Blockchain Supported Decentralization Drives Social Good

The speculative frenzy of the last few years has fueled the narrative that Bitcoin and cryptocurrencies like it are mainly about Lambos, “when-moon?” and other annoying bro-culture memes. Indeed, the huge influx of capital through ICOs brought with it waves of get-rich-quick speculators and snake-oil salesmen looking to rake in some easy-money. And while it’s certainly true that a lot of people have made (and lost) a lot of money buying, holding, and trading Bitcoin and other cryptocurrencies since their inception, the social good brought by the blockchain supported decentralization revolution is far more significant.

Sound Money

To start, Bitcoin and other decentralized cryptocurrencies like it are, by their very nature, the biggest drivers of social good since, perhaps, the creation of money itself. Proposed, as it was, in response to the endemic corruption built into the financial system that led to the 2008 crisis and the untold pain and suffering caused by that crisis, Bitcoin gave people access to – for the first time in history – sound money. This means that people can now hold a form of monetary value that will never be diluted beyond its initially coded limit, is completely outside of authoritarian control, can be transferred across borders with ease, and is censorship resistant.

The social good brought by this new global form of money is only just now showing the first signs of blooming; after all, for most of Bitcoin’s 10-year history it was used merely by fringe groups like cipher punks, libertarians and, more recently by speculators. But now, as the decentralized cryptocurrencies’ continued survival and gradual proliferation are adding to people’s trust in them, we are finally seeing them being used for their intended purpose. In countries like Venezuela and Zimbabwe, Bitcoin and other cryptocurrencies are providing entire populations a critical lifeline while their rulers recklessly devalue the national currency. Some people managed to salvage a portion of their life-savings by buying cryptocurrency before, for example, the annual inflation rate of the Bolivar reached 25,000%. Others are using it after the fact, as a way to receive money from friends, relatives, and even just concerned philanthropists overseas. These pseudo-anonymous remittances are not only keeping people alive, but also undermining an authoritarian regime’s ability to control its population through its stranglehold on the national currency.

As Bitcoin or something like it grows to rival national fiat currencies, it can reduce the power of authoritarian governments, realign geo-politics, and redistribute wealth more fairly (the middle and lower class will finally have an easy way to stop losing purchasing power just by holding liquid money). These effects may take decades and will certainly result in winners and losers (causing suffering along the way as well), but the overall outcome will be an increase in human freedom; a social good that is hard to define monetarily but is clearly a massive net positive for the human-race, regardless of the profit-motive that drives it. And while speculation on the permutations of a realignment of geo-politics is fascinating, there is other more immediate and decidedly tangible social-good brought by the decentralization enabled by the technology underlying Bitcoin.

Let’s explore some other ways – besides increasing human freedom through the creation of global sound money – that blockchain/decentralization can be used for (and is being used for) social good:

Charity & Non-Profits

It is estimated that each year more than $400 billion in aid is distributed globally to address development and humanitarian challenges. Two of the biggest issues that charities face are lack of transparency and the difficulty of tracking donations end-to-end. In fact, many organizations have been exposed as, at best, poorly handling the donations they were given, and at worst, as being outright fraudulent. The UK Annual Fraud Indicator 2017 revealed that registered charities and charitable trusts lost £2.3 billion to fraud in a single year. This has led to a general mistrust of charitable organizations, resulting in people holding on to money they would otherwise consider donating.

In the last two years, several pilot projects have leveraged the decentralizing capacity of blockchain to demonstrably improve the status quo. For example, Disberse platform, which enables aid organizations to track the international flow of funds from original donor to final recipient, completed its first proof of concept in 2017. The pilot project distributed and tracked funds from a UK NGO to Swazi NGOs, and onto four schools, supporting vulnerable girls left as orphans due to the HIV/Aids epidemic in that country. In addition to tracking the funds from end to end in real time, the Disberse platform also enabled the donor to save 2.5% on their transfer fees (through the use of cryptocurrency transfers). According to Disberse, these savings meant they could fund an additional three girls to go to school for a year. Disberse and similar platforms like BitGive are now onboarding more NGOs and scaling their operations.

