In our latest episode of “On Human Rights,” we continue our series exploring human rights and blockchain. In this episode we speak to René Taus Hansen and look at blockchain applications for development and human rights. René’s the Deputy head of quality assurance at the ministry of foreign affairs in Denmark. They recently issued a report called “Hack the Future of Development Aid: Blockchain and Development.”
“We wanted to start this conversation about how can we think differently, because we need to do something drastically different in order to achieve what we want before 2030,” says Taus Hansen. “Basically, that’s why we called it Hack Development Aid. We mean that in a positive sense. We don’t necessarily assign a negative meaning to the word ‘hack,’ simply to think differently.”
Listen to episode 1 and 2 in this series on human rights and blockchain.
Read the entire transcript of our interview with René Taus Hansen below.
Gabriel: You recently issued a report called “Hack the Future of Development Aid: Blockchain and Development.” I’m curious, why did you commission the report?
René: We commissioned the report because we wanted to start a conversation on how we can address the biggest problems facing the planet and how we can do that more efficiently. If you look at the STGs and the speed at which we are achieving the objectives, we are doing really well in some areas but we are also lagging behind dramatically in others. If you project how long it will take us to get to where we want to with the current rate of improvement, it’s just too long.
We wanted to start this conversation about how can we think differently, because we need to do something drastically different in order to achieve what we want before 2030. Basically, that’s why we called it “Hack Development Aid.” We mean that in a positive sense. We don’t necessarily assign a negative meaning to the word “hack,” simply to think differently.
It’s been done before. Just after the Second World War a lot of children didn’t go to school, but we’ve had an exponential growth in the number of children going to school worldwide. The same happened earlier when we invented antibiotics, that we had a dramatic fall in death rates. Humanity has shown before that we can adapt new technologies for the common good and this is the kind of conversation we wanted to start, in this case on blockchain.
On defining Blockchain:
Gabriel: You’re looking at the blockchain, and we’ve had a few interviews with people about blockchain and human rights, and we’re going to have a few more, but I always like to ask people how they describe it, because there are so many definitions floating out there. What do you think?
René: I like to think of blockchain as a series of boxes. If you imagine you have an empty box, you start filling up the box with data, and once you have enough data in the box, you generate a unique code by looking at all the data inside the box. When you’ve generated the code it locks that box and you stick the code on the outside of the box. Then you put a new box on top of it and you start filling that with data, and of course like with the first box, when you have enough data in the box, you generate another unique code.
The trick is here that in generating the code for box number two, you also include the code that was generated for box number one, and then you close box number two. In that sense, you cannot change any data in any of the boxes, or the blocks, as we could call them, without the code changing, because that was generated because of the data inside, and you have linked the boxes because you include the code in the next box and the next box.
You get a series of boxes or blocks which are linked and locked together, and you cannot change any data in that chain of blocks without it being visible in terms of the code no longer matching. That’s what makes the blockchain unique, and also the fact that in many blockchains, at least in the original idea, all data inside these boxes are visible to everybody. There’s complete transparency in what data is stored in a blockchain, and that gives unprecedented transparency on the transactions that are stored within.
Gabriel: Do I have it right that the data of the different blockchains is stored on different servers or different nodes?
René: Yeah, the unique part of a blockchain is that it is stored nowhere and everywhere. Unlike traditional storage solutions where you have a central hub, a server, a big internet provider which stores all the data in a data center, the blockchain data is distributed across the internet on computers that volunteers to be part of that network.
That means if you want to change data you don’t have to hack into one data center and change the data, you basically have to hack the entire internet simultaneously, which is so improbable that it becomes impossible. There’s a high degree of security, there’s a high degree of transparency, and we no longer need these big infrastructure projects of building data centers to provide solutions that we today see being taken care of by these big IT solutions.
On blockchain and cryptocurrency:
Gabriel: Your report came up with four different hacks, and I’d like to dig into those a little bit. The first one was to innovate aid money with cryptocurrency. I guess you’ll have to start with a bit of a description of cryptocurrency for those who don’t know, but then tell me what you came up with as well, please.
René: In terms of cryptocurrency, our report actually focuses on the technology of blockchain, not necessarily using cryptocurrency, although that is one way of using it. We would want to focus on the utilities of the blockchain itself. The cryptocurrency is basically just a way of transferring value on the internet without the risk of that value item being copied like we saw initially with music, MP3 files being copied, or movies. We can’t have that happen with value, monetary value. That was basically why blockchain was invented.
