Development: Technologies – Blockchain

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Reassessing Expectations for Blockchain and Development
Center for Global Development CGD Note – May 2018 – 9 pages
Michael Pisa, Policy Fellow, Center for Global Development
Overview
Growing interest in whether and how blockchain technology can help address a variety of social and economic challenges has given rise to a community of thinkers, innovators, and policymakers working to explore the technology’s implications for social impact and development.

On one level, things are happening quickly in this space. Over the last two years, the largest development organizations have begun to examine how using the technology might help them meet their goals. This includes the World Bank, which established a Blockchain Lab in 2017; the United Nations, which reports that 15 UN entities are carrying out blockchain initiatives; the Inter-American Development Bank, which is exploring the use of blockchain as a platform for asset registries; and USAID, which recently a published a primer on the topic.1 Several humanitarian non-profit organizations (NPOs) are also evaluating blockchain as a potential platform for aid distribution and developing their own proofs-of-concept. This is all happening as the number of start-ups pitching ideas continues to grow and distributed ledger models continue to evolve.

Despite these advances, however, the number of pilot projects underway remains quite small. While this could be just a matter of timing—many of the organizations mentioned above are now reviewing project proposals—it may also reflect hurdles to implementation that have received insufficient attention to date.

Given that blockchain technology is still in an early stage of development, it makes sense that most discussions about its use have focused on its potential rather than obstacles. Too often, however, boosters of the technology have overstated its capabilities and failed to consider obstacles to adoption. This imbalance has led to unrealistic expectations about what blockchain solutions can do, how easy they will be to implement, and how quickly they can scale, if at all. The result has been a widening gap between expectations and reality that has naturally led to growing skepticism.

The best way to address these doubts is to take them head on and to rebalance the conversation away from starry-eyed accounts of the technology’s promise and towards the obstacles that are likely to slow implementation and the steps that must be taken to overcome them.

This brief essay explores a key but often overlooked hurdle to using blockchain solutions, which is the complexity that decentralized solutions necessarily introduce. At times, the benefits of such solutions appear to exceed the added cost of complexity but often they do not. With this tradeoff in mind, the paper considers two use cases, digital ID and health supply chain management. Finally, the paper offers recommendations about how the development community can shift the conversation in a more useful direction.