In a world where people in war-torn countries and dictatorships are fleeing to seek asylum in countries throughout the West, the ability to easily verify identities is important not only for the individual, but for our economy as well.
The State of Refugees and Asylum Seekers
In 2016, the number of refugees, asylum seekers, and internally displaced people in the world surpassed 65 million according to the United Nations.The reasons for this rapidly growing number is the result of devastation from issues such as a civil war in Syria, a humanitarian crisis in Yemen, violence and persistent terrorism in Nigeria, conflict in Colombia, extremism in Somalia, and hyperinflation in countries like Venezuela.
Just three countries - Syria, Afghanistan, and Somalia - accounted for more than half of the refugees under the United Nation's mandate.
As a result of these crises, those who flee often lose their identities because important records like birth certificates and degrees are often destroyed. According to Accenture, it is estimated that approximately one-sixth of the world's population cannot participate in cultural, political, economic, and social life because they lack the most basic information: Documented proof of their existence.
Stacey Warden of the Milken Institute highlights that a lack of ID creates huge problems for countries taking in refugees and the relief organizations trying to help them. Now, compound this with the fight against terrorism and the West's concern of allowing a possible terrorist into their borders, the issue of identity becomes a major issue.
The World Bank estimates that 1/6 of the world’s population (over a billion people) cannot legally prove their identity. These are not only refugees but large swaths of the poor, 78% of whom live in rural areas with less access to important services like education, healthcare, sanitation, and employment. Moreover, economist Hernando DeSoto estimates that worldwide, $20 trillion worth of assets (houses, cars, etc.) have no titles, so individuals and groups cannot legally prove ownership. This decreases the value of these assets (often known as dead capital) and makes it difficult to lend or borrow against them.
What happens to their records?
Identities are currently centralized identities. These centralized identities are assigned—and recognized—by governments and only governments. Without a proven relationship to the state, refugees are effectively no one. Because of this structure, records are destroyed in natural disasters, war, economic collapse, and other forms of turmoil.
Most records are still issued on paper or other physical formats. However, digitization efforts by governments and industries are taking place all over the world. Unfortunately, digital documents can be just as ephemeral as paper; often issued in proprietary formats by vendors trying to capture customers, institutions without the correct software may not be able to read or verify them. Even with the correct software, the verification process can be tedious and uncertain. The same goes for digital signatures: even in places where legislation has mandated their acceptance, digital signatures come in a wide variety of formats with varying levels of security, not all of which are accepted as legal proof. Another difficulty with digital documents is that one of the primary ways people share information digitally — email — is usually not secure, so proprietary transmission infrastructures need to be built to send sensitive documents, such as health records. This greatly improves on the security of postal mail, but raises interoperability headaches. Finally, like paper documents, digital documents can also be spoofed by sophisticated users in ways that are difficult to detect.
Due to the difficulties surrounding centralized identities and the ways they are managed within different countries, those fleeing from oppressive regimes or geopolitical conflict often lose the records stored by their government. Due to this, refugees and asylum seekers lose their identity when they enter a new country making it almost impossible to participate in activities like education, banking, and voting.
Economic Downfalls of Our Current ID Structure
Establishing identity is critical to accessing a wide range of activities, including education, healthcare, voting, banking, mobile communications, housing, and family and childcare benefits. Since our current ID system fails to withstand devastation, war, and economic collapse disabling people from accessing these essential activities, our economy suffers.
By failing to properly include and integrate millions of people into the economy, we create pressures on government redistribution programs and decrease the labor supply of possible high skilled talent. Governments and aid organizations also spend vast resources that currently go toward vetting, containing, and documenting refugees and displaced persons.
How Can Blockchain be a Solution?
The blockchain operates on a network of machines, with no middleman (no government body interfering), meaning the blockchain relies on a decentralized structure. Thus, a person's identity is no longer only provided through the person's relationship with a state. Rather, it is provided through a distributed, trustworthy and accessible ledger.
Using a blockchain database, a refugee could simply approve access to her digital identity enabling authorities to check her identity on their copy of the ledger housing her ID and even her biometric data. Since the blockchain is essentially tamper-proof, the information immigration authorities would see presents a much greater case for her and who she really is.
Stacey Warden also mentions that access to the banking system would improve as a result, but it would also become less necessary. The blockchain can handle digital assets of all kinds. This means relief organizations could wire money to her instantly and directly in the form of tokens or vouchers. Because the layers of middlemen are removed, a larger percentage of the money would find its way to the refugee or asylum seeker.
Finland, which like many European nations has recently seen a large influx of asylum seekers, is using a cryptographic ledger called blockchain to help them get on their feet faster.
For two years the Finnish Immigration Service has been giving asylum seekers who don’t have bank accounts prepaid Mastercards instead of the traditional cash disbursements, and today the program has several thousand active cardholders. Developed by the Helsinki-based startup MONI, the card is also linked to a unique digital identity stored on a blockchain, the same technology that underpins the digital currency Bitcoin.
Besides eliminating the need for a traditional financial institution to mediate transactions, blockchain provides a means for creating and securely storing a digital form of identification that can’t be corrupted and is easily accessible from anywhere. This is also why the United Nations is exploring the use of this technology in its effort to bring legal identification to the more than one billion people who don’t have official documents.
Jouko Salonen, director of the Finnish Immigration Service, says a MONI card can help address several challenges facing asylum seekers. A MONI account functions like a bank account, removing a major barrier to gaining employment. People can use their accounts to buy things, pay bills, and even receive direct deposits from employers. Every transaction is then recorded in a public, incorruptible database maintained by a decentralized network of computers. This enables the Immigration Service to keep track of the cardholders and their spending.
Blockchain technology is not an end-all solution, especially when it comes to terrorist financing and money laundering. However, because the blockchain is a distributed, decentralized ledger that is virtually incorruptible, identities can easily be verified and obtained. Governments will be able to know the "before and after" movements and "past and current" transactions of refugees and asylum seekers. And of course, the information is anonymous, essentially held "off-chain," meaning that people only reveal the information they choose to reveal.
By implementing blockchain technology to store records of information pertaining to identity, the world can better prepare for political and economic turmoil and ensure that any displaced person can still hold onto their identity no matter the circumstances they're facing.