Crypto for Compassion: How Blockchain is Streamlining Humanitarian Aid for Refugees and Beyond

Imagine being forced to flee your home, leaving everything behind. On top of the immediate dangers and uncertainties, consider this: you’re also cut off from your bank accounts, your familiar financial systems. This is the stark reality for many refugees, including those displaced by the ongoing crisis in Ukraine. But what if there’s a tech solution that can bypass these barriers and deliver aid directly into the hands of those who need it most? Enter blockchain technology.

Blockchain: A New Tool in the Humanitarian Toolkit?

For years, humanitarian organizations have been exploring innovative ways to improve aid delivery, especially in regions plagued by conflict or lack of infrastructure. Blockchain, the technology behind cryptocurrencies, is increasingly being seen as a powerful tool to tackle challenges like:

• Lack of Banking Access: Many displaced people and those in developing nations are “bankless,” meaning they don’t have access to traditional banking services. Blockchain-based systems can provide a financial lifeline without needing a bank account.
• Identity Verification Issues: In crisis situations, proving identity can be difficult. Blockchain’s secure and transparent nature can help in establishing and verifying identities for aid distribution.
• Transparency and Efficiency: Blockchain can create a transparent and auditable record of aid distribution, ensuring that funds reach their intended recipients efficiently and reducing the risk of corruption.

Let’s dive into some recent initiatives showcasing blockchain’s potential in the humanitarian sector.

Stellar and UNHCR: Crypto Aid for Ukrainian Refugees

In December, the Stellar Development Foundation announced a significant collaboration with the United Nations High Commissioner for Refugees (UNHCR). The goal? To provide much-needed cash assistance to Ukrainian refugees using USD Coin (USDC) on the Stellar network.

Here’s how it works:

• Digital Dollars via Stellar: Ukrainian refugees will receive aid in the form of USDC, a stablecoin pegged to the US dollar, on the Stellar blockchain.
• Cash-Out at MoneyGram: A crucial element of this project is the partnership with MoneyGram. Refugees can redeem their USDC tokens for physical cash at any MoneyGram location. This is vital because it bridges the gap between digital currency and the everyday needs of people who may not be familiar with crypto or have the infrastructure to use it directly.

Tori Samples, product manager at Stellar Aid Assist, emphasized the importance of accessibility in crisis situations. She told Cointelegraph, “By partnering with Moneygram for cash-outs and using Circle’s USDC digital currency, ‘the entire solution becomes meaningful and accessible for people living in crisis.'”

This initiative is designed for real-world impact, not just experimentation. As Samples pointed out, aid organizations operate under intense scrutiny, and the fact that major organizations are using Stellar Aid Assist in Ukraine speaks volumes about its practical value and potential for scalability.

Red Cross and Partisia: Streamlining Aid with Blockchain

Another noteworthy project involves the International Committee of the Red Cross (ICRC) and the Partisia Blockchain Foundation. They teamed up for a “hackathon” in December to explore how the Partisia network could optimize Red Cross humanitarian aid payments.

The focus is on leveraging blockchain to make the distribution of cash and vouchers more efficient and transparent within Red Cross projects globally. While details are still emerging, this collaboration highlights the growing interest from established humanitarian organizations in utilizing blockchain’s capabilities.

Blockchain in Humanitarian Aid: Not Always a Silver Bullet

While these initiatives are promising, it’s crucial to acknowledge that blockchain in humanitarian aid is not a guaranteed success story. History shows a mixed bag of results.

A study by the Digital Humanitarian Network, titled “Humanitarian Blockchain: Inventory and Recommendations,” examined past blockchain projects in the aid sector. The findings were insightful:

• Success Stories: In some cases, blockchain genuinely improved aid delivery by cutting through bureaucratic hurdles and ensuring aid reached recipients directly and quickly.
• Unnecessary Complexity: However, the study also found instances where blockchain’s implementation didn’t add significant value and, in some cases, even complicated processes unnecessarily. Sometimes, simpler, existing technologies were more effective.

World Food Programme’s Building Blocks: A Blockchain Success Story

One often-cited example of successful blockchain implementation in humanitarian aid is the Building Blocks project by the World Food Programme (WFP). This initiative tackles the problem of “duplicative aid,” where multiple organizations unintentionally provide the same assistance to the same individuals, leading to inefficiencies.

Building Blocks uses blockchain to create a unified record of aid distribution. This allows different aid agencies to coordinate better, avoid duplication, and ensure resources are used effectively to reach more people in need.

Key Takeaways: Navigating the Blockchain for Good Landscape

So, what can we learn from these experiences as we move forward with blockchain in humanitarian aid?

• Context Matters: Blockchain is not a one-size-fits-all solution. Its effectiveness depends heavily on the specific context, the problem being addressed, and the infrastructure available.
• Focus on User Needs: Technology should always serve the needs of the people it’s intended to help. Projects must be designed with the end-users in mind, ensuring accessibility and ease of use, even for those unfamiliar with technology.
• Collaboration is Key: Successful blockchain initiatives often involve partnerships between tech organizations, humanitarian agencies, and local communities. Collaboration ensures that projects are relevant, sustainable, and effectively address real-world challenges.
• Realistic Expectations: It’s important to have realistic expectations and carefully evaluate whether blockchain is truly the most appropriate and effective solution compared to existing technologies.

The Future of Blockchain and Humanitarian Aid

Blockchain technology holds immense potential to transform humanitarian aid, making it more efficient, transparent, and accessible, especially for the most vulnerable populations. The initiatives by Stellar, Partisia, and the WFP, along with the lessons learned from past projects, pave the way for a more impactful and responsible integration of blockchain into the humanitarian sector.

As the technology evolves and more real-world applications emerge, we can expect to see even more innovative uses of blockchain to address global humanitarian challenges and bring aid to those who need it most, regardless of banking access or geographical barriers. The journey is still ongoing, but the early signs suggest a promising future where crypto can indeed be a force for compassion and positive change.