Fighting ‘Tech Complacency’ in Social Enterprise: Why it’s Time to Embrace Blockchain
Editor’s note: This post is part of NextBillion’s series, “High Tech Buzzwords: Hype or Real Impact,” — one of several topic areas we’ll be covering through special series this year. Click here for more details on our 2018 series.
When I tell someone I’m creating a new cryptocurrency, they have a typical reaction: the deer-in-the-headlights stare. It’s the same reaction whether they’re thinking “He‘s trying to get rich quick,” or “I have no idea what that means.” Their real question isn’t far behind. “Why would someone with a solid reputation do something like that? Bitcoin is for scammers and failing states like Venezuela or Zimbabwe.”
That reaction is understandable. The headlines don’t lie: The blockchain and cryptocurrency space is chaotic and full of fly-by-night operators and venal profiteers. Still, I have strong professional – and personal — reasons for diving in, having been a social entrepreneur for much of the last 20 years (besides roles in philanthropy and impact investing). I’m sharing my thinking to persuade you to join me now, in the hope that more social impact professionals will enter the space (and to get fewer blank stares)!
Because while the headlines are true, so is the hype. Blockchain and digital assets (crypto-tokens) have the potential to re-shape healthcare, financial services and other sectors. When a blockchain stores data, parties can trust each other without an intermediary. This means less risk of fraud, exclusion, breaches and errors in health records, credit histories, land titles and even identities. It also expands the potential for innovation, inclusion and efficiency due to blockchain’s open, decentralized approach.
Solving a Multi-Trillion Dollar Problem
LendLedger, the blockchain-powered protocol I’m helping to build, aims to solve multi-trillion dollar financing gaps for MSMEs and informal segments. It connects lenders with sources of data on borrowers who were earlier invisible, enabling more efficient loan approvals. It records the ensuing loans in a public blockchain that no single party controls, but that everyone can access with permission from the borrower. It is an open network without a gatekeeper or single point of failure, where simply holding tokens grants access to view a borrower’s credit history. It can do for lending what VISA or SWIFT have done for payments, without a central decision-maker.
When used creatively, blockchain and tokenization combine the benefits of systems thinking, interdependence, networks and industry standards – all the things I was taught to value by my mentors in financial inclusion.
The Risk of Tech Complacency in Social Enterprise
Now for the personal reasons this new technology is so important to me.
I want my children to live in a world where everyone enjoys equal opportunities, and where every product is not only designed with commercial objectives, but with careful thought to its long-term environmental and social impact. This requires businesses of all stripes – mainstream and impact-oriented – to evolve.
All around us, Fortune 500 firms are becoming “greener” and VCs are starting to finance disruptive agricultural and environmental startups. But as a social entrepreneur I’m obligated to evolve as well — to apply the innovation, risk appetite and long-term perspective of the smartest commercial minds. Why should a company like IBM, beholden mostly to profit-maximizing shareholders, take bigger bets using new technologies (like Watson AI and Hyperledger blockchain) than a social entrepreneur like me – or like my colleagues working on financial inclusion at Accion International, Omidyar Network or the Gates Foundation? Why should impact investors focus on metrics such as assets under management, number of exits and valuation jumps, instead of counting how many industry-wide transformations they’ve catalyzed?
Educating myself on blockchain and cryptocurrencies, building LendLedger, and evangelizing for emerging technologies are how I’m “walking the talk.” We need more social entrepreneurs and impact investors to take risks and get out of their comfort zones, even if it means failing. After all, we are here to solve society’s problems with every tool at our disposal, and not simply wait for technologies to filter down to our target beneficiaries. And with blockchain we can redraw how industries work, not just create the latest in an endless series of mission-driven service providers, or show solid asset value growth again this year.
We may find our sense of purpose eroded if we are complacent. Take mobile lenders targeting underserved East Africans, like Tala or Branch, who are financed by Silicon Valley venture capitalists. Can they really claim to be having social impact using technology (mobile), while charging underserved borrowers between 7 and 15 percent interest per month?
To fulfill our mission and be worthy of the name, “impact” entrepreneurs and investors need to avoid complacency and be willing to fail when experimenting with technology. But let’s also be forthright and disciplined in sharing our results and challenges. Otherwise, like on the HBO television show “Silicon Valley,” any startup using technology to reach underserved populations will claim that it’s “making the world a better place.” Our bar must be higher than that.
The Dangers of Centralized Services
Here’s another personal reason to give up comfortable old ways and pursue something “dangerous” and new. Today, a handful of executives at Facebook, Apple, Google, Amazon and Alibaba have outsized and growing influence on what the world consumes, how people communicate, what they learn about and even how their healthcare and finances work. In seeking financial inclusion, these ‘superplatforms’ can seem to be an attractive solution.
We should react with dismay, not applause. The dangers of centralizing services, news, communications and power are all too well-known. In contrast, blockchain and tokenization can enable open protocols like LendLedger to proliferate. These give endpoints (individuals) – users, consumers, borrowers – greater control over their identities, data, reputations and resources, and greater choice in what to consume. In my field, decentralized financial systems using blockchain will yield far more options, far less cost, and far greater innovation for consumers.
So while it’s a time of great change, it’s the right time for you and me to dive in. Governments and big business are grappling with disruptive technologies while most social entrepreneurs and investors remain passive on the sidelines. But those of us with a personal commitment to changing the world cannot simply witness where the pendulum will stop swinging. It’s our obligation to wrestle with the newest technologies that can create a better world, and ensure they drive the future we want.
Image courtesy of Pexels.