Every day, young girls in Moldova are trafficked abroad and sold to brothels as sex slaves. Rohingya refugees flee persecution in Myanmar. Domestic workers in Hong Kong support families back home at exorbitant personal costs.

In the fight against humanitarian crises, social entrepreneurs are turning to a new tool: blockchain. While far from a silver bullet, the technology is already making a difference in the lives of some of the world’s most marginalised communities.

Despite being mostly associated with cryptocurrencies like Bitcoin, blockchain can record much more than economic transactions. As a distributed ledger system – a decentralised database – a public blockchain can process any piece of paperwork, personal data or votes, no matter how sensitive, thus ensuring complete transparency. In troubled societies, the tool is an indisputable source of information in the face of bribery and corruption. 

“Over the past two years, we’ve seen a proliferation of companies that value the use of blockchain technology for social good,” says Cecile Baird, a blockchain startup strategist and founder of the industry think-tank and non-profit Blockchain For Good (BC4G), launched in 2015. “For profit companies have been exploring this technology for years, but we’re now seeing more impactful blockchain projects focused on putting humanity, society, fair economics, and the environment first.”

A cold night in Moldova

It was a cold night in Grimăncăuţi, Moldova, a small village on the border with Ukraine. Shivering and scared, Mariana Dahan, then 14, ran for her life through the dark village streets. She ducked into a neighbour’s backyard, hiding from a man wielding a knife and threatening to kill her, because she wouldn’t consent to an arranged marriage.

That man was her father. 

“I was born in what is still the poorest country in Europe,” recalls Dahan, now 38. “I witnessed domestic violence and couldn’t see an end to it.”

Dahan’s father planned to wed her to one of his friends, but she was intent on pursuing an education and studying abroad. The teenager faced another major setback: She was born without a proof of identity and could not enroll in school or obtain a travel document without it.  

“It took my mum a lot of time and effort to get me a birth certificate,” she recalls. “It couldn’t be obtained in the village, so she had to travel to the district-level authorities and then to the capital.” Even then, the birth certificate was incorrect and misspelled. At last, Dahan managed to acquire a corrected version and apply to school. “At each of these stages, we needed my father’s signature and approval, which was difficult.” Dahan prefers not to go into detail about how she secured his approval, but in the end, she succeeded.  

At the top of her class, she earned a scholarship from the EU to study in France at the Grenoble School of Management. She continued on to postgraduate work at Paris Dauphine University, then pursued a PhD program in Management and Economic Sciences at the ESCP Europe and, finally, moved to the US for further PhD research work at MIT in Boston, United States.

“Summarised in just a few sentences, it seems like a very easy journey. But along the way, there were moments when I felt extremely vulnerable,” says Dahan, who is writing a forthcoming autobiography. “That moment when I was running from my father, I can understand just how easy it can become for a young girl or a boy, who is fleeing poverty, vulnerability, who lives on the street, to become a victim of smugglers and traffickers.”

This year, Dahan recounted her story for the first time publicly during a TEDx talk at the Ulaanbaatar Salon in Mongolia. She was in Asia to promote the work of her NGO, the World Identity Network (WIN), which harnesses blockchain technology to provide safe and secure identity systems to protect the disenfranchised – refugees, children, and women – from human trafficking.

“There are so many refugees and migrants from the Middle East, from Europe, [from Southeast Asia],” she says. “Many children become victims in this vicious cycle of displacement and vulnerability.” After blockchain came into existence, she says her world vision changed. “We can change the way things are currently done and save children.”

Identity as a human right 

It’s easy to take for granted a plastic identity card, which most of us carry around everywhere. But ‘identity’ isn’t so simple for a large segment of the world’s population. Currently, the World Bank estimates that 1.1 billion people around the world lack a formal, indisputable form of identification, rendering them legally invisible. More than half are children and minors under 14 years old.

Motivated by her childhood experience, Dahan took on this challenge. Working at the World Bank as a senior operations officer since 2009, Dahan pioneered the Identification for Development (ID4D) initiative. Launched globally in 2014, ID4D aims to help countries design and implement digital identification systems so they can deliver government programmes such as healthcare, education, and financial aid to its citizens and residents. ID4D analyses a country’s problem on a case-by-case basis, then offers design solutions and tracks impact. The now US$1 billion programme has expanded to provide digital identification resources in more than 30 countries worldwide, with the aim to provide digital identities for all by 2030.

