Possible Applications of Blockchain Technology in the Future of Social Entrepreneurship
By: Connor Wilson
Tags: Technology, Entrepreneurship, Bitcoin, Blockchain, Social Change

Blockchain technology has the power to change the world. In this article I will provide a very brief explanation of what blockchain technology is, and how it can be applied by social entrepreneurs in solving social issues and disrupting markets through things such as tenuous title claims, sharing economies, remittances, identity ownership, the democratization of data access, online voting, and financial markets.

What is Blockchain Technology?

It seems that in today’s entrepreneurial world everyone is excited about and trying to integrate blockchain technology into their business models to attract more venture capital and be trendy, without knowing what blockchain technology really is. Few people understand how it works, but they know it’s the next big thing. I myself am no expert, but a Ted Talk by Dan Tapscott puts it nicely (see citations).

Here is a perhaps oversimplified version of the idea based on that Ted Talk and my understanding of it: The blockchain is a vast global distributed digital ledger that runs on millions of computers all over the world. Bitcoin is called a cryptocurrency that runs on this network. Bitcoin mining creates the blockchain, which is when a bitcoin, having monetary value is used for a transaction. That transaction must be verified, timestamped and added to the ledger to make sure that that currency cannot be spent twice by the same person, being digital. That transaction is verified by a computer which is required to solve a complex cryptography problem attached to it (this is used to avoid the double-spend problem) to verify it, which then rewards some bitcoin to the miner who contributed the computing power to do this. Bitcoin miners are incentivized to help build this network because they are rewarded this bitcoin, which gradually grows the number of bitcoins in circulation (though there is a limit), and increases the size of this distributed and encrypted computing network. It becomes a native medium for value that is no longer controlled by centralized powers of governments and financial institutions who have been able to amass wealth due to their control over these systems of transaction and verification. Blockchain technology essentially eliminates these bodies as middlemen to become a peer to peer, encrypted network for transacting, but an encrypted and distributed computing system can be used more than just cryptocurrencies. Any kind of asset can be stored, moved, transacted, exchanged, or managed on a blockchain.

Social Issues that Social Entrepreneurs Can Use Blockchain to Help Solve:

Blockchain can be used to provide immutable land titles. 70% of landholders worldwide do not have proper legal documentation of title to that land. Without proper title to land it can be taken from you, and in many places, such as in Honduras where this is widespread, it is. Blockchain technology could be used to verify property claims and prevent fraud and corruption through immutable record keeping. This would help give millions of people conditions for prosperity since land title is needed to plan for the future, use as a secured asset for borrowing against, and more. (Tapscott, 2016)

Blockchain could help create true sharing economies, which today do not really exist. Services like Airbnb, while empowering individual property owners to rent them out, still aggregate those offerings through the Airbnb platform acting as an intermediary and taking a cut of every transaction. Blockchain technology could enable true peer to peer transacting without the need for Airbnb to provide things like the payment processing, verification of the property, and more.

Blockchain technology can help bring people out of poverty. Globally people work in developed countries and send part of their wages back to their families back in their ancestral land. A Philippine McDonald’s worker in the United States who sends her wages home to her sick grandma in Manilla will end up paying Western Union 10% just to deliver the money, a process which can take up to a week or more. With the use of blockchain technology, this process can not only be instant but can be sent to local tellers with high ratings to deliver the cash, converted into pesos, directly to her door for likely as little as even 2 cents. (Tapscott, 2016)

Blockchain technology can be used to help people recapture the ownership over the data they create about themselves. If login and authentication systems can be developed using a blockchain black box layer then personal data such as how you use certain services, where you live, and who your kids are, can be kept private and only shared with your permission, rather than being the default. Data is valuable, and the blockchain can enable the monetization of that data to be owned by the people creating it about themselves so that profits from selling that data primarily go into their pockets (Tapscott, 2016) rather than the large behemoths of Facebook and Google. To better put this into context, if data was privatized then politicians like Donald Trump couldn’t use services like Cambridge Analytica (he did), a data analytics firm that uses psychographic targeting to frame political policies in a way that will most appeal to a specific category of people (Nix, 2015). This sort of technology allows politicians to not only always know what to say and to who, but to influence elections such that democracy becomes more of an illusion of choice than a reality, with the elites holding and maintaining the real power: your data.

Blockchain technology will democratize innovation & entrepreneurship. Ownership of data also enables industry giants like Google and Facebook to dominate many technologically driven industries since any startups in those areas don’t stand a chance to compete with the massive amount of data these platforms collectively have (Manjoo, 2017). While blockchain technology can be used to privatize personal information, it can democratize the channels of access to it, enabling a wave of entrepreneurship not seen since the internet bubble of 2000. If anyone can buy or sell user data, not just Facebook and Google, then this information will be available to whoever needs it for their next big business idea. It will help make the “American Dream” a reality again when the technology giants can no longer bully smaller upstarts into acquisition or extinction.

Blockchain technology could finally enable online voting systems and direct democracy to be created by ambitious social entrepreneurs to provide to governments because of the powerful cryptography built into the system that could be used to virtually eliminate voter fraud and massive increase civic engagement. If you could vote for a candidate or in your underwear at home, much more people would do it. If you (assuming you were educated on the topic) could vote on a policy issue online why would you need an MP to do it for you?

Lastly, blockchain applications can disrupt financial markets, particularly in things like stock trading, could be used to make the stock brokerages, which contributed to swelling wall street coffers and the billions paid out in bonuses to employees while everyone else lost their homes in the 2008/2009 stock market crash (Story & Dash, 2009), obsolete. If you can directly buy ownership in a company without requiring someone to verify that transaction and sent proof of ownership to you, then why would you need a broker? Not only this, but no-commission trading would allow millions of micro-investors from all over the world to begin participating in financial markets. Some businesses such as https://www.robinhood.com/ have already clued into this.

Citations:

1. Don Tapscott (2016). How the blockchain is changing money and business. Ted.com. Retrieved from https://www.ted.com/talks/don_tapscott_how_the_blockchain_is_changing_money_and_business

2. Alexander Nix (2016). The Power of Big Data and Psychographics — YouTube. Youtube.com. Retrieved from https://www.youtube.com/watch?v=n8Dd5aVXLCc

3. Farhad Manjoo (18 Oct. 2017.). How the Frightful Five Put Start-Ups in a Lose-Lose Situation. Nytimes.com. Retrieved from https://www.nytimes.com/2017/10/18/technology/frightful-five-start-ups.html

4. Louise Story And Eric Dash (31 Jul. 2009.). Report Shows Bonuses Paid by Bailed-Out Banks. Nytimes.com. Retrieved from https://www.nytimes.com/2009/07/31/business/31pay.html