Blockchain

As a new way of storing data, blockchain technology could prove highly beneficial to international cooperation. Some experts are expecting the potential for innovation and change from blockchain to be comparable to the success of the internet. The fact that more and more new applications are being developed on the basis of blockchain technology and that the first projects are appearing in a number of different sectors underlines the technology’s great dynamism. As the topic is also highly relevant to international cooperation, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH established a ‘Blockchain Lab’ in February 2018 and tested a variety of approaches to applying this new technology for the achievement of the Sustainable Development Goals. 

Blockchain at a glance

As a type of distributed ledger technology, blockchain offers a new way of handling data. Transactions are being processed, verified and stored in an ever-growing list by a distributed network of computers. Thereby attaining a higher level of data security and transparency. These transactions can contain any type of information, such as financial transactions, contracts, shares or land titles. In comparison to traditional databases, blockchain offers three advantages: 

  1. The entries on a blockchain do not sit on a single server, e.g. of a bank or government agency, but are at the same time and fully distributed across many computers. This further secures the data against manipulation and attacks. 
  2. All entries are cryptographically secured and immutable. New information is saved in blocks that are added to an ever-growing chain. Previously stored information is not overwritten. The result: modifications (as new entries) are traceable and transparent. Retrospective manipulation is not possible. 
  3. Despite its transparency, blockchain can protect the identity of its users – as transactions are not shared with names but with pseudonyms. The traceability and transparency of entered data increases the trust between users and enables transaction between people that do not know one another – without the need for a centralised authority, e.g. a bank or a notary. 

Thanks to these advantages, blockchain technology can be applied in a number of use cases for the Sustainable Development Goals. This is, for example, possible for tamper-proof education credentials, smart grids, parametric weather risk insurances or transparent supply chains. An overview of the most promising use cases was prepared as part of the GIZ Blockchain Lab. 

Blockchain Lab

The GIZ Blockchain Lab, founded in 2018, taps into the transformative potential of blockchain and related technologies in the realm of the achievement of the 2030 Agenda for Sustainable Development. It concentrates on examining the added value of the most promising blockchain applications for sustainable development as well as their technological, economic and legal feasibility. Through proof-of-concepts and pilot projects worldwide, the Lab seeks to generate much needed real-world exposure of blockchain use cases. At the same time, it researches the potential of combining blockchain with other technologies, such as artificial intelligence, sensorics and data analytics.

The Lab’s methodology comprises an agile, interdisciplinary, and innovation management approach, which relies, among others, on co-creative workshops, design thinking and hackathons. Its work is geared towards the needs of users and target groups as well as development-policy objectives as illustrated by the Principles for Digital Development. The openness of this approach has previously produced further concepts besides blockchain-centric ones, for example in machine learning approaches to fighting money laundering in Peru or a transparency portal for land rights in Bangladesh.

 

Blockchain Guide for Development Practitioners 

Based on the Blockchain Lab’s results, GIZ published a hands-on guideline to analyse potential blockchain projects in the field of development cooperation. Besides the basic understanding of the technology and the illustration of exemplary areas of application, this publication can assist in the decision making to verify whether the use of blockchain technology for the set objectives is indeed needed and effective. 
Please refer to the How-To Guide for International Development Practitioners.

Digital land registration in Georgia

In Georgia, GIZ is working with the government on behalf of the German Ministry for Economic Cooperation and Development  to reform the legal system. Legal certainty is a key prerequisite for sustainable economic development. This is why the land cadastre system in Georgia is gradually being converted to blockchain technology. In practical terms, this means that all of the land titles in the Caucasian country will be stored in a blockchain, piece by piece. This is intended to prevent manipulation and corruption, and thus boost the trust that the population and investors have in the national land authority. Around one million transactions have already been registered.

Georgia would like to go one step further: in future it wants property transactions to be processed entirely via blockchain – including obtaining proof of identity from purchasers and vendors. Some 3.7 million people in Georgia are expected to benefit from this transparent, secure and more efficient method of land registration. The legal framework for the changeover to blockchain technology was developed by GIZ – pioneering a new approach to legal processes. 

Tamper-proof education certificates

To increase trust in educational certificates, blockchain-based systems can be used for the verification of digital documents. This helps to limit the forgery of documents and increase their recognition across national borders. 

Education providers such as universities or schools issue certificates as digital originals and store so-called hashes of these files - which can also be called digital fingerprints - on an immutable blockchain. Students receive their certificates in digital form and can pass them on to third parties such as employers or public authorities. Instead of contacting the educational institutions, these third parties can then validate the submitted certificates electronically by comparing their fingerprints with those stored on the blockchain. Ideally, learners, educational institutions and third parties will benefit equally from forgery-proof certificates and the improved verifiability of authentic learning outcomes. 

The GIZ Blockchain Lab is developing a system for issuing blockchain-based educational certificates in cooperation with the Southeast Asia Ministers of Education Organization SEAMEO INNOTECH and the Technische Universität Berlin. The software is not proprietary but relies on open standards and is developed using open source practices. This ensures technical interoperability, prevents vendor lock-in and promotes the acceptance of this novel digital infrastructure in education. With an ecosystem governance framework, the software provides a means for education providers in emerging knowledge societies to embrace the paradigm shift towards digital certificates.

Climate risk insurance strengthened by better data

Thanks to the Global Initiative for Access to Insurance, small farmers in India can use blockchain to document that they produce cotton and peanuts sustainably. This also strengthens climate risk insurances. The project, in cooperation with the Indian project partner Weather Risk Management Services (WRMS) and the service provider dCentra, is storing data on cultivation practices using the technology. If the participating smallholders adhere to the specified sustainable practices, they receive an insurance payout in the event of harvest losses. By using the blockchain technology, compliance can be checked transparently and independently, because the insurance model and possible payouts are based on reliable data. On the basis of this improved information, the insurance company could offer farmers lower premiums. At the same time, the data obtained can be used for the marketing and traceability of the products. Products from sustainable cultivation can also achieve higher sales prices, which would stabilise the income situation of small farmers.

Organic spices on their journey from Sri Lanka to Bavaria

Blockchain enables the traceability of spices from the plantation to the final distributor. Thanks to blockchain technology, every step in the global supply chain is recorded. Small farmers in particular should be able to benefit from this in the long term.

Traditionally, sustainable supply chains have to be verified by a third party to prove their ecological, social and ethical production practices. Blockchain technology offers particularly developing and emerging countries an opportunity to create transparency in the procurement, processing and transport of goods. Every step along the product chain can be recorded unalterably in real time on the blockchain. This ability to provide insight into the origin of consumer goods is one of the most promising features of blockchain technology for local producers, logistics partners, etc. It could reward those who adopt sustainable practices, as the added confidence in the blockchain could encourage consumers to pay a higher price for environmentally, socially and ethically produced goods.

Community Coins for rural communities in Cameroon

The non-governmental organisation Grassroots Economics established community currencies in Kenyan communities to promote and stabilise the local economy. Based on this successful approach, GIZ investigated how community currencies can be further developed on the basis of blockchain technology. To this end, the initiative PositiveBlockchain.io, which operates an international database of non-profit blockchain projects, analysed various community currencies and provided important insights. The resulting publication was used by GIZ in the conception of a digital flagship project. It supports five pilot communities in rural Cameroon in introducing digital voucher systems. The users can use the vouchers to purchase everyday goods and services from each other without having to rely on cash that becomes scarce during the dry season. For the voucher systems, a blockchain-based digital infrastructure with access via mobile phones will be created.