Blockchain Technology Giving Identities to Refugees


SEATTLE — One in three children born in the world is not documented, according to UNICEF. Data from the United Nations states that over 95 million people were forcibly displaced and became stateless persons or refugees in 2015. Many of these people either lost or never had an official identity profile. The World Bank also reports that 2 billion people do not have access to financial services, making it impossible for them to perform simple banking. Blockchain technology promises to correct this problem by creating identities for the undocumented and allowing them to access to cryptocurrencies, such as bitcoin.

Banks and governments are a centralized way of granting official authority to people’s claims. They act as arbitrators and have the power to name a person as a citizen of a country, indeed to deem that he/she exists. Blockchain offers a decentralized solution to this problem.

It works like a public ledger, a continuously growing list of data points and their metadata, called blocks. The information is public and the process by which new blocks are added to the chain, called mining, is determined by all the agents related to the blockchain. All of them must confirm the data before it is added to the jointly-held ledger. This checks-and-balances system, and some cleverly encrypted code, prevents a single agent from altering the information. It is virtually incorruptible.

In the past year, the potential of this technology has been noted by some of the world’s biggest financial institutions and governments. Research conducted by Accenture indicates that fintech firms focusing on blockchain technology attracted $613 million in investments between 2010 and 2015, the bulk of which came last year.

A consortium of 70 of the world’s heavyweights in finance has created a company called R3, with the sole purpose of developing blockchain. China recently published a 70-page white paper identifying key milestones in the country’s efforts towards its implementation to encourage investments from private firms. The Central Bank of Kazhakstan is considering applying the technology for short-term securities deals.

Speaking at the Next Billion conference in October, Brian Beheldorf, head of the Linux Foundation’s open-source Hyperledger project, said “We can use technology to reform the systems of the world to be auditable, accountable and a force for good as we bring in the next billion online.” He is one of many who believe that blockchain databases can be used to help the world’s poor.

In low-income countries not everyone has a legal identity. When a refugee applies for asylum, he/she may need to relinquish his/her passports while he/she waits to travel. Without proper documentation, life can be difficult —  a person cannot open bank accounts, get phone contracts or receive medical treatment. Without some sort of identification, one is practically non-existent in the eyes of almost all official institutions.

Companies, such as BanQu, who won MIT’s “Innovate for Refugees” award are using blockchain technology to bring the disenfranchised back to the financial market. BanQu was founded in 2015 and aims to give people financial identities through its “Economic Identity” app.

Working with displaced Somalis in Kenya, BanQu combines a person’s selfies, biometrics and key physical characteristics to create an identity and upload them to the secure ledger. They add testimonies of the person’s credit, like successful business deals, and start tracking remittances and payments.

The digital footprint that is created is essentially a credit history that can be used as a reference for future deals or loans. It connects the unbanked people with the global economy.

The project received a $350,000 grant from the Rockefeller Foundation in its initial stages. As the US prepares to resettle 110,000 refugees, the Obama administration is pushing other countries and firms to do more in aid of the world’s 21 million refugees. At a summit on the issue last week, the administration established commitments with 50 American companies, including BanQu.

Eliza Gkritsi

Photo: Flickr


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