Should we put our trust in blockchain?

By on 06/11/2018
AID:Tech is a Dublin-based start-up that has managed to overcome trust hurdles.

Blockchains could validate people’s rights – but, misused, they could as easily steal them. David Whitehouse finds that building trust will be key to realising the technology’s potential

Blockchain has an alluring but elusive potential to help the disadvantaged. An incorruptible, open public ledger offers the prospect of empowering both suppliers and users of public services, in areas such as healthcare, housing and benefit payments. How best to make it work?

Blockchains – as explained in more detail here – are distributed databases with no central authority, best known as transaction logs for bitcoin cryptocurrency. According to a recent working paper from the OECD, blockchain technology presents the prospect that governments may no longer be required as trusted third parties in the same way as they are now. The paper suggests that we’ll see the “growth of automated and decentralised decision-making systems that do not require centralised authorities yet still ensure validity and transparency.”

A word of caution

Yet blockchain remains a network that runs on human inputs. According to Alexandra Giannopolulou, a postdoctoral researcher at the Blockchain and Society Policy Lab at the University of Amsterdam, the question of trust is paramount. “We have to trust the actor that inputs the data into the blockchain,” she comments; and there is no easy way to resolve that question. Blockchain is not a “technology of equality”, she argues, “and if anyone is promising that, they can’t deliver.”

Giannopolulou is cautious of “techno-solutions” to social problems. Blockchain is not intrinsically good or bad, she argues, but remains a human network. And its applications will be limited by constraints on data-sharing between governments, international bodies and non-governmental organisations. In service delivery, Giannopolulou believes that blockchain can’t easily be reconciled with the privacy of personal data: “There are too many sensitive issues involved in a public ledger.”

She also warns of the risk that blockchain could be used not to capture accurate information, but to validate lies. In countries where property rights are not well evidenced or enforced, she suggests, companies or individuals could drive people off their land then have their ownership secured in blockchain land registry systems. “Blockchain is not going to change the world,” she says. “It has specific uses for specific needs.”

But big potential

Where blockchains are delivered well, though, they could instead be used to recognise and protect people’s rights. Dr Wolfgang Jamann, executive director at the International Civil Society Centre in Berlin, points out that over one billion people worldwide do not have a proven and secure form of documentation of identity, either because they are refugees or because their government is unable or unwilling to provide it. “A trusted, non-corruptible and well-governed digital ledger could fill this gap and create preconditions” for other needs such as access to bank accounts and housing to be met, he argues. “Land titles are poorly documented and often manipulated in many cadastral [land registry] systems. A blockchain ledger could secure those titles and document transactions properly.”

Estonia was the first nation-state to deploy blockchain technology in a live setting, with its Succession Registry system for wills created in 2012. Guardtime’s KSI permissioned blockchain technology is used to create a unique digital fingerprint, which can be used to identify the asset’s integrity, the signing time and the signing entity. No data goes to the blockchain, so avoiding privacy issues. Estonia also has an e-health registry backed by blockchain which can be used for tamper-proof paperless prescriptions.

Estonia’s emerging blockchain systems work because they’re trusted; and Paris-based OECD consultant Chan Yang emphasises the need for governments to build new systems on fair foundations. “This requires strong commitment from governments to address weaknesses in the public sector and uproot corruption,” she says.

Audit trail

Chan Yang gives Dublin-based AID:Tech as an example of a start-up that has managed to overcome trust hurdles. The AID:Tech solution was deployed in Blanchardstown in Dublin from March 2016 in partnership with the Catholic charity the Society of St. Vincent de Paul. The goal is to provide digital identity for welfare entitlements for women from nomadic communities who have usually been unable to access them.

AID:Tech digital IDs are suppled in the form of QR bar codes on paper vouchers. By scanning the codes, shopkeepers have certainty of the value to which the individual is entitled. Every transaction is confirmed in real time and stored on the Blockchain to create a permanent audit trail that eliminates the possibility for fraud; no cash is used at any point. AID:Tech has also used its system to provide transparency in the aid being delivered to Syrian refugees, and to deliver medical entitlements to pregnant women in Tanzania. 

Trust and scale

Scale is an obvious limitation of these initiatives. Trust may be relatively easy to establish for small-scale projects, but more ambitious goals require the buy-in of bigger organisations. Gender is one part of that trust. Renata Avila, a human rights lawyer and senior digital rights advisor for the World Wide Web Foundation, said at an OECD event in Paris in May that Blockchain as it stands is a “super-exclusive male club”. The blockchain champion Nicolas Cary was also there, and accepted that there are power inequalities that Blockchain can’t eradicate, and that lack of internet access will continue to mean exclusion. He maintained that Blockchain can “democratise and decentralise trust and risk.” Blockchain, he said, doesn’t care about race, gender or credit-card score. “This is not a black box. This is open source.”

OECD consultant Chan Yang sees the role of developed nations as key to applying blockchain in the developing world. Implementation in developing countries is hampered by lack of digital infrastructure and low levels of technological capability, she points out. The cost in money and time to migrate public services delivery onto blockchain solutions will be particularly high for governments that don’t yet have digital systems. “They will therefore need support and experience-sharing from the international community.”

That will require trust-based relationships between the civil servants and governments of developed and developing countries. Blockchain alone can’t create that trust; but in its absence, only a fraction of the technology’s potential will be realised.

About David Whitehouse

David Whitehouse spent 17 years as an editor with Bloomberg News in Paris. Still based there as a freelancer, he writes for The Economist Intelligence Unit as a financial services analyst. He is the author of a book on France's role in the Rwandan genocide and the trials of Rwandan suspects, which began in Paris in 2014.

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