But something in this approach was missing. Dahan further launched WIN, which takes a different view on which technology platform should be used. Whereas ID4D works with governments to implement digital ID programmes within a centralised system, WIN advocates for building more decentralised systems and applying principles of self-sovereign identity.   

Partnered with the United Nations, the organisation is running its first pilot in Moldova in early 2019. “My home country is a prime source country for human trafficking victims,” says Dahan. “In Moldova, you don’t even have to smuggle someone in a bag of potatoes… you forge the documents and use a picture of a child who looks older.”

Of all trafficking victims worldwide, more than 70 per cent are women and children, according to UN Women. Whether fleeing war or abuse, young women and vulnerable children are often lured by the promise of a better life in a new place. Facing desperate circumstances, they ignore the potential risks, and unknowingly put their trust in the hands of a trafficker. Typically, a trafficker will strip victims of their identifying documents, if they have any, and use this as leverage to control them. Without any proof of age or identity, children are more likely to be forced into sex work, factory jobs or slavery, without recourse.

“Without a valid proof of ID, these children lose their chance at a good life,” says Dahan. “But with the emergence of blockchain and by embracing this new tech system we can develop secure ID systems that can’t be forged.”

How it works

Dahan says the power of blockchain lies in its decentralised system. Blockchain itself is distributed and immutable ledger, with data processed and stored in the form of “blocks” that are linked to each other, forming a chain. Each block in the chain is reliant on the validation of the preceding block, which can be confirmed by a unique hash, akin to a digital fingerprint.  

While initial data is not usually stored in the blockchain itself, the blocks can query a decentralised database using that unique hash. Within the database, you could access basic identification information, such as birth date, country of citizenship, eye and hair colour, direct family members, and so on.

In the case of WIN, the blockchain system would run on top the existing immigration systems, but instead of a human checking a physical passport, an automatic system would query the blockchain database to verify the traveller’s identity.

If, for instance, someone tried to forge a child’s passport, the information would not match the ledger.
At that point in time, the system could notify a civil society representative or UN officials and record the false attempt onto the blockchain. Even if a human is bribed to allow the travelers to proceed, that fraudulent entry would still be recorded on the blockchain for future evidence.

“Despite it being very poor, Moldova has been obliged to align with the identification requirements of Europe. Most people already have digital ID documents like biometric passports,” explains Dahan. “So really, blockchain comes on top of it as another layout to ensure that this is working for the benefit of the population and against corruption.”

In the rest of the world, it’s a more complicated task: UNICEF estimates that approximately 230 million children under the age of five lack any form of identification. This can cause myriad issues, such as deportation, detention, violence and abuse. Without evidence of their age, it can also make it significantly more challenging for authorities to rescue children from forced marriages, brothels, or factories work.

Corruption further exacerbates the issue. Human trafficking is a US$150 billion annual business, and, in many countries, often operates in plain sight thanks to bribery. With a distributed ledger (as opposed to a centralised database), this digital identity would be supranational, meaning it’s outside the control of a single government or authority. In order to enable citizens to protect their data, Dahan says it’s imperative to employ a zero-knowledge proof – essentially a cryptographic solution that validates your identity without sharing sensitive information with others. In addition, people would have the right to be forgotten or revoke their data, if they wish, in compliance with the General Data Protection regulations (GDPR).

Introduced in May, the law grants European Union citizens control over their personal data. As such, companies around the world that process personal data have installed multi-level privacy systems and safeguards, such as anonymisation. In addition, personal data cannot be shared publicly without the explicit consent of the owner.

In the case of WIN, any personally identifiable information (PII) will not be stored on the blockchain itself. The blockchain will query a database for claims and validation. As the WIN system has not yet been tested, Dahan says that she expects to face challenges ahead. Creating the tool is one thing, but deploying it will require political will, bulletproof cyber security, and extensive efforts to collaborate and educate government organisations.

The pilot launch in Moldova will be a world first and, she hopes, a catalyst for others to join the fight. “Yes, there are challenges to overcome but we know that undocumented children are more likely to fall victim to trafficking,” says Dahan. “So inaction is not an option. We must work toward every child having this basic human right – access and control over their own personal identity.”

Sundays in Hong Kong

Every Sunday in Hong Kong, the elevated walkways of Central heave with an outpouring of foreign domestic workers enjoying their weekly day off. It’s on this day that they run personal errands, catch up with friends, and send remittances home to their families overseas. Workers scan the dozens of money transfer operators at World-Wide House, looking for the best conversion rate, which for decades has been set by Western Union.

