Could blockchain technology revolutionise development?
A new IDS Rapid Response Briefing unpicks the hype around blockchain, with a ten-point checklist for development policymakers and pracitcal examples of how the technology could be applied.
Image: BTC Keychain / Flickr
Begin to read about blockchain and expert commentators will often include phrases such as ‘the potential to be more transformative than the internet’ and ‘turning traditional banking systems on their head’, but what is the mysterious ‘blockchain’ and the more well-known 'bitcoin'? This is what the new IDS Rapid Response Briefing ‘Blockchain for development – hope or hype?’ seeks to answer, along with some practical examples of how it can support development and how to discern if and when the technology could offer positive alternative solutions, or potentially cause more harm than good.
The potential use of blockchains has attracted widespread attention from the media, the IMF and governments, including the UK Government’s own Chief Scientific Advisor. With the reported potential to replace powerful financial institutions it also has the potential to offer new ways to track aid and tackle corruption, facilitate smart-aid contracts and cut costs for international payments. The briefing cautions against thinking blockchain could have all the answers however, asserting that components for successful innovation – including the use of blockchain - are ‘technical feasibility, business viability and human desirability, all of which come together within social, cultural, political and economic settings that ultimately determine contextual achievability.’ The aim is to achieve a place where all these components interconnect in to a space of ‘grounded innovation’.
With many possible benefits to be gained from blockchain, such as achieving greater transparency in the dispersal of aid and more decentralised systems, the research suggests development policy makers should give the technology careful consideration. As the briefing also states however, with any new technology it will not be a silver bullet and policy makers must look carefully at the pros and cons of applying blockchain technology, and ultimately be hopeful, but avoid the hype.