Three national units of the Red Cross have implemented a blockchain-based system to distribute humanitarian aid and stimulate local economies.
According to a report by the Thomas Reuters Foundation, the Red Cross of Norway, Denmark and Kenya have launched a two-year plan to replace the supply of cash and vouchers with “local currencies backed by the blockchain.”
The organization is the largest humanitarian aid donor in the world after the United Nations.
Currently, the Red Cross distributes about $ 1 billion annually in cash and vouchers. These are aimed especially at areas affected by disasters or for stimulating local economies.
The new blockchain system, which has already been tested in parts of Kenya and Ethiopia, has proven effective in improving trade in poor communities. It allows local users to obtain loans through work, commerce or aid and spend them through a mobile phone application. Transactions are recorded on a blockchain network quickly and efficiently.
Blockchain system ready for implementation
A representative of the Danish Red Cross told Reuters that the blockchain system is similar to Kenya’s M-Pesa mobile money transfer service. In addition, it has the advantage that it does not require users to hold the national fiat currency in order to participate.
The system will be implemented at the moment in Kenya, and will be launched in Malawi, Myanmar, Zimbabwe, Cameroon and Papua New Guinea in the future. Currently, the goal of the program is to ship 320,000 users within two years.
Grassroots Economics founder Will Ruddick emphasized the low costs required to run the system. These amount to about $ 40,000 a year for servers and support across Kenya.
Through their capacity for security, inclusion, local currency and credit services supported by the blockchain, these systems can contribute to strengthening the economies of communities, pointed out Ruddick.
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