Development through Disruption: The Blockchain and Developing Countries

After over 35 years of experience in global retail, e-commerce, and consumer products, I’ve witnessed firsthand the transformative power of exciting new tech over and over again. The greatest technological shifts occur when there are more potential implementations of that new innovation than there are people to pursue them. The internet is an obvious example of this. And I think blockchain will easily be as disruptive and currently holds at least as much, if not more, implementation potential.  

Blockchain technology is the undeniable king of industry disruption at the moment. We’re seeing its effects on everything from banking to healthcare to supply-chain management. Businesses that push back or move too slowly will inevitably suffer. Banking will become more decentralized and efficient, healthcare will be more cost-effective and transparent, and supply-chains will be better optimized and more trackable.

In a pair of recent U.S House Subcommittee hearings, Republican Congressman Ralph Abraham stated that blockchain is a “world-changing technology” in reference to its application in global supply-chain networks. The Subcommittee on Oversight and the Subcommittee on Research and Technology both discussed how successful worldwide implementation blockchain tech will require industry standardization. However, the general consensus was that this technology has the potential to massively disrupt our current networks for globalization.

Profit-bound industries are obvious targets for disruptive tech, particularly when, like blockchain, that tech is so thoroughly wrapped up in currency exchange. The less considered but arguably much more important and transformative applications of blockchain don’t necessary reap large profit.

I’m talking about tech disruption with an undeniably positive societal impact. And that involves using blockchain in global humanitarian and public health efforts.

Blockchain tech can be tremendously beneficial to global health and humanitarian crises. In fact, I’d argue that its most revolutionary impact will occur within these realms of obvious public interest. These issues are generally the most poignant and at the highest volumes throughout the developing world. And what that really means is that third world and developing countries might actually experience the greatest blockchain-based transformations across the globe.

The biggest effect that blockchain will have on humanitarian efforts actually involves supply-chain management. With an increase in transparency, tracking, and efficiency, most of these institutions will become more than standard philanthropic endeavors and be many times more effective. The end result will lead to an equalizing or “flattening” of the world. This is something that the internet has already initiated and that blockchain will surely continue.

It’s obvious that the internet has already opened up third world countries to opportunities that might have taken years or decades to surface. Blockchain is offering the same type of rapid evolution. And so the most palpable and universally felt implementations of blockchain will definitely be those that occur within the developing countries that experience an unfortunate surplus of humanitarian issues.

One of these implementations involves unethical labor. Human trafficking, intentionally unethical contracts, and other forms of forced labor are common throughout the world and even in the U.S. The International Labor Organization estimates that roughly 21 million people are victims of forced labor globally. Blockchain can radically alter the way the we approach this issue.

The core issues with unethical labor crises actually involve supply-chains and logistics. There are two reasons for this. The first is that participants in a supply-chain might not know that they are purchasing goods or services from an unethical enterprise. The second reason is that avoidable inefficiencies and operational costs cause businesses to choose the cheapest options despite the potential misconduct at hand.

Of course, the excessive consumption, negligence, and corporate greed in developed economies also have a tremendous impact on this issue. If we can use blockchain to provide complete transparency and tracking to supply-chains, we can at least hold purchasers accountable for the exploitative businesses they decide to associate with. And we can also improve government and regulatory agency efforts to stop this exploitation altogether.

Blockchain can offer total visibility into typically opaque and potentially harmful supply-chain systems. It can also provide increased operational efficiency through improved methods for product tracking and transactions. This essentially kills two birds with one stone in that it cuts costs and ensures legal and ethical compliance from all supply-chain participants. With blockchain, businesses can effectively avoid partnering with others that use unethical labor and regulatory agencies can easily monitor and track the treatment of all employees within a system.

Forced labor and human trafficking provides roughly $100 billion in annual profits outside of the developed world. The ability for businesses to make these massive profits at the expense of unfortunate individuals is obviously the largest driver of this problem. However, forced accountability through blockchain induced transparency can certainly help consumers and other businesses avoid dealing with exploitative operations.

Another part of the problem is the unnecessary vulnerability of many of these forced laborers. A large portion of those who are exploited by modern day slavery tactics are displaced refugees or impoverished individuals who have been mostly forgotten by government institutions. Having a recognized identity that is registered with both national and international organizations can dramatically decrease an individual’s risk of being trafficked or exploited.

According to Article 6 of the Universal Declaration of Human Rights, “Everyone has the right to recognition everywhere as a person before the law.’ Unfortunately, at least 500,000,000+ individuals do not have government regulated identification across the globe. The lack of institutionalized government recognition makes it too easy for these individuals to be exploited and forgotten.

Blockchain can help these people by providing virtual identities that are unchangeable and live on a decentralized blockchain ledger. These ID’s can be cheaply created and easily dispersed. They would enable formerly displaced peoples to be accounted for by both humanitarian organizations and government institutions.

Blockchain can also help by offering complete transparency into the distribution of aid to these individuals. Donors would have much greater visibility into where and how their funds were being spent or dispersed. This would open up the door to more contribution from people that were previously wary about potential corruption or fraud within governments and charitable organizations. It would also help to ensure that the people in need are actually getting the help they deserve.

By distributing identifications and funds directly to individuals in need using unchangeable decentralized ledgers, these organizations can ultimately rework the humanitarian supply-chain to be more streamlined and less corruptible. This provides more refugees and migrants with better assistance in an increasingly immediate and incorruptible system. This also enables businesses to be held accountable for their own laborers and those that they associate with.

I think that helping to resolve these humanitarian issues with blockchain will ultimately “flatten the world” in the words of Thomas Friedman. This means that these developing countries will have more opportunity to ethically and efficiently compete in the global markets. It also means that previously displaced or exploited individuals will be galvanized and will have a proper voice in the modern world.

Yes, the end result of this will be higher prices for goods and services as these countries will increasingly cease to be realms of exploitation. But I believe that flattening the world in this way is ultimately better for the global economy. If we start to see ourselves as citizens of the world, the global economy becomes much more important than the economic positions of individual nations. The internet sparked this wave of globalization, and blockchain is now here to see it through.

So by helping to resolve humanitarian crises, blockchain can transform many economies from the status of “developing” to “developed”. As more individuals around the world reap the benefits of this transformation, humanity will inevitably progress as a whole. That’s where I feel blockchain can take us, so long as we are ready to give it a chance.

About the Author:

Robert McNulty is the CEO and Co-founder of SupplyBloc, Inc. Formerly CEO and founder of Home Club and Mr. McNulty is an accomplished entrepreneur with over 35 years of significant experience in specialty retail, eCommerce, branded consumer products, retail start-ups and developing new concepts and technology platforms for utilization in the retail industry.

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