Garbage In Garbage Out, on the Blockchain

As we are all getting excited about the limitless potential of the blockchain and imagine forever new ways to reinvent this and the other old thing by the new principles, it is a good time to reflect on the hard fact that, mostly, where you have garbage going in, you’ll have garbage coming out, regardless of the many redeeming qualities of the thing into which you input garbage. The proverbial GIGO.

This has been historically true for any transformative technology — at least all the way back to the printing press — and this new one, the Blockchain, is no different.

Moreover, with previous technologies, you could go in after the fact and fix/ improve on the input to increase the quality of the output. Due to its immutable property, with blockchain that is not going to be possible.

Read the rest of this article at Proof of Impact

In The Future, You be Expected to Pay for Your Externalities

Recently I started a light-hearted series aimed at exploring ways in which the social etiquette of the future will evolve/ change as a consequence of transformative technologies such as the blockchain. In the first post of this series I proposed a version of the future in which it will be socially expected to tip your grower/ producer. In this post, I am proposing a future in which it will not be acceptable to enjoy a profit/ benefit without paying for the related negative externalities*

It is a big tragedy of our time that we operate with economic theories that tolerate privatized profits and socialized costs. These economic theories — developed at the end of the 19th century and in dear need for an update — glorify economic growth and fail to quantify non-monetary cost of this growth. This is the case for countries, companies or even individuals.

Sure we congratulate companies that voluntarily offset (some of) their negative externalities, but it remains shockingly acceptable that economic growth will have socialized negative consequences — left often to NGOs and communities to address as they see fit, in exchanges for “generous” donations from the very people/ companies/ governments who created the mess to start with.

Large industries continue to displace communities, oceans continue to be polluted in the pursuance of economic growth and those people grabbing your water and then reselling it to you while packing the world’s landfills with plastic continue to enjoy investor’s money and government’s confidence.

Jerks.

Read the rest of this post at Proof Of Impact

Tip your Producer!

This is the first of a series of posts in which I will look at how social norms will change into the future, under he pressure of our blockchain enabled life.

Back in the early days of the internet it was all about anonymity. My skype handle to this day is a succession of random characters (which makes for awkward moments when doing business on Skype, as one sadly still does). In those days your online identity was carefully separated from your real identity. Your friends in real life did not know your online identity and your online friends did not know your real life persona. 

Breaching this simple principle was kind of against the etiquette. The idea that people in the future would create online profiles using their real names/ location and that they would voluntarily post pictures or personal information online was cringe-worthy at best. Trusting random websites with your credit card? Order their groceries on the internet? Get outta here. Dating online? Only for desperate creeps. Few people in those days would have bet money that this is the direction in which the world will be going with the internet.

So here we are again. We are in the early days of the Blockchain and it all feels familiar. The exotic technology. The excitement. The nay-sayers. On reddit and in telegram channels I partake in conversations that are not unlike those IRC chats we used to have back in the day. Between all the memes and shills and the FUD, there are people there proposing versions of the future enabled by this new innovation. Some are more radical than others. Which way will it go? What thing that we cannot imagine today will be the norm tomorrow. And can we do things better this time around?

Continue reading at Proof of Impact

Tokenized Impact Investment: A Better Alternative to Impact Bonds

Using private capital to fund impact delivery is an idea that has been around for a long time but never found a practical model that could scale, in spite of interest and resources from large incumbents across public and private sectors.

What we have instead is a large and noisy Impact Investment space, packed with traditional business models that operate in a field that has inherent impact and/ or traditional models operated by businesses that take a commendable ethical position on elements of their implementation.

Meanwhile, the absolute majority of impact delivery happens using traditional donor funds & traditional implementation models.

What we miss is a model where private capital is invested in impact delivery at scale AND investors can expect to make a decent return on their investment.

I believe developing such a model at scale is possible today.

Read how at Proof Of Impact

How to Think about Charities in the Future

There has never been a better time for bold thinking. And of all the immensely bold thinking done out there, some of the most radical happens in the blockchain space. Exponential stuff, really.

People here speak of decentralized futures unencumbered by gatekeepers and rentseekers. They (we?) imagine egalitarian communities where wealth gets distributed fairly and corruption of any sorts is eliminated. Markets work for the people and the people have a voice.

It’s like the internet was supposed to be, but, like, thousand times better.

Read the rest at Medium

Building Better NGOs

I share my vision of distributed impact at scale with quite a few fellow NGO types and usually I get this funny, defensive vibe.

Most of us in the impact space are in this for all the right reasons. We are committed to social impact and we dedicated our lives to deliver impact sometimes at significant personal cost.

What is this talk of distributed impact then? Of disintermediation in the impact delivery space. Am I implying that all these people, all this positive energy is not needed? That somehow in the future there won’t be any NGOs?

To the contrary.

In the future NGOs will be more important than they are today. More relevant. They will get to be more focused on impact and less hamstrung by donor-driven politics and bureaucracy.