Cryptocurrency is just a very easy and fast way of transferring value on the internet as if we sent an email. The way we see [inaudible 00:06:00] for this is partly because a lot of aid has to do with transferring resources from those who have resources to those who do not have resources, and that is, of course, where we see an application of cryptocurrencies. It doesn’t mean that we necessarily want to use bitcoin. An aid agency could basically invent its own currency and use that for transfers if that is the most sensible thing to do. That is one efficiency gain we could have of cryptocurrencies in aid.
On advancing human rights through blockchain:
Gabriel: The second one you’re starting to look into, turning rights into code on the blockchain, can you elaborate on that one?
René: I think the focus of Denmark has for many years been human rights and advocating that and helping our partners to secure people’s rights around the world. That has been a very long and continues to be a hard struggle, and we thought, “Could we use some of this to advance the human rights of individuals?”
A lot of individuals have no form of legal identity. Legal identity is usually stored in either paper-based systems or centrally located computer systems in a government agency, and we see some potential in using a blockchain, because that means that basically from a smartphone with an iris scan and a fingerprint you could basically store your identity on a blockchain network which cannot be copied, it cannot be altered, all the things that passport offices used to verify.
We think there are some blockchain applications where rights can be advanced through this. It could also be registering land rights, for example, giving people access to credit, because then they have collateral when they want to access funding from commercial banks. It could be marriage certificates, which touches upon inheritance law, which could be an important right, especially for women. It could be storing education certificates that cannot be altered or handed over or falsified.
There are a number of applications where we think that the human rights of individuals can be promoted through the use of this technology.
On blockchain applications and issues:
Gabriel: On the one aspect of storing identity, obviously there are some privacy questions that come up there, right?
René: There are. This is not a panacea that will solve all problems. There are big dilemmas in the use of these blockchain solutions. One of the biggest dilemmas, as I see it, is that many of these solutions are being promoted by small startup companies or larger companies, but it’s mostly in the private sector. We see an absence of public-sector institutions engaging in these new technologies.
On the one hand, that is not a problem because maybe some more agile actors can provide a solution which benefits human rights, but in effect, that means we’re privatizing human rights. I think there needs to be a very sincere discussion on whether is that the way we want to go? I think that there could be value in allowing private-sector stakeholders to engage in providing identity for people, but it needs to be sanctioned and it needs to be regulated by a state authority.
Because otherwise, let’s take an example that I have stored my ID with a certain private blockchain provider, but I have no longer enough resources to pay my subscription, if there is such a thing. Does that mean that my identity becomes null and void and I lose my title deed, my marriage certificate, and my bank account if I don’t pay my subscription? That is a fundamental problem we need to address. What is the role of new technology companies versus the state in providing these solutions?
Gabriel: Then it’s interesting that you bring up the privatization, because in a way it’s competing with the central authorities. There’s an argument to be made that blockchain could potentially get rid of the nation-state as we know it.
René: That is some of those discussions that I think we need to kick-start, and that is why we wrote up this discussion with the report, because we think that is some of the issues we need to identify, because if we don’t engage in this discussion we have the risk that this development, for good and bad, continues and in time we will see an erosion of the role of the nation-state, because the nation-state has traditionally been based on the authority to verify or sanction various things, identity or title deeds or whatever, and if that mandate evaporates from the nation-state, what role is there left and are we comfortable with that sort of privatization of rights?
On smart contracts in blockchain applications:
Gabriel: Fascinating stuff. The third hack is about program aid money and agreements and looks at smart contracts. Maybe you can describe quickly smart contracts, and then talk about their role in fighting corruption.
René: Smart contracts has to do with the fact that there are some advanced versions of blockchains out there where you can actually program these boxes I talked about so that if you put in a certain type of data, it automatically starts to do things by itself, which means that if I put in a GPS coordinate together with a tracking code for my package that I have sent on the mail, if the package arrives at a certain GPS coordinate the payment for the transfer of the package is automatically deducted from my bank account.
A lot of transactions can be automated, and that means that some of these inefficiencies that exist in terms of transferring value or delivering goods can be much easier by doing that. We no longer have to have somebody sitting with a stamp certifying that things have arrived or a certain thing has taken place before payment can happen. We can automate that.
Gabriel: And the link there to corruption?
René: That’ll be we take the human factor out. Corruption usually happens in intersections where somebody needs to verify something or have an authority to block things, and you can then pay for having your thing verified or have access to certain services. If that is automated, then there is no opportunity for corruption in those instances.