But in November 2014, a new option became available: Bitspark. Launched by 26-year-old Maxine Ryan and 29-year-old George Harrap the venture provides the world’s first cash-in, cash-out cryptocurrency remittance platform. Just like any other money transfer services, the pair set up a stall and displayed their conversion rate. “As soon as we put up our rate, people did a double take,” says Ryan. “Long queues started forming, just for our rate.”

Bitspark offers transfer rates that, on average, are anywhere from 2 to 14 per cent lower than those of Western Union, depending on the market. It’s preferred by money transfer operators (MTOs), too. In the past, MTOs would pay 80 per cent of each transfer fee to Western Union, only keeping 20 per cent as revenues. But with Bitspark, they split the fee 50-50.

Built on the BitShares blockchain, the company can provide lower rates by using blockchain and crypto technology. “When you put in US$200, it’s converted to US$200 in Bit USD – cryptocurrency pegged to whatever currency you’re using, so it doesn’t fluctuate,” says Ryan. “Customers are actually buying and holding crypto, until they want to send it to somebody, let’s say, in Indonesia – that’s one of our most popular corridors. Then the system trades it to IDR, and the person on the other end of the transactions receives cash.”

Consumers have two methods of transfer: either they can approach a Bitspark transfer agent shop, or they can use Bitspark’s Sendy app to manage money on their mobile phone. When using the app, the process involves three steps: Taking cash to a top-up partner shop, digitising the currency, and sending it home with a click of a button. Behind the scenes, the standard currency will be transferred to Bit currency on the Bitshares blockchain, then converted to foreign currency to be collected.

Ryan recalls their first customer, who digitised HK$10,000 to send to the Philippines. “That seemed like quite a lot of money, and legally, we have to ask why. It was for her wedding,” she says. “By sending money through us, she could save enough for two places at her wedding. That felt very real to me.”

Broader implications

Both Ryan and Harrap dropped out of university in Canberra, Australia, to pursue Bitspark. At the time, Ryan was studying international relations with aspirations to work on humanitarian projects in developing countries. “The idea of having something decentralised, with the potential to be global, with no infrastructure or bureaucracy to hold it back – that fascinated me,” she says. “I could see the potential and wanted to use blockchain to help people.”

Since then, Bitspark has grown from that tiny stall in World-Wide House to a major player in remittances. They currently operate in eight countries, including Malaysia, Philippines, Indonesia, Vietnam, Pakistan, Ghana and Nigeria and more than 100,000 cash-out locations globally.

Ryan also has personal motivations for launching Bitspark. Having grown up in a single-mother household in Hong Kong, she depended on domestic worker Susan Bayaua. “I was pretty much brought up by Susan,” recalls Ryan. “She was very much a part of the family and I saw her routine, sending money back every month.”

These two experiences – her upbringing in Hong Kong and an early introduction to blockchain – made her next step clear. “Imagine being able to build an application that can help people who perhaps don’t have a financial identity. They don’t have banks. They rely on expensive money transfer agents….”

From the beginning, Ryan understood that the exchange rate is the main thing that overseas workers consider. The second? Oversight. In addition to saving money on transfer rates, domestic workers also have more control over where their money goes. “Sometimes they have to send money to a friend or family member who might use it unwisely,” says Ryan. “So having control over paying the bills is important.”

Bitspark is working to make it possible for women to make bill payments directly to schools, phone bills, transport, and other services. “We will connect the Sendy app to payout providers who have APIs, so that payees can make direct transfers to banks, pawnshops and convenience stores,” adds Ryan.

As a strategy for customer retention, the team is also developing a way for Sendy users to earn more money in the form of loyalty “ZEPH” coins. Just like with a credit card, every time a customer makes a transaction on the platform, they earn reward tokens. Once the user has accrued a balance, they can cash out the tokens for cash, or use them toward their next transfer.  

A better rate

Kenette Tacadena Bote, 34, grew up in the Philippines in modest conditions. Her family could not afford to send her to university and, as a single mother, she could not make ends meet at home. Twelve years ago, she moved to Hong Kong to find work, while her parents took care of her 2-year-old daughter.

“I was a single mum, and it was hard to raise my child and work in the Philippines,” says Bote. “You can’t earn a high salary there, especially if you don’t have your undergraduate degree from a university.”

