Solving Challenges in Developing Countries with Blockchain Technology
Blockchain technology can solve development problems as it improves existing instruments and enables the development of new ones. Blockchain-based applications particularly address institutional weaknesses and financial inclusion because they restrict deception, corruption and uncertainties. In the future, the blockchain can also be a development vehicle empowering people directly and mitigating power asymmetries.
Poverty and economic disparities in underdeveloped countries
In its “Poverty and Shared Prosperity Report 2016” the World Bank reported that “poverty remains unacceptably high” with an estimated population of 766 million people living on less than $1.90 a day in 2013. Many countries located in Sub-Saharan Africa (388.7 million) or South-East Asia (256.2 million) are classified as underdeveloped countries. Nevertheless, significant progress has been made in the past years. Nowadays, especially in cities, a small well-educated middle class exists which can be an important fundament for technological innovations. Innovation has been identified as a means to support development in developed and developing countries (Chudnovsky, Lopez and Pupato, 2006; Kaplinsky, 2011). In general, new technologies can bring significant changes to these countries and improve their living conditions. In particular, blockchain technologies have been suggested as a new technological solution to many problems in underdeveloped countries (e.g. Swan, 2015; D. Tapscott and A. Tapscott, 2016) but has been held to be somewhat nebulous.
In attempting to compensate for this insufficiency, this paper first aims to introduce useful blockchain-based applications and link them to development problems. We seek to create an overview of some of the existing projects and suggested applications. We assess their potential by evaluating the impact scope, the implementation feasibility and the likelihood of adoption. Second, this paper intends to create awareness of new opportunities of the blockchain technology and to motivate governments, international organizations, non-governmental organizations (NGO) and entrepreneurs to leverage them. We show how a new technology (blockchain) could be applied to existing solutions in underdeveloped markets.