Blockchain tech guards refugee aid

LONDON— In the Za’atari refugee camp in Jordan, Amar Al-Eid heads toward the checkout of the food distribution store carrying supplies for his two children. The shopkeeper raises a black box to his face and scans the Syrian refugee’s iris. The transaction goes through, and a day’s rations are secured.

The data technology that underpins virtual currencies like bitcoin is also used to deliver aid more efficiently by lowering the risk of bribes and fraud by local officials — a longstanding problem in the industry.

The blockchain keeps a record of all transactions and buyers, making sure recipients like Al-Eid get their goods without the added costs of graft or bank transfer fees. And donors can track the use of their aid money, all the way to the refugee family it helps survive.

The U.N. World Food Program has been testing the use of blockchain technology since 2017 to manage aid for more than 100,000 refugees in camps in Jordan, which hosts more than 740,000 people from neighboring countries such as war-torn Syria. Other international organizations, including the World Bank, UNICEF and the Red Cross, are looking at ways to implement blockchain into their own projects.

Blockchain is an online ledger of transactions spread across a global network of computers that use their processing power to verify any changes. It is most famous for being used to support virtual currencies like bitcoin, but in practice it can be used to track any system of payments or data transfers.

In the refugee aid system it is testing, the U.N. does not use virtual currencies but dollars. The blockchain technology helps it know where every cent is, from the moment it is donated to when it is spent on a physical good.

And that can mean huge savings.

Former U.N. Secretary-General Ban Ki Moon has said that in 2011, some 30 percent of aid donations — around $40 billion, according to one estimate — failed to reach recipients because middlemen skimmed some off the top and corrupt officials often took a cut.

Because the information is spread across so many computers, a thief would have to take control of the entire network to fudge the numbers and make off with the money.

That doesn’t mean smaller thefts can’t occur. So far in 2018, about $1 billion of virtual currencies backed by blockchain has been stolen, according to cybersecurity firm Carbon Black. But these thefts are carried out through hacks of the end users by entering the email account of a person to get their passwords to open their virtual currency accounts and take the money.

The blockchain doesn’t use middlemen such as Western Union or PayPal, meaning the costs of transferring money are reduced by 98 percent for users like the WFP. That translates to savings of over $40,000 per month for the UN agency.

David Beasley