Can Blockchain Help Rebuild Venezuela?
The challenges associated with the Venezuelan crisis can be addressed with blockchain technology. It’s not easy to understand, but here we show you four simple use cases.
Photo: Medium, retrieved.
Last month, the biggest names in crypto and blockchain technology gathered in New York City for the yearly NYC Blockchain Week and at Consensus, the flagship conference with over 4,000 attendees, one of the most anticipated workshop sessions focused on Venezuela.
Bringing together experts from both the public and private sectors to discuss if, and how, blockchain technology can be useful for Venezuela’s recovery, four promising fields were studied: humanitarian aid, digital identity, data transfer and e-government.
Let’s break each one down:
USE CASE # 1: SENDING AND RECEIVING HUMANITARIAN AID
Prominent economists have estimated the cost of rebuilding Venezuela to be $15 billion a year, or $80 billion over several years. Beyond economic recovery packages, Venezuela and the surrounding countries impacted by the migrant crisis need funds in the form of humanitarian aid. Local efforts accept cryptocurrency donations from around the world and use those funds to purchase food and run community pantries in Venezuela. This model could scale to larger NGOs receiving humanitarian aid from international bodies. Blockchain and cryptocurrency models may be powerful tools to deliver aid transparently both at local and state levels.
Key stakeholders: Venezuelans living inside the country, migrants and refugees, receiving communities, OAS and multilateral bodies who can support implementation of humanitarian aid, NGOs.
Opportunities: With hyperinflation, Venezuelans turn toward digital money; four million Venezuelans abroad are sending remittances, which could include cryptocurrencies, effectively bypassing Maduro’s exchange controls. For Venezuelan migrants and refugees in dire socio-economic conditions abroad, digital currencies can also be of huge help, especially as they transition from country to country.
Challenges: Adoption is not guaranteed, as key stakeholders are wary of new forms of digital money. The key challenge is to educate users, beneficiaries and other actors; other challenges include verifying data, building a secure and trustworthy system, and identifying recipients. Merchants must also feel comfortable with this new form of currency.
USE CASE #2: DIGITAL IDENTITY
Over 10% of Venezuela’s population has fled the country in the last five years, and many migrants lack access to identity documents, critically important for their protection. In some cases (like children born to migrant parents in Colombia), Venezuelans lack documents at all.
Fortunately, caretaker President Guaidó recently approved a decree guaranteeing diaspora Venezuelans’ right to identity. Venezuelan passports’ validity has been extended for five years, and are already recognized by the governments of the United States and Spain. However, there’s still a need to find alternative ways to guarantee this basic right.
Many Venezuelans need to renew or replace identification documents, such as birth certificates and passports, or would benefit from having consular cards. Blockchain-based ID applications can help Venezuelans renew, or replace, their original documents and verify the identity of their children and relatives. Some of these efforts are already underway.
Key stakeholders: Guaidó’s administration, Venezuelan migrants and refugees, national authorities in receiving countries.
Opportunities: Blockchain technology can support the verification of identity, by cross-referencing expired documents with other forms of identity-check (like birth certificates). The use of biometric technology may also be relevant, but careful consideration must be taken to ensure citizens’ privacy and protection. This use case is an excellent opportunity for Guaidó’s government to show some “actos de Estado,” progressively making the Maduro regime irrelevant.
Challenges: A system that guards against fraud, Sybil attacks, and cyber-attacks must be designed, also ensuring the privacy and dignity of participants. If identities are verified using a scanned passport and a selfie, how will that prevent someone from stealing your name? Another key challenge is ensuring governments in the region recognize and accept these new solutions for immigration and employment.
USE CASE #3: DATA TRANSFER ON MIGRANTS AND REFUGEES
Once Venezuelans have a mechanism by which they can prove and maintain their identity, they have to obtain legal status, access to healthcare and update personal records such as academic degrees. Venezuela, and allied countries, need a structured and secure processes to share data and protect the dignity and privacy of migrants, and that can serve as a useful tool for policy making.
80% of the 3.5 million Venezuelan migrants are in South American countries. Of those, approximately 60% have irregular legal status. There’s an urgent need for macro data on the migrant crisis, to inform policy-makers on the design of humanitarian aid packages and, on the micro-level, it’d be tremendously useful to have a secure regional database for Venezuelan migrants and refugees, to help host countries track their legal status, pending visa applications, criminal records and health records (particularly relevant, given the rise of malaria, diphtheria, tuberculosis and other communicable diseases).
