Cash is the fax machine of Global Development

How Cryptocurrencies and Facebook’s Libra Coin will disrupt emergency & disaster relief and donations.

By Adjunct Professor Samson Williams,
University of New Hampshire School of Law’s
Blockchain, Cryptocurrency & Law Program

Edited by Dr. Tiffany Gray, DrPH, MPH

Introduction

On September 5th, 2019, I had the opportunity to discuss big data, blockchain and cryptocurrencies at the AIDF Global Summit in Washington, DC. The Aid and International Development Forum (AIDF) is a global humanitarian organization, who has hosted high-profile summits in Asia, Africa and North America with an aim to provide a platform for independent debate, knowledge exchange and for establishing long-lasting partnerships to improve efficiency and effectiveness of aid and international development. My presentation was entitled, “Facebook’s Libra Coin. Disrupting and Improving Development Globally”.

Prior to my presentation there was a panel on “Innovative cash and voucher assistance for impact on women and children”, discussing the benefits/realities of cash in development and gender. And yes. For the record, I believe “Cash is King” and should be placed directly into the hands of those impacted. When explaining to someone from the UN’s Mental Health division just before going on stage I said, “Cash is the fax machine of global development. An outdated method in a digital age.” After I said that, I was like, “That's a good analogy. I’ll lead with that”.

I am writing this article to help clarify and explain not only why cash is the fax machine of disaster response and relief but also to shed light on the hype and reality of blockchain, cryptocurrencies and the truly disruptive potential of Facebook’s Libra Coin to the global development field. Too, I’m writing this because during a break someone approached me and said that disparaging the panel before me was unprofessional. And in that exchange, I smile and recognize what innovation and hinders growth more than anything...is fear of change and ego.

I am from Texas and my ego comes second only to the President's on Twitter. However, when we talk about digital transformation and directly impacting the lives of the humans in disasters, if we can’t recognize the fear we as humans have in adjusting to changing circumstances, we’ll have an uphill battle in changing our globe for the better.

Note - Libra Coin is a greater threat to our Democracy than any amount of collusion the USA has seen in the last two and a half years. “Company script” is an age old system of explotation, nearly as old as slavery itself. Libra Coin is poised to reinvent this system of exploitation in a digital form. In short, Libra Coin is f*ed up. Now that we are clear on that let's discuss how blockchain, cryptocurrencies and digital currencies will and are disrupting global development and disaster relief.

Blockchain + Development and Disaster Relief Sectors

To understand what blockchain means to the Development and Disaster Relief sectors, we first have to lay the basic foundations for what blockchain is. An easy way to understand blockchain is to think of it as a group text message. Much like in a group text message, blockchain is a distributed, time-stamped, tamper-resistant, record of data transactions. For a moment, imagine you are in a group text. There can be anywhere between 3, to 20, to 20,000, to an unlimited number of people in this group text. You know who some people are because their names and cell phone numbers are known to the group. While others in the group are pseudo-anonymous as you can see their cell phone number but do not know their names. Each time a person sends a message, they create a record of data that is time-stamped, tamper-resistant, and is distributed to everyone in the group text message. Keep in mind that data can be anything from a text, an emoji, hyperlink to a website, video of flying squirrels or an IOU for lunch. Here is a hypothetical example of how blockchain is like a group text message, as blockchain is most often used for recording financial transactions:

Samson has $10. Samson sends (via a text message) Maureen $7. Maureen sends Gilday $3. Gilday sends number 555-555-5555 seventy-five cents.

Everyone on the blockchain network (group text) can see each, every and all transactions. Because all transaction records are public, transparent and encrypted (this is the “crypto” part of “cryptocurrencies”), Samson (or anyone else) cannot reverse the transaction or claim to have money they don’t actually possess. In this example, Samson now only has $3. Even if Samson deleted the original message or destroyed his phone, the entire history of that group text message is alive and well on everyone else’s phone. This is ensured by the distributed nature of blockchain records. The “phones” of blockchain networks are known as “nodes.” At a high level, this is how blockchain works. Blockchains facilitate the encryption of transaction data that is time-stamped, distributed, and tamper-resistant.

Note - There is no “the blockchain” or “a blockchain.” There are numerous blockchains. In short, there can be as many blockchains as there can be group text messages or applications that require a distributed, encrypted, time-stamped record of transactions.

What these “blockchain group text messages” mean for Development & Disaster Relief

To reiterate, blockchain is a means of electronically documenting, encrypting, and sharing transaction data. Blockchain is most often used to create cryptocurrencies (e.g.,p Bitcoin, Ethereum, Artbytes, etc…). However, it should be understood that cryptocurrencies are simply the easiest way to leverage blockchain technology. Anyone can cut and paste and create a blockchain-based cryptocurrency in about six minutes. Again, cryptocurrencies are not the end-all applications of blockchain technology. They are currently the most commonly used application of the technology. You can, in many respects, think of cryptocurrencies as the porn of blockchain technology. Much like with the adoption of the world wide web (when in the early 1990s the majority of internet traffic was porn), it turned out more could be done with the internets than stream porn. This too, can be applied to the use of cryptocurrencies and blockchain. Established businesses, governments and an ever growing army of startups are leveraging blockchain technology beyond Bitcoin and cryptocurrency applications.

