Denmark has highlighted the potential application for blockchain technology to be used in humanitarian aid, and is considering becoming the first donor country to move funds using cryptocurrencies.
According to Udenrigsministeriet, the Danish Foreign Ministry, blockchain offers new levels of trust that are missing from paper-based contracts.
A report published by the ministry, alongside think tank Sustainia and blockchain currency platform Coinify, investigates how blockchain technology might solve problems in providing development aid, noting that by using cryptocurrency, money can be transferred faster and safer, and without a middleman or fees.
In addition, contracts and other legal papers can be digitalised to combat corruption and ensure a more effective development aid and better protection of the rights of marginalised groups, the report, Hack the Future of Development Aid, explains.
The report also recommends that development and humanitarian organisations use blockchain when promoting human rights, for example in India, where blockchain is being explored as a tool to combat the country’s land register bribes — which the report says amounts to around $700 million.
“Crypto and crisis is a perfect match, and aid organisations will undeniably be able to respond quicker using blockchain-based digital money, which arrives at email-speed, safely and transparently,” Sustainia project leader Marianne Haahr said.
Blockchain is still relatively immature and it might take time to develop trust, but some concrete initiatives are being developed. Coinify, one of Europe’s biggest virtual currency platforms, is working on using cryptocurrency payments to scale off-grid renewable energy.
“You will be able to pay with your cryptos directly into a solar panel situated in, for example, an African village and then you would not donate money but electricity,” Coinify’s chief executive Mark Højgaard told Reuters.
Another option, according to Coinify, could be an online hub where people would donate to single projects like schools, railroads, or bridges. So-called smart contracts would ensure that the money went to its intended project.
“The money being donated goes into a programme where you can only use it for bricks and mortar to build a bridge for example,” Højgaard added. “Even if you try to buy a banana it will go back so you can seriously control the money flow.”