Skip to main content

'End Poverty, Restore Trust': World Bank Dives into Blockchain with Lab Launch

The world's largest multilateral development bank is launching a blockchain lab as part of a bid to pilot projects that can improve governance and social outcomes in the developing world.
The World Bank, based in Washington, DC, officially launched the venue Tuesday morning to serve as a forum for learning, experimentation and collaboration on distributed ledger technologyThe blockchain lab will now seek to bring together internal and external participants to work on blockchain use cases of significance to the bank's more than 80 client countries.
Core focus areas will include land registry, digital identity, aid distribution and financial infrastructure.

Trust and poverty

At the event launch, Denis Robitaille, vice president and chief information officer of the World Bank's technology division, said that the lab's objective is to explore and build with its non-profit and technology partners, and to produce proofs-of-concept that can then be rolled out in the field.
The lab will focus on empowering the bank to be a thought leader in the space as more countries explore blockchain solutions. It has been set out to do this through facilitating greater understanding of the technology itself, as well as its accompanying security, legal and policy implications.
These pillars, bank officials emphasized, are critical to the World Bank's mission of eliminating extreme poverty and raising living standards worldwide.
The institution is also viewing blockchain as a potential vehicle for building and restoring trust in institutions, which has fallen precipitously around the world in recent years. New research by Edelman recently found that only 15% of people trust the systems in their countries to work for them, and that trust across every sector declined for the first time ever in 2016.
Sebastian Molineus, director of the World Bank's finance and markets global practice, argued that blockchain's true potential is not just in individual use cases, such as payment facilitation, but in rewiring the entire financial infrastructure of developing countries. 
Molineus told the audience:
"This is not just a fad or something that people are talking about in the abstract, it is something that is real and something that will trickle into our development work."

Project origins

According to Molineus, the impetus for the lab was organic demand among bank staff, client countries and stakeholders, as well as the rapid exploration of DLT by other multilateral institutions like the United Nations.
"One of the surprises was how often private sector banking clients are asking for more information, more guidance and more 'mind partners' as they think about how to deploy this technology in their areas," said Susan Starnes, head of supply, trade and supply chain solutions at the International Finance Corporation, a division of the World Bank.
Bank officials also emphasized that they believe there is ample potential in using the technology to improve transparency and streamline procedures within the institution itself.
"What really struck me is that we can actually now track every single dollar that our development partners are giving to members," said Molineus.
He went on to emphasize that such increased efficiency and transparency in project lending could dramatically improve project outcomes.
Arunma Oteh, the bank's vice president and treasurer, said that using blockchain as a structured finance vehicle could allow the bank to issue debt and raise funds more cheaply on capital markets, and therefore enable it to issue project loans to developing countries at lower rates.

Understanding the risks

However, the bank is also keen to understand the potential challenges and pitfalls associated with blockchain.
Randeep Sudan, a digital strategy and government analytics advisor at the World Bank, called for a tempered approach to blockchain, stating that the potential benefits must be embraced with an accurate grasp of the risks.
He remarked that environmental and energy consumption issues must be considered, particular as the World Bank is highly sensitive to climate change and environmental aspects.
Sudan noted, for example, the electricity use that bitcoin mining, the process by which the protocol verifies transactions and rewards participants, requires, stating:
"These are hugely energy intensive efforts. Obviously, one would have to think about the implications as far as energy consumption as we pursue this technology."
Sudan also pointed to other concerns, such as the consumer's "right to be forgotten", which has been legislated in the European Union, and the potential development of quantum computing in the future that could break modern cryptography.
Starnes emphasized that the technology must be accompanied by proper understanding, training and value systems for its full potential as a development tool to be realized
She said:
"What we recognize is that whenever there is a new technology or process or development, whether it's small or large, is that the success of those individual systems and innovations are primarily dependent on the human processes that accompanies them."

Comments

Popular posts from this blog

Case-By-Case or Cease-and-Desist? In Search Of a New Approach to ICOs

That rumble you hear is the sound of regulators around the world mobilizing resources to tackle the pressing matter of token sales. Yet, in spite of the spectacular growth of blockchain token-based funding, no one seems to have a clear idea of what type of rules to introduce. The resulting uncertainty (not to mention ridicule) is left hindering progress as money flows to unviable projects and investors are left vulnerable to foul play – exactly what regulation is supposed to prevent. Perhaps a new approach is needed. But to see where this could go, it's worth stepping back and asking what we expect the regulation to do. Safety belt First, why do we need regulation, not just of finance, but of anything at all? To protect us. At its roots, that is the main role of government – to protect its citizens from avoidable harm and extreme loss brought about by others or from our own lack of common sense. When it comes to securities, that usually means stopping us from making poor decisions…

Frequently asked questions about Bitcoin

What is Bitcoin? Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping systemin existence. Who created Bitcoin? Bitcoin is the first implementation of a concept called crypto-currency", which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010 without revealing much about himself. The community has since grown exponentially with many developers w…

Is Bitcoin Legal?

Bitcoin is of interest to law enforcement agencies, tax authorities, and legal regulators, all of which are trying to understand how the cryptocurrency fits into existing frameworks. The legality of your bitcoin activities will depend on who you are, where you live, and what you are doing with it. Bitcoin has proven to be a contentious issue for regulators and law enforcers, both of which have targeted the digital currency in an attempt to control its use. We are still early on in the game, and many legal authorities are still struggling to understand the cryptocurrency, let alone make laws around it. Amid all this uncertainty, one question stands out: is bitcoin legal? The answer is, yes, depending on what you’re doing with it. Read on for our guide to the complex legal landscape surrounding bitcoin. Most of the discussion concerns the US, where many of the legal dramas are currently playing out. Alternatively, you can access our comprehensive Regulation Report for worldwide expert …