless networks, but every member also has access to a shared copy of the blockchain’s data. Furthermore, data on a blockchain is immutable—once it’s added, it cannot be altered or removed—and optimally secured using cryptography. 

Given the above features, enabling autonomous processes with in-built trust and accountability has been the foundational principle of blockchain technology. Blockchain ecosystems are often regarded as being “trustless” as they eliminate the need to entrust third-party intermediaries in order to facilitate processes. For instance, in the case of cryptocurrencies, secured financial transactions can take place without relying upon intermediaries like banks. Instead, the technology uses computerized algorithms to ensure that processes are inherently compliant to predefined rules. 

In the present context of social impact, this concept of trustlessness has great significance. However, it’s important to note that being trustless doesn’t imply an anarchic situation where anybody can do whatever they like, even when it harms others. On the contrary, it entails that processes are to be designed in such a way that they are compliant by nature. When that happens, there’s no need to trust any particular entity. 

Using open-access blockchain platforms, social impact endeavors can make their functioning fully transparent, auditable, and thus optimally accountable. Moreover, using blockchain-based solutions like smart contracts, we can further eliminate the risks of manipulation and mishandling. Simply put, smart contracts are automated, self-executing codeblocks that trigger certain actions based on predefined conditions.

Furthermore, blockchain technology is truly borderless and censorship-resistant. By leveraging these aspects, we can not only ensure global access to social impact endeavors but also make them egalitarian and democratic. In the following segments, we discuss some of the major aspects of the social impact sector that blockchain technology is transforming. 

Transparency & Innovation in Philanthropy

In general, donors have little or no idea about how non-profit or charitable organizations use their funds. Despite the monthly or yearly reports, it is almost impossible for donors to know whether their contributions are actually making an impact at the grassroots level. Given the lack of transparency in traditional and centralized philanthropic systems, we have no meaningful ways of tracking financial or in-kind donations. At best, we have access to aggregate data which doesn’t provide a clear and nuanced picture of who benefitted from our donations and how. As several surveys have pointed out, nearly one-third of the world’s population doesn’t have faith in philanthropic endeavors primarily due to their low accountability. 

As previously discussed, implementing blockchain allows social impact initiatives to gain the accountability and transparency that their donors demand. Moreover, it unfurls unprecedented and innovative ways of raising funds which also allows more people to participate. 

Although cryptocurrencies are often solely associated with financial speculation, the reality is much more expansive. Backed by their growing popularity and diminishing misconceptions, cryptocurrencies have emerged as a promising alternative for philanthropic fundraising.

Crypto-economic Charity

Donations made in cryptocurrencies are fully traceable as they are recorded on the underlying blockchain. For instance, donations made through the RSK-based GiveTrack platform can be traced in real-time. Moreover, since cryptocurrencies are globally accessible they allow social impact projects to overcome their physical barriers. Especially in terms of cross-border donations, crypto reduces the settlement times from nearly a week to less than a day. 

One of the limitations of traditional charity systems is that micro-donations aren’t feasible within these setups. Primarily, this is due to high administrative and processing costs which effectively nullifies the impact of small donations. This issue can also be resolved by giving and receiving donations using cryptocurrencies. Since crypto-assets are highly divisible, they can be used to setup micro-financial systems for welfare projects. 

For clarity, imagine a project that is raising donations to set up a clean drinking water facility in, say, Bolivia. Suppose, the total cost involved is $1 million. Quite understandably, it would be rather cumbersome to manage the donations if they are made in small amounts of, say, $10 or even $100. The internal cost of managing micro-donations in this case would be too high. However, if the equivalent amount is raised in bitcoins (or any other crypto), the donor can easily chip in small amounts, without implicating any additional expense for the receiving project. 

The asset to be built (in this case the drinking water system) can also be tokenized and represented on the blockchain. In turn, this will ensure tamper-proof accountability. Moreover, blockchain-cryptocurrency philanthropic ecosystems can also incentivize the donor’s contributions in several ways. Thus, cryptocurrencies enhance philanthropic innovations on the one hand, and on the other, they foster greater inclusion and participation.

Faster & Relevant Aid Disbursement

In the context of aid disbursement, speed is a crucial determinant of impact especially in cases like natural calamities. In other words, the sooner we can help those in need, the better they can benefit from our help. In fact, delays in aid disbursement often become a life or death question for those at the receiving end. Apart from that, it’s also essential to properly identify the needs of the affected community so that the aid is actually relevant to their use. 

