Blockchain Projects for Humanitarian Aid: Progress and Challenges

Humanitarian groups are increasingly turning to blockchain technology to address challenges like lack of banking access and inadequate identity verification in developing or war-torn nations. Two recent projects launched in December exemplify this trend: one utilizes the Stellar network to provide cash aid to Ukrainian refugees, while another plans to offer cash and vouchers through the Partisia network.

While innovative, the success of past blockchain projects has been mixed. Some initiatives have effectively enabled recipients to bypass bureaucratic hurdles, while in other cases, the use of blockchain proved to be unnecessary or ineffective. As part of the efforts to assist Ukrainian refugees, the Stellar Development Foundation announced on Dec. 15 a partnership with the United Nations High Commissioner for Refugees (UNHCR). The goal is to offer USD Coin (USDC) on the Stellar network as a form of cash assistance.

The USDC tokens can be redeemed at any MoneyGram location, which its creators believe will streamline aid distribution, particularly for refugees lacking bank accounts or having limited access to them. Tori Samples, the Stellar Aid Assist product manager, emphasized that the solution must stand up to real-world use, given the scrutiny that donor funds typically attract. The effectiveness of their product is reinforced by its real-world application amidst the ongoing crisis in Ukraine.

Earlier in the month, on Dec. 2, the Partisia Blockchain Foundation held a hackathon in collaboration with the International Committee of the Red Cross to explore methods to enhance the efficiency of humanitarian aid payments using the Partisia network.

The Checkered History of Humanitarian Blockchain

While these initiatives are admirable, the sector has faced challenges in the past. An August paper titled “Humanitarian Blockchain: Inventory and Recommendations” by researchers from the Digital Humanitarian Network highlighted previous attempts to leverage blockchain for aid. Some organizations managed to enhance their aid delivery efficiency, whereas others dismissed the technology as unhelpful.

For example, the Building Blocks project initiated by the World Food Programme succeeded in addressing the issue of duplicative aid by leveraging a permissioned blockchain for cooperation among various aid entities. Building Blocks continues to operate and manage its mission effectively. However, the Direct Cash Aid program, which involved a consortium of 121 humanitarian organizations, faced setbacks as it attempted to use blockchain-based self-sovereign identification (SSI) to help aid recipients in countries such as Ethiopia and Kenya.

Upon running the program, administrators found that many recipients did not have access to smartphones or reliable internet, leading them to abandon the blockchain components in favor of centralized identity verification alternatives.

Conclusion

The use of blockchain technology in humanitarian efforts shows promise, allowing for more efficient aid distribution and improved accountability. However, the challenges of implementation, limitations of technology accessibility among recipients, and the need for trust among various service organizations remain significant hurdles. Recognizing these issues will be vital as humanitarian organizations and blockchain technology strive to create a future where aid is effectively delivered to those in need.