Bitcoin, Ethereum, and other cryptocurrencies have dominated the news in recent months as their values have skyrocketed. However, blockchain, the technology underlying cryptocurrencies, is equally worthy of hype. Many actors from both the private and public sectors are quickly recognizing blockchain’s potential to change the global and technological landscapes they operate within. Mobile apps based on the technology may allow organizations like the Center for International Private Enterprise (CIPE) to make monumental leaps in their efforts to promote entrepreneurship, combat corruption, and improve governance around the world.
Blockchain technology is most widely known for its use in financial transactions. However, it is easily adapted to other forms of transactions. Currently, thousands of blockchain-based apps in development have the potential to transform lives of individuals, as well as the functioning of small and large companies, non-profit organizations, and even large-scale governments. This article explores several up-and-coming apps that could contribute to CIPE’s mission.
Economic Empowerment and Entrepreneurship
One of CIPE’s core focus areas is creating entrepreneurship ecosystems by building the institutions of a market economy, reducing barriers to doing business, and promoting an entrepreneurial culture. Blockchain-based apps will prove to be highly useful in this mission, as they facilitate the inclusion of millions more people in the international financial system. This technology has the greatest potential impact in emerging economies with weak or non-existent payment networks.
Many apps currently in development seek to improve access to finance and capital for individuals and businesses in emerging economies. For example, Humaniq, an Ethereum-based app, uses biometric identification to reduce barriers to opening bank accounts, such as paperwork and ID requirements. Through apps like Humaniq, only a cell phone with basic internet access is needed to open personal and organizational bank accounts. Additionally, the cost and difficulty of transmitting funds internationally is reduced, as most apps in development have minimal transaction fees and permit transactions to occur instantly. The decentralized and secure nature of blockchain allows apps such as Humaniq to empower start-ups through streamlined and reliable access to capital.
Blockchain further democratizes economic opportunity by allowing individuals and small companies to participate in the global marketplace without delays imposed by traditional bureaucratic infrastructure and processes. Blockchains and smart contracts—a set of instructions written in computer code and residing in a blockchain—reduce barriers to incorporation and have the potential to streamline compliance with local regulations. It creates a platform where ownership and incorporation records can be easily tracked, making it a trusted emerging way to incorporate a business. Thus, it makes doing business easier in emerging economies, where red tape often delays approval processes and significantly increases operating costs.
Anti-Corruption and Public Trust in Institutions
CIPE’s approach to anti-corruption compliance often involves increasing the cost or difficulty of conducting bribery and corrupt practices, rather than harshening the punishment for such activities. Blockchain technologies have the potential to do just that. Because the blockchain is an unchangeable record, it significantly reduces the risk of data tampering by corrupt individuals. Further, information on transactions can be made public to increase transparency. As CIPE has found through partnerships with organizations like SILAKA in Cambodia, enhancing the transparency and security of procurement practices helps to build trust in public institutions. Blockchain can be harnessed to further enhance this outcome.
Good Governance
Governance can be streamlined through the automation of the chain of smart contracts. The mobile app Harbour assists in this automation through designing the most effective governance system possible for participating organizations. It automates various forms of democracy and incorporates democratic processes into the management of a variety of companies, ranging from small businesses and non-profits to multinational corporations and international governing bodies. One function of the Harbour app is e-voting, which allows all app users to vote on the terms of the organization’s smart contracts or governing rules. Thus, the unchangeable smart contracts or rules can be modified according to the consensus of the governed group. Harbour is one of many examples of emerging platforms that will help to improve the design and function of both public and corporate governance through smart contracts.
Obstacles and Shortcomings
Amidst the hype surrounding it, we must acknowledge that blockchain is still an emerging tool, which is neither inherently good nor bad. Although it has great power to make the world more secure, inclusive, and efficient, it also has the potential to be harnessed by individuals with more destructive intentions. Just as the internet can be exploited to restrict free speech and weaken democracy, blockchain has the potential to be manipulated for destructive means as well. As blockchain technology becomes widely incorporated into the international system, policymakers should keep these risks in mind.
Other shortcomings and obstacles to implementation of blockchain include technical barriers, such as the lack—or high price—of internet connectivity in countries that stand to benefit the most from this technology. For example, blockchain’s main advantages—financial inclusion and economic empowerment—could have the greatest impact in countries like Papua New Guinea, where many people, especially women, cannot open bank accounts. However, the price of internet is so high in Papua New Guinea that it is out of reach for those who are most in need of these services. The global spread of internet access has occurred at an impressive rate in recent decades, but development organizations should be mindful of areas of the world that still lack reliable and affordable access.
Further, technological literacy presents a possible barrier to the adoption of blockchain technologies. While many mobile apps are designed with accessibility and ease of use in mind, internet users who are new to basic technologies and social media will likely face a steep and daunting learning curve when it comes to adopting blockchain technology. Education surrounding the use of technology, specifically these apps, will be crucial in helping people to reap the full benefits that blockchain has the capability to produce. Organizations such as the Chamber of Digital Commerce and the Blockchain Education Network have already begun to educate the general public, as well as policymakers, about the technology’s potential.
Finally, new blockchain enthusiasts must understand that most apps are not yet ready for use. Thousands of apps in development are set to be released this year. As with any new technology, there will be glitches to work out as the technology is adapted for widespread use. The spread and adoption will not happen overnight, and the benefits will take time to appear as well. Successful global integration of blockchain technologies will require patience and experimentation.
Just as the internet dramatically changed the world, blockchain has similar potential. Globally, leaders in all sectors and industries must facilitate the constructive adoption of this technology, especially in areas without widespread internet access. With innovation, patience, and sustained efforts to provide education on and access to blockchain for all, we can work toward creating a more free and prosperous world.
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Kayla Blomquist is a former Program Assistant for Asia at the Center for International Private Enterprise.
Published Date: March 14, 2018