Read the whole article at Proof of Impact

How to Disintermediate the Delivery of Impact Using Distributed Impact Verification

The weakest link in the wider impact industry (that includes aid/ development as well as impact investing) is the lack of any reliable impact verification.

Aid delivery is a black box. No-one knows what exactly the outputs of any activities are and if and when impact happens and/ or what exactly are the correlations between activities implemented and impact and how we can optimize impact.

Here are some of the direct consequences of this lack of verification:

  • A whole industry has evolved to capture a significant slice of the precious resources available for impact. It trades in mostly spurious, process-based data and creates a false perception of visibility/ transparency. Even worse, this industry feeds the whole space with false insights, dodgy assumptions and a horrible noise-to-signal ratio;

Read the whole story over at Proof Of Impact

The Future of Impact is Distributed

It is a bit of a cliche to point out that technology has been disrupting every sector and niche out there. Indeed, every sector relevant today has been reinvented around tech-driven principles. Whoever did not adapt has been obliterated.

Yet there is one sector that has been stubbornly resisting change. And this is not some small or insignificant sector. Weighing in at ca.150B USD/ year this is the one sector that defines our desire to improve the world as we know it and, more practically, it affects significant parts of economies of numerous low-income countries.

The aid/ development sector has fundamentally remained unchanged for the last 40 years or so, pretty much oblivious to the several changes of paradigm that happened everywhere else. Of course, technology has penetrated here and there — everyone is on social media and fundraising has become slicker — but fundamentally, things happen as they always had.

Click here to read the rest of this post over at Proof of Impact. 

The Blockchain Will Change Doing Good Forever. Here is How:

We need to talk about the blockchain, folks. Because it will change everything. And there are so few people that understand what it is and where the opportunities lie that the ones who do have a huge edge.

You want that edge.

Even more so in the do-good industry, where the opportunities are enormous, and where shockingly tech-illiterate incumbents struggle every day to roll out the same old interventions following the same antiquated cycles. I want to share a few of the more obvious opportunities right here as we are looking into some of them here at Triggerise and/ or are currently pursuing.

First, a super-quick description of the blockchain (skip this section if you have a basic grasp of this technology):

A blockchain is a public, shared record that cannot be modified retroactively and that everyone trusts to be accurate forever. This record could be a list of transactions (as in the blockchain’s flagship application, bitcoin) or it could be any other information that once recorded cannot be modified anymore. It’s basically a ledger kept honest by mathematics, rather than humans or institutions. It is formed out of “blocks” of information that reference each other (“chain”) with newer blocks containing added information on top of older blocks on which information cannot be modified anymore.

Think about how many institutions are out there – some of them widely loathed – that exist simply as formalized witnesses for some sort of data-point in history: Notaries. Banks. Insurance companies. The National Gazette. Passports. Elections. Bookies. Copyright.

In theory, blockchain applications could drive all of these into irrelevance. And I am personally looking forward to see quite a bit of disruption in these spaces in the near future.

But what of the development industry? What about donors and implementers and – lest we forget – the proverbial beneficiary?

  1. A valuable currency & payment platform.

I think this is the most obvious application and one that has been written about extensively. There are plenty of exciting startups in this space – bringing bitcoin and other crypto currencies into low-income markets where millions of unbanked people could enjoy the benefit of a virtual currency that they can save, spend and trade. It would be a powerful way to “bank” the unbanked, without the need of an expensive operational expansion of a traditional banking infrastructure. Additionally, it would offer millions of people a way to hedge against bad fiscal / financial policies if they have the misfortune to be living in a place where such policies are rolled out. There’s more, of course: people fleeing conflict or persecution could store whatever values they have in a crypto currency and access it en route as needed and/ or once they are in a safe place. Today, many refugees leave their belongings behind and/ or get robbed or ripped off by criminals and corrupt officials they encounter during their perilous journey.

2. My absolute favourite application in this space: Remittances.

Un-banked, hard-working migrants currently pay astronomical fees to the likes of Western Union when they send money home. No more of that – a crypto currency allows instant, no-fee transactions. This can be set up right now, without the need for any single extra line of code. The only thing needed is an extensive operational presence, which many non-profits have and which a nimble social entreprise could set up quickly using a franchise model, for example

3. A global, secure, distributed registry for identity.

Like a global passport that you can never lose and never expires. All important events – birth, marriage, death, driving license, voting card – can be recorded on a blockchain, forever accessible and indestructible. No-one could have access to this data, unless permitted by the owner who is always in control. There are further opportunities here: Medical records. Credit history. Insurance status. This could help refugee processes in recipient countries speeding up processes and removing doubts about nefarious elements infiltrated among legitimate refugees.

4. (Micro)Contracts. (Micro)Credits.

One of the more exciting developments in the world of blockchain is the integration within blockchain protocols of secure contracts (“smart contracts”). That means that contract deliverables get scripted into the blockchain and payment happens automatically once deliverables are verified. This has a lot of potential in managing small-amount/ high-volume contracts such as micro-credits or other predictable, simple contracts. It removes a critical barrier and allows small-value contracts to go to scale without the need of a margin-eating middle-man to facilitate trust.