Venezuelans need jobs, but they also need a better process to validate their academic degrees and professional titles. Evidence suggests that, in Chile, at least 80% of 150,000 Venezuelans have an academic degree or a professional certification; in Peru, around 70% of Venezuelans have a profession and are under 35 years of age. Professional associations, universities and governments should work together to improve procedures at this use case. Blockchain applications, either stand-alone or tied to a digital identity, may be an effective tool.
Key stakeholders: Government authorities in receiving countries, United Nations agencies, OAS, Pan American Health Organization, the private sector.
Opportunities: Blockchain offers a decentralized way to store information and validate it. Blockchain systems storing data would need an additional source to validate information, but it can be a convenient, cost-efficient, and secure way to share information amongst countries receiving Venezuelans.
Challenges: The key challenge for regional or international data exchange centers is about who will pay for this service, and who can be trusted to maintain the system once it’s set up. For a project of this magnitude, international bodies and regional governments must be willing to financially invest in a large scale solution. All stakeholders need to be involved in the design of this system, to ensure the process is valid and trustworthy.
USE CASE #4: VOTER REGISTRY
The fourth use case centers around e-government and voter registration. Following the model of Estonia, some Venezuelan technologists, political scientists and activists have begun to think about how to rebuild Venezuela with e-government solutions and systems to prevent corruption. A very concrete application is for voting.
According to the Venezuelan Constitution, Venezuelans can vote abroad in a referendum and in presidential elections. However, the current electoral registry (which doesn’t include the 4 million currently abroad) is outdated, and the current system probably won’t be able to absorb the couple million Venezuelans who will be able to vote. Blockchain applications can facilitate voter registry by establishing a record of Venezuelans abroad, out of which the electoral registry would be arranged. A bolder application of this technology is for actual voting, but that’s for another post.
Key Stakeholders: Guaidó’s administration and its embassies abroad, Venezuelan migrants and refugees.
Opportunities: The post-Maduro Venezuela has to find ways to reinvent itself and think of alternative solutions to old and new problems. Blockchain can help establish an electoral registry by strengthening transparency, and it can also be a cost-efficient way to identify the diaspora Venezuelans and facilitate their vote.
Challenges: The principal challenge here is trusting the blockchain to verify identity, and protect the citizens’ right to privacy. Other challenges center around the verification of identity for each Venezuelan added to the blockchain, a major issue as very few Venezuelans trust the electoral system. Blockchain, if well understood, can generate more certainty and transparency, if citizens understand it. There are other systemic threats associated with the use of this technology: we all know that Venezuela’s electric grid is on the brink of collapse. How does digital money work in a world without electricity?
These four use cases have been hotly debated for over a year, and yet we find ourselves far from the finish line. Some circumstances are obviously beyond our control but, as a parting thought, here are some ethical considerations to keep in mind:
Informed consent: Many of these proposed use cases involve technology that hasn’t been tested, let alone launched on a massive scale. It’s important to establish a framework for deploying experimental products in a way that ensures participants (whether they are Venezuelan citizens, communities or governments) are fully aware of the risks and ramifications. In medicine, whenever an experimental drug is released on the market, doctors must go a step further to educate their patients before administering the treatment. This process is called informed consent, and it’s based on the premise that one can’t consent to something not fully understood.
Disclosing conflicts of interest: The Venezuelan cause has brought together well-meaning stakeholders across the political spectrum, from all backgrounds. Businesses are finding ways to partner with nonprofits to raise awareness for Venezuela and champion the application of blockchain technology as a potential solution. These efforts are commendable but worth critical examination. Businesses have profit-driven motives that may influence the design and direction of a project. So long as these interests are disclosed, these public-private partnerships can be a powerful engine for progress.
Collaborate or perish: There are over 40 individuals fastidiously researching, building and investing in blockchain applications to aid in Venezuela’s recovery. There are countless more who have expressed interest in joining the cause. If we don’t find a way to work together, these efforts may rot on the vine. We must break the mold of cliques, coteries and chismes. No single group has the answer, so working together is challenging, it requires pushing aside egos and defining common goals. It demands compromise for the sake of the greater good.
And this applies to the bigger political goal of a free Venezuela.
* The views are personal. They do not represent those of the OAS.
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