The No-Hype Possibilities of Blockchain for Social Impact

You’ve heard this before: Blockchain can save the world! Blockchain can end poverty! Blockchain can fix the Cleveland Browns! Much of the hype seems abstract, fantastical, or half-baked, and it’s rare to see actual results from the save-the-world stuff.

Ben Siegel is on a mission to make sure these big ideas are realized. In 2016, fresh out of college, Siegel was hired by ConsenSys as the first assistant to CEO Joseph Lubin. (Prior to this, Siegel had interned in Elizabeth Warren’s office and thought his career would be “politics, politics, politics.”)

Siegel quickly outgrew his admin role, and pitched Lubin an idea: What if we do something for social impact? Specifically, he thought ConsenSys could leverage the firm’s technical know-how and partner with NGOs and non-profits, just as it has partnered with corporations like Microsoft and P&G. Lubin green-lit the project, put the then-22-year-old in charge, and now, two years later, Siegel heads up the 10-person team of Blockchain for Social Impact.

Siegel’s team works on projects that aim to bring funds cross-border during humanitarian crises, curb illegal fishing, and grant financial “identity” to the impoverished and unbanked. Specifically, ConsenSys is now beta-testing a blockchain project called “BiFrost,” which aims to slash the typical transaction fees of crisis aid from 10 percent to 1 percent, and shorten the lag time from 3 weeks to 3 days. (They have a cute little cartoon that explains the concept.) BREAKER caught up with Siegel at Singapore’s De/Centralize conference to talk about the future of social impact, smuggling, speeding tickets, war crimes, and why the “unsexy” stuff matters.

Why don’t we see more success stories about social impact?
Ben Siegel: A lot of people are jumping five years down the line. They’re saying, “This is the world we want to build.” But what we don’t talk about is, “How do we actually get there? What are the first steps? What are the proof-of-concepts we have to build to actually achieve this?” And we don’t talk about this, I think, because there’s a fear that these first steps aren’t sexy enough.

I want to hear about the non-sexy stuff.
So, as one example: In a lot of crisis zones, there’s a huge need for cash, and cash and crypto don’t always go together, right?

As in, how do you convert cryptocurrency into cash?
Right. And if you’re making donations of crypto of any sort [in a humanitarian crisis], you eventually need cash on the ground. But you don’t actually have to touch the final item to make the solution better, to make the system better.

Final item?
Let’s say there’s a donation going into some unnamed country. It takes about three and a half weeks to get there. Sometimes you have to start in the U.S., and it has to go through an umbrella corporation’s bank, and then it has to get transferred internally, and then it has to get through an internal transfer cross-border, and the value is drained.

How exactly is the value drained?
If you make a private donation, it has to go through a number of bank accounts. Up to 10 percent of your donation can be lost to banking fees. [Note: This is significantly higher than fees to transfer in or out of cryptocurrency.] And it can take three to four weeks.

That’s a long damn time.
Exactly. So we said, okay, we’ve got blockchain. What is the original use case of blockchain? What if we could transfer value without having banks? That’s bitcoin, that’s the purpose. We know that maybe a bank is necessary in the end, but if there are four or five banks in the middle, that’s an incredible amount of value that’s being drained. So what if we just cut them out? What if we could cut out those three weeks, and turn it into six days?

In this example, how far does the crypto get on the way to the people who need it?
In order to get cash on the ground in a low-infrastructure area, you have to put cash in the hands of somebody in a more secure situation. A lot of aid agencies will deliver cash to ground workers in a country outside [the recipient country], and then it’s [physically carried] across the border.

So the blockchain gets the cryptocurrency as far as it can go, pre-smuggling?
Pre-smuggling. And I think “smuggling” is maybe the wrong word, but you know what I’m saying. I don’t mean that it’s an illegal activity, just that someone needs to physically bring the cash to the end beneficiaries.

Right, you can focus-group the optics of the word “smuggling.”
The thing that we don’t often talk about, with blockchain, is those last few miles. Once you’re talking about data and money that’s off-chain—whether it’s moving from on-chain to off-chain, like in this case, or moving from off-chain to on-chain—those last few miles are where the risk is.

What’s the risk, exactly?
The risk is that information that’s put onto a blockchain that’s false is viewed as true, even though it’s false, and the blockchain acts as if it’s true. So proper verification systems are huge.

Proper verification systems—this sounds like one of those “non sexy” issues that are super important.
When you’re setting up a smart contract, of any sort, it’s If X, then Y. And Y is dependent on proof that X happened. Let’s say I set up a contract that says, “I will pay you to clean my roof.” And let’s say that all I require from you is a picture. [This is “X.”] But I don’t set the parameters of what the picture should be. And then you take a picture. You clean just one tile of the roof, and take a picture of it. Because it’s a poor verification mechanism, that could initiate the contract, and you could not do your job and still get paid, because I agreed to this deal.

Can you bring that concept back to a social impact use case?
How do we verify that there’s no [slave labor] in the supply chain? Is your verification mechanism going to the factory owner and saying, “Is there slavery in your factory?” Obviously, the factory owner is going to say no. And if they can lie and that’s taken as true, the blockchain is going to read that as true.

