Why does the United Nations value Ethereum so much? 5 reasons why it can’t let go of the Ethereum blockchain

When they woke up on May 31, 2017, 1,000 Syrian refugees in Jordan’s Azraq camp had received the aid they had been waiting for. But instead of the usual white and blue trucks from the United Nations World Food Programme (WFP), this time the aid came in the form of electronic vouchers distributed using a rapidly evolving technology called blockchain — specifically, the Ethereum blockchain.

Due to the apparent success of this implementation, some United Nations (UN) agencies have begun to take notice of the technology, claiming that blockchain technology can not only be used to distribute aid to refugees around the world, but also for other charitable purposes.

What is the Ethereum blockchain?

Ethereum is a cryptocurrency that is very similar to the famous Bitcoin. Cryptocurrencies are very similar to traditional currencies, except that they are completely digital, encrypted and can be stored and transferred on electronic devices. One of the key selling points of cryptocurrencies is that they cannot be controlled by a central authority, such as the Federal Reserve, which means that the amount of this currency is strictly limited to a pre-set logarithmic growth and its value is completely determined by market demand.

The risks of wild inflation or deflation are minimized, and Ethereum makes it easier to transfer money across borders — although this could facilitate some criminal activity because financial transactions can’t be tracked the way they can through the heavily regulated traditional financial system.

The underlying technology of cryptocurrency is blockchain, a public ledger that records all transactions and uses private key cryptography and peer-to-peer networking to ensure secure decentralized distribution.

The United Nations explains that blockchain is a “distributed database that is continuously updated and verified by users.” Each added block of data is “chained” and becomes part of a growing list of data that is monitored by members of the network.

The United Nations’ aid efforts have historically been plagued by fraud, mismanagement and bureaucratic red tape, but aid delivered via blockchain could be more efficient with the ability to bypass governments and banking institutions.

This is especially true for the Ethereum blockchain. The Ethereum blockchain is Turing complete, which means that Ethereum only has its own internal code and can execute any algorithm given enough time and memory. This makes it more flexible and enables it to transfer everything, not just cryptocurrencies.

How can Ethereum be used by the UN?

Distributing relief supplies

As mentioned above, the United Nations World Food Programme (WFP) is already using the Ethereum blockchain to distribute food vouchers to refugees in Jordan in a pilot project called Building Blocks. WFP also plans to expand the project to refugees in eight other countries.

But this is just the beginning. Experts are brainstorming how to exploit the applicability of the Ethereum blockchain.

Climate Change

At the United Nations Climate Conference in Bern, Germany, the Ethereum blockchain was proposed to help combat climate change. Alexandre Gellert Paris, an official of the United Nations Framework Convention on Climate Change, claimed that “blockchain can facilitate greater stakeholder involvement, transparency and participation, as well as help bring trust and further innovative solutions to combat climate change, thereby strengthening action to combat climate change.

More specifically, blockchain can be used to facilitate the trading of carbon assets, where the owner of a carbon asset has certain rights to emit a predetermined amount of greenhouse gases. Companies can buy and sell these carbon assets like other assets, and this market can benefit from the efficiency and transparency brought by the Ethereum blockchain. In fact, IBM and a new organization called Energy Blockchain Lab are currently trying to apply the Ethereum blockchain to the Chinese carbon trading market.

In addition, some experts at the UN Climate Conference said that blockchain can be used to develop a peer-to-peer renewable energy trading platform, where governments, businesses and citizens will be able to buy and sell digital assets representing a certain amount of energy products. They also pointed out that this will help finance renewable energy projects and strengthen tracking of greenhouse gas reductions determined by the Paris Agreement.

identity

Currently, more than 1 billion people do not have an official government identity, which means they cannot enjoy the protection and services provided to citizens of their country, such as education, health care, voting, and opening a bank account. The UN considers this to be a major issue facing the world, and has pushed them to take steps to "provide legal identity for all, including birth certificates, by 2030." Currently, this has proven to be more difficult than originally thought.

But the ID2020 Alliance — a new group of UN agencies, nonprofits, companies, governments and other businesses — thinks they can achieve this goal by creating a digital ID network based on Ethereum. At the group's second summit, Accenture and Microsoft presented a prototype that makes identity personal, persistent, portable and private. That is, an identity that is unique, owned from cradle to grave, can be used anywhere, and can only be given out with permission.

money transfer

The UN estimates that around 200 million migrant workers around the world support nearly 800 million family members through cross-border remittances, which totaled more than $400 billion in 2016. According to the UN International Fund for Agricultural Development (IFAD), this helps lift millions of people out of poverty as the money is spent on needs such as food, health care, housing, education and sanitation. Unfortunately, transaction costs for remittances currently exceed $30 billion per year, making these fees prohibitively expensive for the poorest countries and remote rural areas.

The Ethereum blockchain, with no central authority or middlemen, allows for free transactions, thus eliminating this multi-billion dollar burden. This blockchain also offers greater speed, ease of use, and increased privacy. IFAD and other UN organizations that handle remittances are actively studying how to apply the Ethereum blockchain.

Smart Contracts

The United Nations Children’s Fund (UNICEF) is considering applying the Ethereum blockchain to increase transparency and reduce what they claim is the “cost of trust.” Because of the difficulty of tracking international education, they suffer from a degree of mismanagement, including the potential for fraud.

UNICEF Ventures, a branch dedicated to improving the organization's ability to mobilize funds, said this problem can be solved by using smart contracts. Smart contracts can operate like ordinary contracts, where two or more parties reach an agreement, but this agreement does not require a third party to execute it. This contract is executed entirely on the blockchain, abandoning the involvement of third parties.

For example, if A wants to buy a website password from B, they can enter into a contract that the password will be released to A only when the amount of cryptocurrency agreed upon by both parties is transferred to B. This transaction will be placed on the public ledger, which has higher transparency and efficiency, thus helping UNICEF overcome transparency issues and run more smoothly.

More apps coming

Since its release in July 2015, the Ethereum blockchain has gained tremendous attention, and individuals and organizations of all types have begun to imagine nearly endless ways to take advantage of the transparency, security, and efficiency that Ethereum provides. The UN in particular has embraced the technology, with seven UN agencies either investigating or implementing the Ethereum blockchain for various purposes. In fact, this October, the UN's New York headquarters will host a major summit, where the UN's technical expert agency Digital Blue Helmets is expected to reveal some new and exciting applications for the Ethereum blockchain.