Unlike traditional financial systems, secured overseas fund transfers using cryptocurrencies can be settled within hours to a day at most. That too, without being subjected to lengthy bureaucratic procedures which often account for majority delays in aid disbursement. Thus, crypto donations can be seen as a digital alternative for cash donations—instantaneous and hassle-free. 

Moreover, blockchain-based social impact projects can also build distributed data repositories that can be used to get a precise idea of what a certain community might actually need. Such innovations can be enhanced further by integrating AI and Big Data. When combined, these technologies could impart greater relevance to aid-giving projects and result in better social impact. 

Accountability in Governance

Although charities and philanthropic initiatives do their bit in trying to make lives better for people, local governance undoubtedly has the most consistent role to play in this regard. In other words, it’s important to make sure that people, in general, have higher and better standards of living. This applies to almost every aspect of society, including financial stability, identity, equal opportunity, etc.

In order to be truly democratic, governments around the world also need to ensure optimal participation from the citizens. This cannot be achieved merely by legal compliance and requires practical ways of enabling people to meaningfully contribute to government projects. On the other hand, there’s a growing need to make government bodies more accountable for the ways in which they use the taxpayer’s money. 

Given the rampant red-tapism and corruption that abound governmental processes, the benefits of welfare policies either don’t reach the intended recipient or are gravely inadequate. Implementing blockchain in governance can lead to a possible resolution for these issues. 

Apart from making corruption extremely difficult, if not impossible, blockchain-based traceability can help us ensure that the people in need actually get their due from governmental policies. 

Decentralized Identity & Social Data

Even if we achieve an ideal, corruption-free system, we need proper ways of identifying beneficiaries so that welfare policies could reach them. To enable this, we need streamlined identification systems and data sets comprising an individual’s nuanced social markers.

However, such systems cannot be centralized as that would raise serious privacy concerns and undermine the citizens’ democratic autonomy. Physical identification is also not a proper option in this context as they are highly susceptible to forgery and loss. Moreover, they preclude the very possibility of seamless access to identification.

Self Sovereign Identities (SSIDs) created and stored using blockchains could be an alternative in this regard. First, they overcome the shortcomings of physical identities, even in places of low-connectivity. Second, they are a decentralized form of digital identity where the owner has complete control, especially with regard to sharing and disclosure. While SSIDs can be seamlessly accessed by anyone who has the owner’s permission, they cannot be censored or monitored as they aren’t stored centrally. SSIDs are also tamper-proof and reliable. 

Around the world, many are presently deprived of welfare schemes and initiatives as they cannot prove their identity. SSIDs could bring this deprives class under its folds, empowering them in the process and opening up the doors to their upliftment.

Auditable Social Services

Despite their lofty promises, most social service programs are unequally distributed. Often, governments around the world channelize welfare schemes in ways that forward their political agenda. Furthermore, citizens don’t really have ways to audit the allocation of social service funds and to hold their governments accountable in this regard. 

Using blockchain technology, we can impart greater liquidity, accountability and reliability to social services. While the services themselves can be tokenized and their value represented on the blockchain, we can have transparency regarding how they are being distributed. 

Recording the government’s actions on a publicly shared ledger can also compel them to be more accountable to the people. 

Micro-Funding for Public Service

We can blame corruption and other internal vices of governance for the low quality of public services. Yet, we can’t deny the budget crunches that governments face. The cost of public projects is massive while investments are often low. Apart from taxes, the sale of government bonds is a significant way for governments to generate revenues. 

However, most of these bonds are presently funded by large corporations that have their own agendas and interests. Often, these interests are conflicting with the greater common good of the public. In this context, micro municipal bonds could play a major role in enabling greater participation and direct investments from the common public. 

Presently, investments into government bonds can only be made through banks, insurance companies, or other financial institutions. We have little control over how these funds are allocated—which bond gets what percentage of our investment. Moreover, the mediated process also implies that only the wealthy and ‘banked’ section of the society can invest in these bonds.

With that being said, using blockchain technology to issue digital government bonds could be a way of eliminating intermediaries and their associated costs. This would directly reduce the price of bonds and enable greater participation from the common public. Like any other tokenized blockchain-based asset, digital bonds could also enable micro-donations using cryptocurrencies and thus bring better liquidity into public funds as well. 

Fostering Inclusion with Blockchain Technology

A closer look at the foregoing discussion would highlight that inclusion is one of the biggest takeaways from blockchain implementation. In its present form, our world is highly fragmented and the not-so-prosperous classes carry the burden of such fragmentation. From financial services to governmental schemes, traditional systems are highly discriminatory and exclusionary. 