Since moving to Hong Kong, she has found employment as a domestic worker. First, she looked after young children, before moving to work with a family with teenagers about two years ago. In her first job, Bote earned HK$3,320 a month. Now, she makes HK$4,310 and aims to send home HK$3,000 of that every month. The rest, she says, is saved for personal use or unforeseen emergencies at home.

When it comes to transferring remittances, Bote says the first thing she checks is the foreign exchange rate. “A high rate [of Hong Kong to Philippines pesos] can make a huge difference.” She read about Sendy on a flyer and decided to give it a try. “The rate was like 6.83 [pesos for every Hong Kong dollar] or something like that,” she recalls. “If I am sending HK$1,000, when you convert it to pesos, even a few decimal points [in the exchange rate] are going to make a big difference.”

For Bote, that extra cash enables her to purchase ad hoc items for her daughter, be it materials for a school project, a larger food allowance, or ‘just because’ gifts. “Let’s say I save 100 pesos a month thanks to the good rate exchange. That means I will be able to send more pesos home to my family or give the extra money to my daughter, so she can buy what she likes,” she says. “[The app] is really helpful to us [Filipino domestic workers], because every cent is important to us.”

In addition, Bote says she appreciates the convenience of mobile transfers. “You know, we only have one day off per week,” says Bote. “We usually send money through the remittance shop, queuing up on Sundays. You spend a half day doing that sometimes. No one wants to spend all day in line.”

But the most important aspect, for Bote, is the immediacy. “My family has little emergencies sometimes – my daughter might need to go to a doctor’s appointment, for instance” she says. “In the past, I had to find time to go to the remittance shop while my family waited. But that takes time, and I would get worried about that. It would affect my work. But now I can take a moment and go to the bathroom to make the transfer.”

A dark day in Myanmar

Since August 2017, more than half a million people have fled Myanmar, after the government began its brutal ethnic cleansing of Rohingya, a Muslim community that has lived in the country since the eighth century.

Across the border in Bangladesh, Kutupalong refugee camp has become a temporary home for more than 800,000 Rohingya refugees. Scattered across the camp, makeshift tents feature concrete floors and walls of tarp held up with bamboo sticks. As the Rohingya culture is patriarchal, women typically cannot go outside without a male escort and tend to stay indoors. In addition, refugees aren’t allowed to leave the premises or take up formal work that could take away jobs from local citizens. 

Many have lost their former identities, both literally and figuratively, and it could take years to rebuild their lives. James Song, who has been working in Myanmar and Bangladesh for the past five years, believes he has developed a way to fast-track that process. 

“From the very beginning, I thought the most important thing to invest in Myanmar is the education system,” says Song. “The country lacks a modern infrastructure and enough schools to support their education.” To that end, Song began looking at long-term ways to expand the school system. But he also wanted to impact refugees faster. That’s when blockchain entered his radar. “Using blockchain technology, predictive analytics and artificial intelligence would optimise education for each student,” says Song.

His efforts to integrate the technology into his vision for broader education culminated with ExsulCoin – “exsul” meaning exile in Latin – a video education platform that Song hopes has the potential to make high-quality education available to every marginalised community around the world. For now, he’s focused on Rohingya refugees. He has developed classes such as business training, early learning education, English fundamentals, and software development training.

To date, the company has created educational content in several languages including Burmese, Karen and Kachin. If a family can’t afford internet, or the connection is too weak to stream videos, Song’s team has designed another distribution method over Bluetooth called “mesh networking.” It’s much slower – usually transferring four or five videos overnight. 

Making the grade

There’s another layer to it. In addition to providing classes, Song’s company records students’ performance on the public Ethereum blockchain. They issue grades in the form of a token, dubbed XUL. Listed on international cryptocurrency exchanges, XUL coins have a real value. “XUL are also used to track academic achievement, as well as incentivise performance on our platform,” says Song.

By tracking performance, students can essentially build a digital CV on the blockchain. They’ll have an established track record of educational achievements and professional history. Song says this is important, since many refugees don’t have identification or job references, making it nearly impossible to secure a high-quality job if and when they resettle.

“No one can just bribe a teacher to get straight As anymore. There’s no suspicious behaviour or possibility of corruption,” says Song. Another draw: classes can lead to jobs. For example, if a student completes a course, they could be invited to complete remote Nanowork – such as design jobs or programming tasks, which are paid in XUL tokens. Since cryptocurrency is location independent, refugees can take their coins with them wherever they go. Alternatively, they can cash out the digital currency from an exchange in Bangladesh. Cryptocurrency trading is officially banned in Bangladesh, but Song says it’s a legal grey area and many exchanges still operate.  

