Blockchain Is Not Just Bitcoin Alone
The Blockchain technology that runs cryptocurrencies such as bitcoin could be used in many applications that contribute to sustainable development, from crop insurance to vaccine supply chains.
In an increasingly digitalized economy and society, data transactions’ security and accountability are critical elements for creating trust and enabling breakthrough innovations in the digital world.
In this regard, blockchain technology could be a game-changer, with the potential to revolutionize processes from finance to pharmaceutical industries, from government public services to humanitarian work and development aid.
The blockchain serves as the base technology for cryptocurrency, enabling open (peer-to-peer), secure and fast transactions. The blockchain application has expanded to include various financial transactions (e.g., online payments and exchange platforms) and the Internet of Things (IoT), health systems, and supply chains.
However, issues associated with scalability, privacy concerns, uncertain regulatory standards, and difficulties posed by technology integration with existing applications are some of the potential market constraints. There is also the risk that blockchain’s potential for solving developmental problems has been somewhat inflated by its early adopters and the tech media and may not be as applicable for developing and least developed countries.
At its twenty-third session held in May 2020, the United Nations Commission on Science and Technology for Development (CSTD) selected “Harnessing blockchain for sustainable development: prospects and challenges” as one of its two priority themes the 2020–2021 inter-sessional period.
To contribute to a better understanding of this theme and assist the Commission in its deliberations at its twenty-fourth session, the Commission Secretariat has prepared this issue paper based on relevant literature and country case studies contributed by Commission members.
What are the emerging uses of blockchain that can be breakthroughs in accelerating progress towards sustainable development goals (SDGs)? What are the potential adverse unintended social and economic effects of this technology? How could governments maximize the opportunities and minimize the risks? The Commission could consider the recommendations in this issue paper to examine the potential of harnessing blockchain for sustainable development.
The paper’s main messages are that blockchain technology can be used in many applications that could contribute to sustainable development. However, at this moment, blockchain innovation has focused on financial applications dissociated from the real economy.
For most of the innovations in this field, the goal is to profit by extracting rents through financial intermediation and speculative gains in crypto-financial assets instead of creating real value through new products and services.
Such behavior, combined with the lack of regulation and the swift pace of innovation, is a receipt for financial bubbles and bursts.
At the same time, blockchain is potentially a key technology in a new technological paradigm of increasing automation and integrating physical and virtual worlds, together with technologies such as artificial intelligence (AI), robots, and gene editing.
In such a scenario of the very early stages of this new paradigm’s installation period, it is still not clear the real long-impact of these technologies on the economy, societies, and environment. Similar moments in the past technological revolutions offered windows of opportunity for some developing countries to catch up and others to forge ahead.
Therefore, governments of developing countries should seek to strengthen their innovation systems to strategically position themselves to benefit from this new technological change wave.
