INTRODUCTION

Over the last five years, the promise of blockchain technology has swept the social impact world, with many innovators experimenting to find use cases for this uniquely secure technology. This has resulted in hundreds of new organizations, ventures, and initiatives (referred to collectively as “organizations” in this report) focused on blockchain. To understand the ways in which blockchain can most effectively be used for social impact, our team conducted phone interviews with people in upper-level management positions (often CEOs and founders) at 110 organizations. These interviews were augmented through digital surveys. For this report, we focused on organizations in the following key sectors:

• Agriculture and Land Rights


• Financial Inclusion


• Climate and the Environment


• Governance and Democracy


• Digital Identity


• Health

In the following report, we share our conclusions from these interviews, including observations about trends that we discovered among our sample of organizations, as well as specific use cases in different sectors. In all cases, we are reporting on conversations held with a subset of organizations operating in the blockchain space and not extrapolating to the broader industry or sector. METHODOLOGY To compile these findings, our team of student researchers divided into sector-oriented subteams. To identify organizations to approach, we used the participants of the 2018 report Blockchain for Social Impact: Moving Beyond the Hype as a starting point and added organizations from our own internet searches and personal networks that we knew to use blockchain for social impact. We did not limit by nonprofit status. Most of our outreach to these organizations was conducted through email, beginning with an explanation of the project and a request for an interview with organizational leadership about their use of blockchain for social impact. These interviews shared a common format based on a questionnaire; in some instances where an interview was not granted, this questionnaire was filled out and returned by company leadership, or by a member of the research team using publicly available information. The number of participating organizations varies by sector. These numbers are influenced by the organizations cataloged by the research team as possible participants, as well as organizational willingness to participate. This variation in our sampling is not indicative of larger industry trends (e.g., we interviewed fewer organizations using blockchain in the Health sector; this does not mean that there are generally fewer organizations in the Health sector using blockchain).

USE CASES

Within the six different sectors, we wanted to understand the specific problems being solved through use of blockchain technology. To bring commonality to the solution to these problems across sectors, we listed five different use cases and then categorized the solutions across these use cases.

BLOCKCHAIN TYPES

Among organizations that we surveyed, the blockchain technology landscape is fragmented. Some 41% of the 110 organizations interviewed report using Ethereum, while 10% report using Hyperledger, 8% report using Bitcoin, 8% report using their own or a custom-built blockchain, and 5% report using multiple types of blockchain. Another 14% report using a blockchain that is not Ethereum, Hyperledger, or Bitcoin — these other blockchains included Corda, Cosmos, Stellar EOS, Penta Global and Ripple.

In three use cases — payments and money transfers, platforms and marketplaces, and records and verification — we encountered organizations that use their own or multiple blockchains. However, none of the organizations with whom we spoke are currently using multiple or proprietary blockchains for smart contracting or supply chain management. Within individual sectors that we surveyed, the choice of blockchain was similarly fragmented, with only one sector in our sample (Digital Identity) showing a clear preference for a particular type of blockchain (Ethereum, used by more than 50% of the 20 organizations in our study). When asked about their choices, some organizations reported that they use Ethereum because it is one of the more established blockchain protocols. Many organizations also said they found Ethereum more scalable and developer-friendly and hence chose it over other forms of blockchains.

 

 

IMPACT

 

We asked about the time frame during which organizations hoped to reach customers or end users, which we defined loosely as “impact.” The overwhelming majority of organizations in our survey anticipated reaching customers or end users within six months; a small minority expected to require more than a year. The majority of the organizations that we surveyed (57%) focused on providing a general social public good. Examples include reducing emissions or improving healthcare services for all. Meanwhile, 43% were designed specifically to benefit a vulnerable or marginalized group — for example, people of lower socioeconomic status or people who do not have access to traditional forms of banking. Of the organizations surveyed, those operating in the Climate and Environment, Digital Identity, and Health sectors were more likely to report larger-scale impact. We speculate that one reason for this could be the type of clients served in these sectors — a health organization might be serving an insurance provider with a large number of clients, while organizations in sectors such as Financial Inclusion are trying to bank unbanked consumers themselves. Note that these numbers are self-reported and have not been subjected to independent verification; they include companies impacting the general public through greenhouse gas emissions reduction, improving voter transparency, and similar actions with broad social benefit. VALUE-ADD OF BLOCKCHAIN An overwhelming majority of the executives in our survey reported that blockchain had a strong value-add toward achieving their social impact goals: Of 108 who answered this question, a slim majority (51.9%) said that blockchain is a necessity for solving their problem, while 41.7% said it is an improvement over other methods. Only 6.5% said that it is one way to solve the problem but that other, non-blockchain solutions may be better. CHALLENGES AND SUPPORT Not all organizations with whom we spoke had launched their blockchain operations, but the majority of those who had reported that launching was more difficult than they anticipated. Stanford Graduate School of Business / Blockchain for Social Impact 6 Regulatory challenges were reported by nearly half of the organizations in our study. Examples include an unfriendly regulatory environment, unclear regulations that required organizations to navigate a gray area, or a lack of regulations, which makes organizations more nervous. Many also reported that regulators do not understand the technology and its potential impact. Other reported problems include education of the public and stakeholders, cost or budget issues, lack of infrastructure, general internal challenges, and security or privacy concerns. When asked what would improve their organization or its ability to expand, many organizations cited increased education of the public, as well as more funding, better networks, and more labor.

CONCLUSION

General Trends in the Blockchain-for-Social-Impact Landscape While blockchain use varies across the sectors that we explored, we identified three overarching trends. First, the most common use case among our sample of organizations is records and verification, indicating that this is a salient problem across sectors. In that use case, we believe blockchain offers improvements in efficiency and implementation. Meanwhile, the most common challenges cited by interviewees are regulatory. This suggests that government regulations are not adapting quickly enough to properly incentivize and facilitate growth in the blockchain-for-social-impact space. Improving policies and regulations in different sectors to reflect the reality of blockchain’s use could catalyze more innovation. Additionally, most interviewees reported that launching was harder than anticipated; here, again, policy reform could lower the threshold for blockchain-based innovation in the social impact space. The following report unpacks these trends by sector, examining how they converge or diverge within different industries.