Blockchain for greater transparency and security
GIZ’s Blockchain Lab explores how new digital technologies can advance sustainable development.
‘We see blockchain as an interesting technology that may well bring huge changes in its wake,’ says Franz von Weizsäcker, Head of GIZ’s Blockchain Lab. The Lab is based at the Impact Hub Berlin, and since early 2018 has been investigating the added value of this digital technology for development cooperation.
Some experts are expecting the potential for innovation and change from blockchain to be comparable to the success of the internet. The fact that more and more new applications are being developed on the basis of blockchain technology and that the first projects are appearing in a number of different sectors underlines the technology’s great dynamism.
What is a blockchain?
The impetus for creating a blockchain comes from a network whose members want to exchange data and values securely with each other via the internet. This might involve taking out insurance, renting a car or selling a plot of land. All data is logged in blocks in distributed locations, and forms an ever-growing chain. It is not stored on just one server but is spread across many different computers.
This data processing system belongs to no one; it is autonomous. Encryption algorithms prevent anyone from subsequently altering or falsifying the data. This differentiates the system from conventional databases, to which administrators, for example, have access. The blockchain is transparent and traceable, because all transactions are processed between the participants. The technology saves time, costs and resources.
Added value for the UN Sustainable Development Goals
GIZ’s Blockchain Lab is exploring what added value blockchain technology can offer in working towards attaining the United Nations Sustainable Development Goals. In the field of development cooperation, in particular, this technology offers positive features that can ensure stability and confidence in increasingly digitalised societies. Thanks to the nature of the technology in providing neutral, distributed platforms, the blockchains allow data to be shared independently and reliably between different actors, such as private companies, institutions or even countries.
The scope of blockchain applications ranges from simple timestamping tools for public sector accountability to reliable education and green energy certificates, as well as to blockchain platforms that make international trade more efficient. Blockchain will only realise its full potential when it is combined with other digital technologies, such as internet-enabled sensors or artificial intelligence. The Lab is therefore also researching other technologies so that it can obtain a holistic picture of the positive opportunities presented by digital innovations.
Focus on the social aspect
Blockchains are also seen as social technologies because they can create a new level of inclusion and participation. The Lab therefore has a broad scope, not only offering expertise in computer sciences but also researching from a social science, political and philosophical perspective. Furthermore, it relies on cooperation between a variety of actors: development experts, government institutions, the scientific and academic communities, the business world and start-ups all contribute to developing the economic, legal and institutional frameworks. At the end of 2018, the Lab’s cooperation network comprised more than 200 different actors, including nine German federal ministries, the EU and the World Bank.
Digital land registration in Georgia
In Georgia, GIZ is working with the government on behalf of the German Development Ministry to reform the legal system. Legal certainty is a key prerequisite for sustainable economic development. This is why the land cadastre system in Georgia is gradually being converted to blockchain technology. In practical terms, this means that all of the land titles in this Caucasian country will be stored in a blockchain, piece by piece. This is intended to prevent manipulation and corruption, and thus boost the trust that the population and investors have in the national land authority.
Around one million transactions have already been registered. Georgia would like to go one step further: in future it wants property transactions to be processed entirely via blockchain – including obtaining proof of identity from purchasers and vendors. Some 3.7 million people in Georgia are expected to benefit from this transparent, secure and more efficient method of land registration. The legal framework for the changeover to blockchain technology was developed by GIZ – pioneering a new approach to legal processes.
Sustainable spice supply chain in Sri Lanka
A digital project in Sri Lanka is paving the way for sustainable production and supply chains. A specially designed system is used to transfer data from spice production in a blockchain. This ensures transparency, enables suppliers to improve the way they work with each other and prevents incorrect certification. Customers receive a verifiable insight into the quality and origin of products, and for smallholders, better sales opportunities mean more income.
Climate risk insurance for Indian farmers
The purpose of another project in this field is to give consumers confidence in agricultural supply chains and strengthen the position of farmers. With this in mind, the project is developing a blockchain-based application that enables the accurate tracking of goods. In addition, producers who pursue a specific form of environmentally friendly and profitable farming are covered by climate risk insurance, which guarantees them a minimum income even when they are hit by extreme weather events.