Immutably. And the end consumer is going to see that as, “Oh, yeah, there’s no slavery here.” So if the factory owner—who, in this case, is probably using slavery—can lie to the blockchain, then what’s the point of having a blockchain? If the information put onto the blockchain is false, then it’s immutably false.

That’s a really big problem.
It’s a huge problem. Verification—especially in the space of social impact—is huge.

So what’s being done to solve this?
This is where starting to integrate blockchain with other sorts of technologies is awesome.

In Australia, the World Wildlife Fund is using the blockchain to help ensure fishermen are not illegally catching tuna. How does something like that work?
When the fish gets caught, you stamp it and create a hash of that. That hash is immutably stored on the blockchain.

You mean that you physically put a sticker—with a hashtag—on the fish itself?
Yeah, you put a hash [a unique identifier, like a barcode or QR code] on the fish, and this can be scanned with an RFID scanner. Then it goes to the blockchain. When that shows up to the vendor, and the vendor takes the fish off the boat, the vendor rescans it. If the hash is a match, you know that the fish was legally sourced. If the hash isn’t matched, you know that the fish wasn’t legally sourced because it doesn’t match what’s stored on the blockchain. You’re not relying on any human actor.

A so-called “trust-less” solution.
Right. And at the social impact team at ConsenSys, we don’t believe in one mechanism of verification, and we usually don’t believe in two. You want at least three points to build trust. So how do we start to build incentive mechanisms that are redundant?

Can you give an example?
An IoT [Internet of Things] scanner detecting air pollution. A third party monitor comes in and says, “Yes, this IoT scanner is working, and also I’ve checked it with my own scanner to see that there’s no pollution here.” And then you can tie that to a worker’s verification. So you’re building up this story of verification, and making sure that there’s no single point of failure. That’s how we start to enable those really advanced use cases of blockchain.

Such as?
Once blockchain and IoT start communicating, all of the sudden you can have verification for certain events, like speeding tickets. This is maybe a weird one, because I’m talking about supporting the government with blockchain.

Yeah, you’re gonna get kicked out of the blockchain club.
But if you have an IoT sensor attached to a scanner and a car goes by speeding, it could just automatically verify, Yeah, this car was speeding at this point in time. And you can tie that to a picture that has the license plate. You have immutable evidence.

But how is that more effective than the current setup of a speed camera?
It isn’t necessarily more effective; however, the owner of the sensor could potentially corrupt, or change the data of the speeding car (if they wanted to). Now let’s say there are bystanders, social media reports, et cetera that the general public produces surrounding the event, that tie a certain event to a specific time and geography. Now, all of a sudden you can [connect] that data to your IoT report, so you have multiple levels of verification surrounding an event, one that is “owned” by the IoT sensor company, and supporting evidence from third parties. Maybe the speeding car wasn’t the best example, because we aren’t necessarily worried about corrupted speeding ticket data.

But I get the idea. And if you’re helping the accuracy of speeding tickets, suddenly, everyone just became a lot less interested in blockchain.
I just screwed over everybody. My friends are never going to talk to me again.

Yet I’m guessing there are some social impact use cases, too.
What about war crimes? There are sensors that can detect bombs going off, that can detect planes. That’s a data point. It’s the beginning of a story. If we can prove that this is what immutably happened, we can start to tie that data point to other reports—social media, news, pictures, videos, and we know that all of this data came in from the same area at the same time. We’re able to tell stories.

What will take for this to become a reality?
I think what’s vital for the long-term success of the ecosystem is to reach out to demographics that we don’t normally see in fintech. We need to make sure that social impact is driving the conversation. If the story continues to be price, price, price, then that’s the story that will follow blockchain throughout its life, right? But what if we can use blockchain without crypto? What if we can solve problems with it? And driving those stories, I think, is critical for the long-term success of the technology.

What’s your short-term vision, medium-term vision, and long-term vision for social impact and blockchains?
Solving some of the scalability, security, and infrastructural issues of the technology. How do we help organizations be more efficient? How do humanitarian organizations, through increased efficiency, help others directly? If we can help someone help someone, that’s awesome.

I think we’ll start to see a lot of beneficiaries more directly touched by the technologies without actually interacting with it. Like the project with the tuna, for example.

And long-term?
Data sovereignty, control of identity, the ability to have more control over your life. That’s what unlocks the potential of the technology at its fullest extent. The ability to separate ownership and control of our data and our identities from Facebook, from Amazon, from Google. Right now, I can interact with a vendor in California because Amazon tells me I can trust him and his identity, but that gives Amazon power over us. With the blockchain, in the future, we can have that level of trust without these larger organizations. [That allows] us to interact with other people across the globe, without other organizations profiting off our backs. That’s how you start to see the wealth be redistributed.

Ben Siegel is the global social impact project and partnerships lead at ConsenSys. You can find him on Twitter at @BenLLSJeff Wilser is a writer-at-large at BREAKER and the author of “The Book of Joe: The Life, Wit, and (Sometimes Accidental) Wisdom of Joe Biden.” Follow his adventures at @JeffWilser.