What does this mean for the Global Development community? Keeping that group text message example in mind and that blockchain isn’t just for cryptocurrencies, imagine how the following would be impacted.

Air-Drops - Facebook, through its pseudo-blockchain based cryptocurrency Libra Coin, will be able to “Air-Drop” Libra Coin to anyone of its users. Air-drops are fairly new creation that came out of the 2017/2018 era of Initial Coin Offerings, aka “ICOs”. ICOs were a fundraising mechanism whereby projects claiming to be blockchain businesses raised ~$26.3 Billion dollars, over the internet, during that 2 year period. With an “air-drop” an ICO project could push or “drop” their cryptocurrency directly into a person’s cell-phone. Air-drops work very similar to turning on the “sharing” or “blue-tooth” feature on your smart device. You can also airdrop to a smartwatch, tablet, or laptop. In short, air-drops are the new email spam for smart devices. Because I can push a cryptocurrency to your device whether you want to receive it or not.

GeoFencing - The image above is an example of geofencing. Geofencing is fairly old tech. Geofencing is the practice of using global positioning (GPS) or radio frequency identification (RFID) to define a geographic boundary. Then, once this “virtual barrier” is established, an administrator can set up triggers that send a text message, email alert, or app notification when a mobile device enters (or exits) the specified area. When air-drops are combined with geofencing, it enables smart devices (cell phones, tablets, watches, IoT (Internet of Things) to be pushed any type of digital object; typically in the form of a coupon, voucher, or in the case of ICOs blockchain based cryptocurrency or token.

Beacon Marketing. Geofencing is often used in combination with “beacon marketing”. Beacon marketing is a proximity marketing channel used by businesses to interact and engage with consumers at strategic locations. This communication is triggered by a tiny hardware device known as Bluetooth beacon. These devices transmit location-triggered rich notifications to smartphones nearby.

Facebook Bringing it All Together. Please note that all of the features above are brought together seamlessly on your phone without you having to do much beyond turn it on. You may occasionally have to be bothered to “click” a button. For instance, have you ever checked in “Safe” on Facebook after an incident or emergency? Facebook knows the location of your phone, drawing from wifi and cell towers, assumes it's within 2 feet of you and pushes you an alert inquiring if you’re safe.

For people not directly in the disaster zone they even have a handy dandy “donate” button. Remember this button as it’ll be important later as this is where disaster relief and Global Development get disrupted.

Anyone with a Facebook, Instagram or Whatsapp (all the same company) can be identified, within a specified geographical location (geofence) of an incident/emergency.
Facebook can take it a step further and using beacon marketing technology, make it so that only people who are within wifi range or connected to a given wifi (wifi networks are super easy to identify, especially when they’re your own post-disaster hot spots) can be air-droped currency. Not fiat cash but digital currency or cryptocurrency, a la Libra Coin.
Facebook can then airdrop $10k worth of Libra Coin to every family unit (Facebook already has that information) within a specified disaster zone or area.
Via geofencing, Facebook could additionally limit the viability/useability of Libra Coin distributed in a geofenced location to that location or to a set of pre-approved list of “disaster” goods (e.g. milk, diapers, bread, hotels within the geofence or range of the beacon, etc.), or a pre-approved list of vendors who have agreed to accept Libra Coin and will later redeem Libra for USD or the local currency of choice.
Recalling the group text message example previously mentioned in this article, this methodology of distributing Libra cryptocurrency would be one hell of a transparent process. Facebook could monitor, down to the penny, where every fraction of value was distributed, spent and after the event, even go so far as to void or cancel any Libra Coin that was unspent. This would and WILL completely revolutionize how funds are disbursed during disasters.
Remember that “donate now” button? Facebook could (and probably will) provide you the option of donating directly to a person, in Libra Coin of course, who they verify is in the impacted area.
How do you get Libra Coin? Simple. Facebook says that for every $1 USD donated, they’ll match it with $2 USD worth of Libra Coin. This isn’t kindness. It has some tax implications too dizzying to think about. For example, who is responsible for the tax on a donation of computer code? It is really a marketing ploy by Facebook to push users, companies, NGOs and governments to adopt the Libra Coin as “money” / “currency”.

NGOs this decades Blockbuster Videos?

