Can Bitcoin Technology Solve the Migrant Crisis?


Blockchain technology means more than transferring funds: It could give refugees back their legal identity.

REFUGEES FROM WAR-TORN NATIONS often give up everything they have in an attempt to create a better future for themselves and their families. But in addition to the jobs, property and relations they leave behind, these migrants give up something far more fundamental: their legal identity.

As they leave their country of origin, refugees will often have their government IDs confiscated and their bank accounts wiped out. Without proof of citizenship, legally speaking, they cease to exist. This loss of identity is compounded by a loss of access to critical social and economic infrastructure—including the international banking system.

A lack of ID creates huge problems for the border countries taking in refugees and the relief organizations trying to help them. The situation with the Syrian crisis is aggravated by the fight against terrorism. Are these people who they claim to be? Where did they come from? Who is a danger and who is not?

How Blockchain Technology Knows Who You Are

Centralized identity is assigned—and recognized—by governments and only governments. Without a proven relationship to the state, you are effectively no one.

Because the blockchain relies on a network of machines, with no government or institutional association, it creates a decentralized data structure. Who you are is no longer reliant on a relationship to a state, but rather on information contained in a trustworthy and accessible ledger.

Most of these questions could be answered by blockchain technology, a common ledger that each party can view in the same way that multiple users can work on shared computer documents. With a blockchain distributed database, when a Syrian refugee arrives in Greece, border authorities could check her identity on their copy of the ledger housing her ID and even her biometric data. And because the ledger is tamper-proof, she would be able to present a much more compelling story of who she is, where she’s been and who she knows. Furthermore, because blockchain technology allows for anonymity as well as transparency, she could choose to reveal only as much about herself as required for the transaction she wished to undertake.

Access to the banking system would improve as a result, but it would also become less necessary. Because the blockchain can handle digital assets of all kinds, relief organizations could wire money to her instantly and directly in the form of tokens or vouchers. Without layers of middlemen, a larger percentage of the final value would find its way to the person in need.

Several initiatives have tried to apply blockchain tools to the Syrian crisis. Bitnation is using the bitcoin blockchain to establish an Emergency ID for refugees that would enable family members to verify each other’s relationships and fund a bitcoin Visa card, but it has had minimal uptake so far because it requires shops near the refugee camps to accept bitcoin or exchange it for the local currency. More recently, NevTrace won a Spanish HackforGood contest for a refugee blockchain that would better capture migration patterns and improve targeted assistance. It is too early to tell if these or similar efforts will gain traction, but it is obviously more difficult to set up such a system after a humanitarian crisis has exploded.

Staci Warden is the executive director of the Center for Financial Markets at the Milken Institute.

Blockchain technology is not a panacea for preventing money laundering and terrorism financing. If someone with a convincing fake ID went to a bank that shared the blockchain ledger, that fake ID would spread through the system—a “garbage in, garbage out” problem that banks must prevent by Know Your Customer efforts (which, admittedly, will become easier with third-party verification and other security measures). But because the blockchain is a widely distributed, tamper-proof system, it allows for verifiable, attributable and easily obtained records of individuals, their movements and their transactions. The blockchain can hedge against political turmoil of all kinds and create a world in which a refugee—despite the political collapse of her national regime and her present physical circumstances—can maintain the power and dignity of proven identity.

mm – leading Bitcoin News source since 2012

Virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to consumer protections. The information does not constitute investment advice or an offer to invest.