Linking Blockchain to Impact
Here's what we've learned so far in our explorations of the technology - and what this means for what's next
Not long after UNICEF Innovation launched its Venture Fund focused on emerging tech, we realised that making blockchain a key focus of our investments was important. The UNICEF Innovation Fund is a $35M + 2267ETH +8 BTC pooled Fund through which we not only invest in early stage, open-source, emerging technologies, but also explore these spaces to create products that can benefit humanity — and, since launching the Fund, we have seen no other technology cluster with a steeper growth over the past years than that of blockchain. So in 2018, we launched the first blockchain call for applications, resulting in UNICEF's first cohort of investments using blockchain technology, composed of 6 companies from around the world.
What we’ve seen: Our explorations of blockchain so far
In our initial blockchain explorations, the use cases we focused on were quite broad; this allowed us to better understand a variety of use cases and gain a better understanding of where the technology might be applicable in the context of UNICEF. In tandem, we also conducted internal prototypes of concepts like smart contracts for organisational efficiency, digital recognition via blockchain (certificates and tokens), using cryptocurrency to transfer value, and much more. These explorations led us to some early conclusions about blockchain, furthering our curiosity about the possibilities of the technology.
These early insights include:
- Blockchain works well as a ledger of information that is used to share information across multiple parties. In situations where there is an element of mistrust, or when there are multiple parties who need access to a common set of information, blockchain can be a good technology to facilitate and coordinate that information in a transparent and efficient manner. OS City, Prescrypto and StaTwig are good examples of using blockchain as a ledger.
- Blockchain can be used as an efficient way to transfer value between parties. From sharing internet connectivity (such as the case of W3 Engineers), to incentivising a community to take positive actions (such as the UNICEF Boost Tokens), and to making payments via cryptocurrency in under a few minutes for under a few dollars, blockchain can serve as a means to do so (such as the UNICEF CryptoFund).
- Smart contracts, the ability to apply logic to the information on a blockchain, can create efficiencies in traditional systems. Take Atix Labs, who uses blockchain-based contracts to digitise milestones and automate paperwork and processes related to angel investing. Blockchains allow us to reevaluate traditional systems like organisations and communities, and rethink how we are engaging and/or operating to be more efficient and inclusive; an example of this is the UNICEF Digicus project conducted with UNICEF Kazakhstan.
What we’ve learned: A bird’s eye view into building blockchain applications
There were also some more general takeaways that we learned from the cohort, in addition to our own prototyping. These observations are more about building blockchain products, rather than the underlying benefits of the technology:
- The end consumer does not care about blockchain — they care about a solution that is solving a problem. This means that the user onboarding experience needs to be easy. The problem that is being solved needs to be clear and, ultimately, the product should bring tangible benefits to the user, otherwise the user will not return to the product being created. Solutions that are complicated make it hard for users to realise the benefits. The product that is being created must always cater to what the user wants.
- There is a lack of understanding of the privacy space. The public might not yet know or understand why and how they should be protecting their data, and the possible benefits that blockchain can provide remain underleveraged.
- Many blockchain solutions are still not fully decentralised. Many decentralised applications (dapps) are reliant on centralised services, meaning they might be less reliable than fully decentralised solutions. Access to a greater variety of decentralised services, such as decentralised oracles and storage solutions, will be essential for building fully decentralised applications.
What this means for UNICEF
These findings led us to refine our premise of where we believe blockchain can be useful in the context of UNICEF’s work. While we track rapidly accelerating areas such as blockchain, we also work off a set of principles that ensure these technologies are built with, and are at the service of, the world’s most vulnerable people.
Based on our experience to date, the team sees blockchain technology as having benefits in three main ways, forming our priority areas: 1) leveraging innovative financing models to distribute resources; 2) increasing efficiency and transparency, and; 3) incentivising and encouraging the creation of open-source digital public goods.
As we get ready to onboard our second cohort of blockchain investments in the coming weeks, we want to be mindful of these learnings to help a new group of solutions create greater impact. When we launched our second call for blockchain applications in 2020, we were more focused in terms of the types of applications we were looking for. We specifically asked companies using blockchain technology in new and innovative ways to apply. This includes using blockchain to collect, aggregate, and validate data and leveraging blockchain to remodel traditional systems to engage and empower a wider group of individuals. With that, our new portfolio will be composed of solutions that not only support our ongoing blockchain priority area explorations, but also have the possibility to support UNICEF’s work in the field, including by making financial systems more inclusive.
We hope that, by sharing these publicly, our learnings will accelerate others’ efforts to build a more inclusive, equitable, and, ultimately, impactful next generation of products. Watch this space to learn more about our next cohort of blockchain investments that will help us to continue to refine our understanding of where this technology can have an impact on the work of UNICEF and young people around the world.