Guernsey: 'Block By Block' - How Blockchain And Smart Contracts Can Revolutionise The Aid Sector

As the Oxfam scandal deepens, questions are being asked of the ability of the aid sector to self-regulate where sexual misconduct is alleged against its employees. With the spotlight now sharply focused on accountability in the aid sector, donors are also starting to audit the billions intended for worthy causes which range from education, healthcare and the environment. The backlash against Oxfam has been swift. At the time of writing The Independent reported that 1,200 regular direct debit donations to Oxfam had been cancelled in the wake of the scandal and the International Development Secretary was threatening to withdraw government funding for Oxfam. Although the frustrations of the well-intentioned individuals and organisations that provide monthly funding for development projects in many parts of the world can be understood, ultimately it is the beneficiaries of these projects that lose out when funding is withdrawn or reduced. It is important, therefore, not to lose sight of the intended beneficiaries of this funding and let the malfeasance of a few undermine public confidence in organisations whose net contribution to humanity is overwhelmingly positive.

In Guernsey, the challenges currently being faced by the aid sector present a unique opportunity for practitioners in the Blockchain space to promote a novel solution.

Nele Bhebhe, an associate in Appleby's Guernsey office, and Christopher Burgess the founder of Burgess IT are two such Blockchain practitioners who have taken up the challenge and are working together to devise an innovative solution based on Blockchain technology. As part of Appleby's corporate team, Nele regularly deals with a number of Blockchain technology related enquiries and is well versed in the regulatory framework in this fast moving and evolving space.

The pair have teamed up to develop a unique proposition which will offer any aid donors such as the Overseas Aid and Development Commission in Guernsey enhanced visibility over the funds that they provide to aid projects in the developing world through charities such as Oxfam.

Their idea is simple but the technology that underlies it can be, at first glance, a little hard to comprehend.

"Blockchain explained"

Conventional databases comprise a single ledger that forms a definitive record of all transactions that have taken place. A central administrator is then responsible for ensuring that this ledger is maintained, kept up to date and secure. Blockchain – or distributed ledger technology - replaces the centralised transaction database with a decentralised, distributed digital ledger where each and every transaction flowing through it is independently verified. In this way, the record of any single transaction cannot be altered without alteration of all subsequent transactions or "blocks" that are chained across the entire distributed ledger.

By using Blockchain's cryptographically secure, transparent and automatically-updating decentralised ledger, it is intended to create a smart contract driven process, based on the Blockchain which will allow transactions to take place between parties who do not necessarily know nor trust each other. Essentially, aid Donors, charities and the various third parties with whom they transact will repose trust in the 'process' primarily because each party will have the same copy of the transaction records, which records will update automatically through the Blockchain technology. Put simply, the movement of funds from the Donor to the charity and to any other third party (e.g. a supplier of mosquito nets) will be tracked on the Blockchain which will be updated automatically when a smart contract is entered into or when a transfer is initiated.

A proof of concept and a pilot of the process are expected this summer.

With technological innovation transforming offshore businesses and markets, Appleby has led the way amongst the offshore firms by launching a dedicated Global Technology and Innovation Group. With experts across its network of 10 offices around the world, the group supports clients across a broad range of emerging technologies.

Originally published in June 2018 issue of Business Brief

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Jeremy Berchem
 
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