The improved trust and increased efficiency enabled by the blockchain-based transparent tracking of funds along supply chains, brought chief operating officer of charity watchdog Charity Navigator Larry Lieberman to conclude, “Blockchain will be one of the most important revolutions of international relief efforts, without any question,” as quoted in Bloomberg.

Beyond improving upon established social-good infrastructure, “blockchain” – which includes the concepts of decentralization, smart contracts, and autonomous governance – is being used to build completely new models for contributing to and enabling social good.

An example of this is distributed autonomous organizations (DAOs) for charity. Here citizen force can be efficiently aggregated by pooling, for example, a million people who are interested in environmental protection but who are each willing to donate only a dollar to the cause. A community member of the “social good DAO” could then propose dedicating a portion of the pooled funds to the purchase of, for example, wetlands for conservation. The proposal would then be voted on and, if approved by the agreed upon conditions stated in the DAO’s charter, the funds would be released. Such a platform – which is only possible through the responsiveness afforded by decentralization, the efficiency of smart contracts, and the trust provided by autonomous governance (all built on blockchain) – could help to correct the power imbalance between citizen and industry.

A Decentralized Internet

Outside of pure philanthropic giving, the decentralizing power of blockchain-supported infrastructure can be leveraged to enhance any number of applications directed towards social-good. As an example, it can improve the fairness and openness of the Internet itself.

While the initial vision of the Internet was the creation of a decentralized commons, its consolidation over the last 20 years into a relatively small number of centralized corporations has had implications that objectively run counter to what can be considered social good.

For example, a major criticism of Web 2.0 is that individuals have lost control over their personal data. Having not realized the incredible value of that data, people absentmindedly handed it over to the Facebooks of the world in exchange for a dangerously addictive stream of content disguised as a convenient way to connect with friends. As an aggregator of personal data, Facebook is currently valued at over $400 billion.

The creation of a decentralized Web 3.0 promises to lead to a fairer internet experience for all. Through the creation of decentralized versions of everything from Facebook to Youtube, individuals are empowered to take back control, ownership, and monetization of their personal data and content. Peer-to-peer marketplaces for data could enable people to earn the real value of the data they personally generate, from medical records to shopping habits. They could choose to donate certain types of data for scientific research or opt-out of data-sharing altogether. With the removal of intermediaries in the consumption of content, meanwhile, content producers would be more fairly compensated for the real value of their efforts, leading to higher quality content for all.

Another problem with the current version of the Internet is that its structure has made it susceptible to the creation of regional pockets of outright government-enacted censorship, China’s so-called Great Firewall being the biggest example. A decentralized version of the Internet itself – built on the spare computing resources of individuals (nodes) who are incentivized through micropayments to serve content – has the power to circumvent nation’s attempts at censoring internet content. There are already several functioning versions of this, such as Substratum, who’s founder Justin Tabb writes, “One day, Americans might wake up and realize they don’t like big brother watching over their shoulder and having corporations track everything they do.”

Proof of Research

Proof of Work (PoW) is the consensus mechanisms that forms the backbone of the game-theoretic puzzle employed by Bitcoin to incentivize disparate parties to secure a decentralized global network that currently holds $100 billion in value. A notable criticism of PoW – which involves the directing of huge amounts of computing power towards essentially “useless” calculations – is that it is a waste of electricity.

While there are valid arguments against these criticisms (such as that Bitcoin and other PoW blockchain’s “waste” of energy is actually more efficient than the status quo for securing monetary value), there may be alternatives that satisfy the core proof of work required to allow the game-theoretic puzzle to continue while simultaneously directing otherwise “wasted” computing power towards work that is more useful than just heating a warehouse in, for example, in rural Mongolia. Known as Proof of Research and pioneered by an early fork of Bitcoin known as GridCoin, the alternative consensus mechanism secures the GridCoin network while directing the computing power towards an approved list of worthwhile scientific causes like genetic sequencing. Here we can see that, in theory, at least, even a widely criticized flaw of decentralized networks can actually be altered to contribute to social good.


The potential for blockchain supported decentralization to advance social good is immense. Most obviously, it improves the traditional charity infrastructure, enabling more value to reach its intended target with less fraud. Such improvement is not insignificant but it pales in comparison to the true potential of the technology, which is no less than a marked improvement in human freedom.

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