Using Blockchain for Poverty Reduction

If you're asked to provide only one technological solution to tackle poverty, what would it be? 

That was the essay question which I was asked in my job application to Dalberg last year. I eventually didn't get the job, but I did go through a surprising thought process because of this question, and to be honest, an interesting interview experience which I learned from, but that's besides the point here. 

I arrived at Blockchain as my one technology solution. Here's why: 

Blockchain, the encryption technology, behind Bitcoin, has the potential to significantly reduce global poverty. This technology records all Bitcoin transactions and makes this record publicly available and easily accessible. These transactions imply transparent and digitally available transfers of ownership. This has implications for poverty reduction through ownership of property.

Ownership of property is seen as one of the most important factors for wealth creation. According to modern economist, Harnando De Soto, formal property systems that proved ownership of property (whether land or livestock) was what created capital in the West (America), and led to their economic development.

Therefore, using Blockchain technology to record ownership of property can ensure easier access to capital, because ownership transfer records can be used to secure funding in a legal and trustworthy fashion.

Furthermore, there have been links between clear property rights and reduced poverty. For example, a study in Kenya revealed that “well specified property rights are associated with higher productivity …environmental conservation… and lower poverty”. This is further supported by common sense – when you own something, you will preserve and develop it for your future generations.

It should be noted though, that any implementation of such a technology to improve property rights and land ownership may have to be coupled with capacity building. This will facilitate understanding, use of the technology by relevant institutions, and proper regulation. This training will also ensure that there is mass awareness on the uses and implications of the Blockchain technology with regards to raising capital.

Implementing this technology is cheap, and advances here will drive the development of digital infrastructure and inclusion. The scene is already set – 50% of the global population have mobile phones. By 2016, it will be about 70%, driven primarily by emerging markets.

In conclusion, the war against poverty has made minimal progress. It is time to think of innovative approaches to change the mind-set of the poor, and empower them. This can be done by using resources that are already available (their livestock and land) and innovative, disruptive technology, to open up new opportunities for financing and facilitate self-employment.

Note: This was submitted as part of a job application to Dalberg, but I believe it's quite relevant and so I thought to share. Start with this short overview of Bitcoin, and then click on the links below to learn more about Bitcoin, and then Blockchain.

Check here for more information about Bitcoin (video) and Blockchain (video). Also, this infographic is great - check out The Most Interesting Thing About Bitcoin Isn't Bitcoin.