Also, as I said initially, the data on the blockchain can be made fully transparent, which means that everybody can see who was engaging in what transactions, that I had my driver’s license renewed and there was no human interaction, that I paid somebody [inaudible 00:13:37] payment to get it renewed.
Gabriel: But there’s always a person behind the code, right?
René: Yeah, but this is … Ultimately there would be, definitely, but that again would mean that you had to hack the entire system and not just the individual transaction. Nothing is foolproof, but I think it could be a vast improvement of what we see today. That comes back to the question we addressed earlier, who controls this? Is this something that a state sanctions? Is it something that a private sector does? Who controls that code? It’s important to discuss also democratic participation in this. Is it elected officials and thereby a democratic process that decides these systems, or is it a strictly private sector?
On eliminating intermediaries:
Gabriel: The last hack the report explores is disrupting the aid model, where it talks about removing intermediaries. What are you thinking there?
René: We’re not too specific in that sense, but we do see a potential in basically transforming the way we provide development assistance, because basically we have somebody with a need and that need is being met by somebody who can supply solutions or resources. In effect, it’s a marketplace, so somebody’s requesting something and there is a response to that. Can we make that more efficient, is basically what we’re trying to address here. In a way like Airbnb has removed the need for big hotel chains, there is a direct link between those who are providing a resource, which is accommodation, and those who need it, the people going on vacation.
Can we adopt some of that thinking to the aid model? I think also here, there are dilemmas, because development assistance is not just about the transfer of resources. It may even be the least part of it. I think a lot of the mechanisms existing in development assistance has to do with prioritizing who gets the scarce resources and how do we do it most efficiently.
Even though we do talk about eliminating intermediaries, that would be in a sense of making it more efficient, but there is also a different role of these intermediaries in terms of prioritizing the flow of resources, and that role will remain. It just means that some of these intermediaries may have to change role to be more of verifying needs, quality assurance, rather than being technical agents that transfer value around the world.
On blockchain applications and immediate challenges:
Gabriel: We’ve discussed a few of the challenges and downsides, but what are the big ones right now, do you think, that need to be overcome before we could move this forward?
René: I think the technology itself needs to mature. It is still something that has enormous potential, but we are still to see the big breakthrough in across-the-board application of blockchain technologies. There’s definitely still some development to take place on the blockchain.
Then there is, as I alluded to earlier, I think the biggest issue in terms of applying blockchain in practical solutions is governance. It could be, first of all, is there a global system for certifying what a good blockchain is? Because there are many variations of it. What is a secure blockchain? Should we have certification on who controls the blockchain that starts to be used for some of these applications? That is one aspect of governance.
Another one is, as we discussed, the role of the state. Does the state have a role, and if it does, what should it be? Should it be purely regulatory, that as a state it steps back a bit and allow private sector and private actors to take over traditional state roles but maintain a regulatory authority, or should the state itself begin to provide blockchains solutions?
Those are some of the big issues, and I think as a development agency in Denmark, I think we could play a role in facilitating that discussion. We are not blockchain programmers in my agency, and we never will be, but we could have a role to play in that bigger governance discussion.
Gabriel: I think it’s interesting. You’re probably the only Ministry of Foreign Affairs who’s done anything like this. I could be wrong, but looks like it’s pretty much cutting-edge. I wonder, so what are the next steps now? You issued the report, I’m sure you’ve gotten some interesting feedback, and you’re already partnering with different blockchain groups to produce a report in the first place, so what happens next?
René: Yeah, the blockchain report was issued, as I said, initially, to start a conversation about the opportunities and challenges in this new technology. The report is not a list of things that the ministry will now start to implement, but of course we are now looking at opportunities. The report has generated substantial interest and we have been contacted by stakeholders who may want to take this further, but if the outcome of the report is that people’s curiosity has been awoken and that they start taking this agenda upon themselves, I think that has been a success.
I know that there are some UN organizations that have now started also before our report to work on small blockchain solutions to explore, and I think it’s important to stress, as I said also, that this is an immature technology at the moment, but we need to start playing around with it in order to gain confidence and to explore what the opportunities really is and then see where it takes us from there.
Gabriel: René Taus Hansen is the Deputy Head of Quality Assurance at the Ministry of Foreign Affairs in Denmark. René, thanks so much for taking the time.
René: You’re welcome.