Though it’s technically illegal for refugees to work, Song says that microwork is another  grey area. The Bangladeshi government currently does not interfere with this type of informal, remote work. “I designed XUL and ExsulCoin to work around these restrictions,” says Song. “People are engaging in non-formal digital tasks that do not meet the requirement for formal employment status in most jurisdictions.” For example, he says, most tasks come from a variety of employers – not a single source – and they’re not taking jobs way from citizens.

For some, remote work might mean launching a business. Earlier this year, Song hired 10 women to attend his business training courses with the goal of helping them establish Exsul – a jade jewellery business on social media.

As 50-50 owners of the business, the women craft high-quality bracelets using Myanmar jade. The choice of the stone is particularly powerful: traditionally, the jade trade has been used to fund the Myanmar military, meaning it has been tied to the oppression of the Rohingya. “But now, it is a tool for empowerment, not suppression,” says Song.

Song might have a social mission, but his company is unabashedly for-profit, with an aim to grow it into a multibillion-dollar company. “I’d like it to deliver high-quality education to every disadvantaged person on earth, but not just education – create a pathway for people,” says Song. “Education can’t just live in isolation, people want to find meaningful work afterwards.”

How blockchain works

The power of blockchain comes down to transparency and immutability.

Blockchain is a distributed database, where chunks of records (called blocks) are linked together using unique cryptographic hashes (a fingerprint of the data). A public ledger is decentralised and immutable, meaning it’s transparent to all involved. With these attributes, blockchain can be powerful in combatting corruption, bribery, forgery, scams… it’s a democratising tool that’s being adopted all over the world.

Ideas unchained

From Venezuela to Jordan, blockchain-based technologies are changing lives around the world.

Democracy.Earth

A blockchain-based “liquid democracy,” Democracy.Earth harnesses blockchain technology to transform democracy and the way people work. It revolves around a corruption-proof voting platform using smart contracts and tokens. There’s no censorship, gerrymandering, or voter fraud – everyone has a voice to address pressing global issues. “That’s what blockchain is all about – giving more power to the people,” says Baird, a blockchain startup strategist and founder of the industry think-tank and non-profit Blockchain For Good BC4G).

Learn more democracy.earth

Crypto Cucuta

In Venezuela, the financial crisis has created through-the-roof inflation, unrest, hunger and widespread crime. In its wake, Crypto Cucuta is aiming to educate more than 300,000 Venezuelan refugees and Colombia residents about cryptocurrency. The nonprofit is distributing all donations in crypto, so this unbanked community has the financial freedom to build a better future.

Learn more cryptocucuta.com

UN World Food Programme

In the Azraq refugee camp in Jordan, the World Food Programme’s “Building Blocks” project has recorded digital identities, using biometrics, for 10,000 Syrian refugees. Their identity is linked with their food assistance, so they can make purchases at grocery stores on the blockchain ledger. This not only speeds up the process and removes the need for expensive intermediaries, but also lessens the risk of fund or data mismanagement. By the end of 2018, the WFP plans to reach all 500,000 refugees in Jordan. 

Learn more rinnovation.wfp.org/project/building-blocks

For purpose or profit?

Companies like ExsulCoin and Bitspark have faced criticism for operating for-profit businesses while serving vulnerable communities. But is profit necessarily a bad thing? We ask the people behind these businesses to share their thoughts.

I do not believe the structure and ethos of non-profit organizations generate real, sustained and substantial impact. Think about smartphones: At one point, no one had them. Now, smartphone penetration is re-defining how people consume content. That’s the power of capitalism. Everyone loves the system so long as they are able to participate fairly in it – and that’s the trick: making it fair and accessible to everyone. 

James Song, ExsulCoin

By being for purpose, not for profit, we aim to deliver impact without facing financial pressures from authoritarian regimes, large lobbying groups or corporations who need to see their return on investment no matter what. We’re positioning ourselves as neutral knowledge brokers and aim to serve first and foremost the marginalised groups.

Mariana Dahan, World Identity Network

I don’t see why there should be a divorce between having a social mission and being for profit. Those should never be separated. If they were combined more, then more people would probably be trying to offer solutions.

Maxine Ryan, Bitspark

Successful next generation businesses will be those with a clear purpose; that can balance the needs of people and the planet with profitability. Using blockchain, we have an opportunity to rethink systems and business models.

Cecile Baird, Blockchain For Good