These are just a few possible applications and each of them could have a tremendous impact on local economies. But their combined impact is even higher and it unlocks entirely new categories of opportunities related to local entrepreneurship and economic growth:

5. New forms of equity structure and trading

Currently, there is no real equity structure on under-served market segments, never-mind trading. There are many reasons for that – no infrastructure, no regulatory framework, no real incentives to bother with any business structure. Capital doesn’t follow opportunities here. In fact, there is no capital to speak of – hence, no real growth. Sure, it is a bit of a stretch to expect that there is any appetite for any equity structures on markets where the typical business is a mama selling a few bananas or a local store selling rice by the cup and the odd beer.

What if we could structure the equity on these markets, and raise the capital on modern, sophisticated markets? Let’s start with the basics. The mama selling bananas. Could we assume her business has a value? Or Triggerise’s own micro-distributors who go from door to door in their communities and make a living out of referring people to services or selling things like nappies or fortified staples – there are a few thousands of them in our global network as we speak. Could we valuate one of these businesses, just like we would any other business? How much would it be worth today? 15 dollars? 100 dollars?

I think we can. And once we do, we can record the valuation on a blockchain. Then we can sell shares and/ or stock options – either directly, or through a token/ Coin Offering. The buyer of these micro-shares could be from the same village or from a big city on the other hemisphere. You could aggregate (i.e. network index) and structure this micro-equity into modern investment instruments that can be traded directly with investors or through legacy brokers. Hell, you could even structure all sorts of derivatives on these instruments, increasing the flow of capital into capital-starved market with a high profit potential.

6. Commodity trading/ futures.

Now let’s imagine one of these businesses is an agri-business. We can record various inputs onto the blockchain as well as crop yield and other outputs. We can structure a token (and smart contracts) and use that to basically sell/ buy futures. A bit like an old fashioned cooperative bank, but without the bank (and without the bank fees);.

7. (Micro)Insurance

With all crop data on the blockchain it should be easy to insure that crop. Or anything else, for that matter. Premiums are registered on the blockchain (linked to a smart contract and maybe fulfilled using a blockchain currency?). This can be done at any frequency – daily, weekly, etc. Once the insured event is registered, payment comes automatically.

8. Impact Investment

The Real Game-Changer with the Blockchain in this industry is related applications in the space of Impact Investment. We are currently dealing with an unfortunate reality: modern markets are saturated and there are diminishing returns for process innovation there. So investors are forced to accept lower and lower returns for their money, which they grudgingly see as a price for an illusion of “safety”. Meanwhile, emerging markets across the global south have the potential to deliver solid, consistent growth/ returns, but are starved of capital. This is mostly because they lack the sort of institutions that investors feel would guarantee their investments and also because investors are not familiar with investment opportunities on these markets. So the main capital that flows towards these markets is donor funding, which mostly doesn’t benefit the markets that dearly need it. In fact, it often undermines the fundamentals there, creating volatility and scaring investors even more, even while it feeds an artificial economy of consultants and middle-men.

Enter the blockchain.

The opportunities here are plenty and we haven’t even started scratching the surface. Here are just two of them – only because these are some of the models that we are trying to articulate and roll out at Triggerise:

Development impact bonds on the blockchain. Current development impact bonds are really hard to scale, mostly because of the difficulty to track progress and/ or to verify that milestones have been met (more on that here). Investors don’t feel comfortable with this level of lack of visibility and they don’t feel comfortable with how expensive verification actually is. The blockchain can change all that. Agree on a real-time output indicator (Triggerise uses Verified Impact Behaviour) and set a smart contract on the block chain that would release a payment when the indicator is registered. Or even better, don’t even call it an impact bond. Simply issue a coin linked to measurable impact. Like so:

Fundraise with Crypto Impact Coins. You could turn traditional impact investment on models in their head, by issuing a blockchain coin to raise money from investors through an initial coin offering (ICO). Link the initial value of the coin to the cost of delivering impact (Triggerise is using the cost of verified impact behavior). Investors can trade the coin on any crypto/ asset exchange or they can hold it (or HODL it, as per the bitcoin meme). Every time a donor funds a specific project, a corresponding amount of coins gets destroyed, which will increase the scarcity of circulating coins, and hence their value. The investor/ donor relationship becomes mutually beneficial and self-enforcing, as investors benefit when donors fund relevant programs (because that reduces total no. of available coins, increasing coin value) and donors benefit from investors purchasing coins, because that leverages private funding (“cost-sharing) to the causes they fund. Everyone wins.

I will stop here. Would love to hear your thoughts on above or any other opportunities you can think of in this space. Obviously, this technology will not solve ALL problems – no technology ever has or ever will – but I am convinced that it will unlock a new era of opportunities that we cannot even conceive right now.

I can’t wait.