Blockchain technology: New solutions for sustainable development

Everyone is talking about blockchain, but not everyone knows how the technology works and what it can do. Blockchain is essentially an innovative way to store data. A distributed network of computers processes, verifies and stores a constantly growing ledger of transactions. This ensures a high level of data security. Since the spring of 2018, the German Government has been striving to develop a blockchain strategy for Germany so that it can tap the technology’s potential itself. As the topic is also highly relevant to international cooperation, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH established a ‘Blockchain Lab’ in February 2018.

The aim of the lab’s work is to leverage the potential of blockchain and related technologies for the purpose of implementing the 2030 Agenda for Sustainable Development. It has already analysed over 150 potential applications and identified four projects in which blockchain technology can be put to the test. These include climate risk insurance, forgery-proof education certificates, intelligent electricity grids and sustainable supply chains. The pilot projects are now moving into the planning and implementation phases. The Blockchain Lab is also currently advising on a further 20 projects.

For example, blockchain can help smallholder farmers in India document their sustainable farming practices, which also makes climate risk insurance more attractive. The project uses the technology to store data on water consumption and farming practices. If project participants adhere to the sustainable practices prescribed, they can obtain insurance cover for extreme weather events. Thanks to the use of blockchain, the requirements can be checked transparently and independently because the insurance model and potential payments are based on reliable data. This improved quality of information makes it possible for insurance companies to offer farmers less expensive premiums. And because goods grown on sustainable farms can be marketed at higher prices, the collected data can also be used to promote the farmers’ products.

The Blockchain Lab has now drawn up a practical manual documenting this model and further examples of how blockchain can be used in development cooperation. It provides insight into the technology and assesses the areas in which blockchain may prove beneficial.