In the above scenario the NGOs and relief agencies aren’t dead or wiped out. But they will surely be more mission focused. Why? Because Facebook will donate funds to them in Libra Coin and later enable them to be redeemed for USD or local currency of choice. That is just typical currency exchange, except with digital currencies. However, because they’re pseudo-blockchain based, the Libra Coin “group text message” will show exactly how every fraction of Libra Coin was spent. In this transparent ecosystem hoarding, stealing, re-allocation, theft, bribery and waste will be hard to a) hide and b) justify. Blockchain transparency will bring a level of accountability to the distribution of disaster relief funds, hereunto unknown and impossible to imagine. For instance, no more raising $500M in donation dollars to only build 6 homes in Haiti as the Red Cross did in 2012. Why? Distributed ledger of timestamped, encrypted, records of transactions, aka blockchain.

Libra Coin Threatens Democracy

Libra Coin is the biggest threat to democracy this generation has faced to date.

That’s not a typo. I just want to be clear. Allowing a private organization the “legal” right to mint money out of thin code is a really bad idea. Allowing Facebook, who when not influencing US elections, the ability to buy, finance and manipulate governments (via Libra Coin currency) the world over is even worse. Remember the adage, "He with all the gold, makes the rules?" It's doubtful you'd want that person to be Zuck and the gold to be Zuckbuck Libras. However, that is a longer conversation, which I’ve summarized in this article, “A Trojan Horse Named Libra.”

The point isn’t that Facebook is just an evil company, prior to creating Libra, the point is, “What happens when a Russian or Chinese company decides to create its own cryptocurrency?” If governments allow one company to do it, the world will not be governed by democratically elected officials but CEOs and Boards of private companies. More on why historically that is a bad reality.

In the meantime, if you’re reading this article implore your elected members to really take the time to understand the full implications of blockchain networks, cryptocurrencies minted out of thin code by multi-national, multi-billion dollar private corporations and why there is no level of caution short of nuclear that Libra Coin and other soon-to-be released cryptocurrency deserve.

Pivoting - Development and Disaster Relief

How will Development and Disaster Relief groups and agencies pivot to remain relevant in the next 3 years and beyond? Why is 3 years the timeframe? In three years, cryptocurrency and airdrops will be as standard in disaster relief as Whatsapp messaging groups and Bitcoin donations. What can development agencies do?

Educate your leadership about the reality of blockchain, cryptocurrencies and the potential threat of not only Libra Coin but other private cryptocurrencies that are being developed.
Set up a Bitcoin and select cryptocurrency wallets so that people can donate cryptocurrencies to your organization and you can familiarize your staff with what they are, how to handle them, as well as compliance and tax implications.
Transform your organization. What happens when not only Facebook but other large donors create their own cryptocurrencies? How will your organization’s funding be impacted when donors demand instantaneous, easily auditable, impact analysis and ROI? From boots on the ground to financial relief, development agencies face a moment of blockchain driven digital transformation similar to what they faced when the internet required them to evolve...for the better.
Realize that cash, as your sole means of currency, doesn’t improve outcomes or impact. It many cases it simply preserves historical legacies of inefficiencies in a world that has gone digital.
The world has gone digital. “Money” and “value” has gone digital. By 2025 paper cash will be as relevant to Global Development as fax machines. Weigh carefully how you can move your donation, relief and development activities from the paper bases of fiat, to the digital and cryptocurrency realms of blockchain and mobile money and then move confidently in that direct.

Of course we are just in the first 10 minutes of this Chapter of Digital Transformation known as “Blockchain and the Rise of Cryptocurrencies”. What will the future hold? A lot of disruption, promise and opportunity. Does anyone really “know” where we’ll be in a decade? No. There are no experts in blockchain, just fools at different levels of discovery. But there are some destinations more attractive than others. As we move forward into this brave future of unknown unknowns, let's try to keep in mind that human beings and freedom are more valuable than profits, “money” and ego. ‘Til then, stay awesome, stay woke and stay ready.

Thank you for reading my post. On LinkedIn and for Blockchain Business Magazine, I regularly write about technology, cannabis, crowdfunding, real estate, health and compliance investing trends. To read my future posts simply join my network here or click 'Follow'. Also feel free to join me on Twitter, Facebook, Instagram, or YouTube.

About the author

Samson is an internationally recognized anthropologist and expert in Operations & Technology, blockchain, cannabis, cryptocurrencies, mobile payments, mortgage finance and organizational change management in FinTech. Prior to his life in finance and technology, Samson earned a Masters in Emergency & Disaster Management from American Military University and served as an Emergency Manager at Fannie Mae and the DC Department of Health’s Health Emergency Response & Preparedness Administration, in Washington, DC.

Samson is ranked among the globe’s top innovative technology professionals for his cutting-edge research and applications in crowdfunding, tokenomics and digital securities. Samson is an adjunct professor at the University of New Hampshire School of Law, Columbia University and Principal consultant at Axes and Eggs. For inquiries he can be reached at: samson.williams@law.unh.edu.

Tags: Libra Coin