If social impact initiatives are to achieve their full potential, we need to find better ways of actively involving the intended beneficiaries. In the previous sections, we have discussed how transparency drives accountability. However, it’s important to realize that unless the right people are able to demand accountability, it is rather meaningless. 

As permissionless and community-governed ecosystems, inclusion is one of blockchain’s fundamental principles. Indeed, there is an associated learning curve and a long way to go before blockchains reach their full potential, but these hurdles than can be overcome with time. 

Even in its nascent form, blockchain technology is enabling unprecedented financial inclusion through cryptocurrencies. In this regard, there have already been several projects on the RSK blockchain, such as SeSocio, Money on Chain, 88i, Davinienda, and so on. Similarly, blockchain technology has the inherent potential to make every other social institution optimally inclusive.

The RSK Blockchain — Supporting a Better Tomorrow

Alongside the gradual maturity of blockchain technology, more and more of its potentials are being unlocked by real-world use cases. Although they remain to be the most popular blockchain usage, cryptocurrencies are no longer the only solution that this technology enables. 

As we have seen previously, the social impact sector is ripe with the potential for blockchain implementation. Over time, several innovators have already identified the scope and launched promising decentralized projects in this space. As a robust smart contract platform with Bitcoin’s security, the RSK blockchain supports a large share of these projects. For instance, the BitGive Foundation—the first-ever blockchain-based philanthropy platform—is built on RSK.

Working with a vision to support the full decentralization of processes and systems, IOV Labs (RSK and RIF) has been actively developing protocols, toolkits, libraries and several other solutions. Its scope includes tokens, payment protocols, identity and naming protocols, oracle solutions, etc. Leveraging these, the following are some of the major RSK-based projects that are having a substantial social impact. 

Charity

GiveTrack, BitGive and Circles of Angels are two of the biggest existing use cases of the RSK blockchain in the philanthropy sector. Primarily, both of these platforms enable greater transparency and accountability in charitable initiatives. 

B4H is a non-profit initiative and a decentralized accelerator for promising social impact projects. It works interoperably with the Giveth dApps and projects listed on the platform need to achieve milestones. As a result, they get advice, sponsorship, and partnership propositions from the members of the Giveth community. 

Targeted at social activists and entrepreneurs, B4H solves the issues with primary funding that most blockchain-based social impact projects face in their early stages. Moreover, it also ensures the general benefits of blockchain in social impact, including reduced costs, greater transparency, faster cross-border fund transfers, and the likes.

Governance

We have already noted how governments play a pivotal role in ensuring social impact. In doing so, we have also discussed the problems that governments face in this regard. Furthermore, we have seen how identification and citizens’ participation are major determinants of social inclusivity. In this respect, some promising projects have been using the RSK blockchain.

OS City

OS City is a blockchain company that innovates solutions that allow the digital transformation of governments. Despite their authoritative position, government processes are often siloed and cannot interact seamlessly with each other. This is a major factor abetting governmental bottlenecks to which OS City offers solutions. 

Being a digital platform, it enables greater modularity in public services and allows more people to directly participate in governance. Strengthening people’s trust in government services and minimizing the barriers to GovTech are two of the prominent goals of the OS City project.

Enargas

Enargas is a decentralized identification, registration, and certification platform focusing on the Gas sector. Primarily, it targets gas distribution companies, licensed gas fitters, and end-users. In doing so, it imparts greater traceability and transparency in this sector. The certification program also ensures better accountability for service providers, as well as a higher quality of customer services.

Conclusion

A lot is being done for a better world but people are mostly losing faith in the legacy systems given their lack of transparency and accountability. 

One of the ways of solving these issues could be to implement blockchain technology. With features like immutability, open-access and user control, blockchains can impart greater accountability to social impact initiatives. This could substantially benefit sectors like philanthropy, governance and food security, among others. Above all, blockchains could make our systems more inclusive and thus allow the deprived sections to participate better and more directly. In fact, inclusion is one of the major factors driving social change and mobility.

Realizing blockchain’s potential for social impact, IOV Labs innovates several toolkits for optimum decentralization and digital transformation of social institutions. Apart from these, the RSK blockchain presently supports a range of social impact initiatives ranging from philanthropy to financial inclusion, food security and also governance. 

Supported by frameworks like RSK, the world is truly moving towards greater equality and meaningful democracy.