NEW YORK — Use of blockchain technology offers the potential to transform how development work is conducted, some experts say, even as its widespread use remains in nascent stages.
That is changing fast, with the growth of new organizations that recognize how blockchain, a new “distributed ledger” technology that distributes and locks in information with cryptography, could be helpful when dealing with issues such as identity, data, and now, contracts.
Handshake — one new startup powered by coders and others with a background in development — is developing a new online platform stored securely on the blockchain. They believe the open interface, now piloting in the Philippines, could help ensure safe and just working conditions for the some 150 million migrant workers worldwide.
While remittance flows delivered by migrants and others, including refugees, are greater in any given year than official development assistance, some migrants continue to lack basic work protections — like knowing their contracts will be upheld once they reach a new location, or complete a job.
Handshake’s solution is to create a system that allows for “smart contracts” that cannot easily be tampered with away from public view. Its work is being piloted with a staffing agency in the Philippines.
Devex talked with one of Handshake’s founders, Leandra Tejedor, during a humanitarian blockchain summit at Fordham University in New York, in late 2017, about how smart contracts work, and how other organizations can consider applying blockchain tech to their work in development. The conversation, edited for length and clarity, follows below.
Why did you see a need for creating smart contracts?
As a migrant worker, I could sign up for one job and then — either before or when I arrive at the country where I would be working — a lot of times there will be a new contract and different terms, such as different pay or completely different work, or living areas that I didn't expect or agree to in the contract. There are not a lot of resources for people in that situation. The contracts will be stored in a centralized server that only the employment agency may have access to, which isn't helpful when you are thousands of miles away and there's a government there and you don't speak their language.
And how does Handshake change this dynamic?
Our platform lets the agencies and the employers create a standardized contract, which is then stored on the blockchain and signed with uPort identities, which they also create. That's their identity on the blockchain. Because it is in a decentralized server, the workers have access to the contracts; and governments that want to make sure that their citizens are safe also have visibility and access to those contracts.
The way that a smart contact or any kind of blockchain-based system would work is that you don't need the human oversight. Ideally, all the interactions between the agency and the worker, all the exchanges would take place on the blockchain. If a worker had to pay any fees to the agency and they pay it through the blockchain, they wouldn't be able to pay more than was required. Part of what the Handshake system could do in the long term would be to manage all those interactions so you would not be able to charge more because you are watched. You just couldn't do it.
The idea of the blockchain is still new and sometimes met with confusion. How do you explain this platform to new partners very simply?
I think we've actually found a lot of enthusiasm in the space once we explain it as a way for us to store their information and create a system that isn't these internal products that they work on. Because, for a lot of the agencies that we work with there's no standardized software that they use to keep track of people, to keep track of contracts. A lot of it is built in house, which is very expensive.
We don't want to make any assumptions about this space ... I definitely don't want to come in with a shiny new technology and say, ‘I'm here to fix everything and save everyone.’”— Leandra Tejedor, co-founder, Handshake
They're just excited to have that baseline of a way that someone will come in and store information, about the potential of creating something that would mean that you don't mail documents back and forth, something that's very time consuming.
And are there any real other benefits to this, other than that contracts can’t be altered as easily?
Yes. As far as the contracts go, definitely the idea that they're not in a standardized database and that they're able to exist a way that can be accessed outside of international borders, as well as by the workers in the areas where they're working. The other piece of it is the economic identity piece. The idea os that you're creating an identity that is bound to you and it can't be changed. You are not going to be able to create a new one.
It exists on the blockchain and you're able to build from that.
You don’t have to reach out to an organization and say, “Did you really work here,” because you are able to trust the data associated with that identity and that helps us with the agencies, too. Right now there's not really a way for people to know if an employment agency has your best interest in mind.
How do workers identify themselves on Handshake?
The launch of the World Identity Network may have taken place at Sir Richard Branson’s private luxury island, but the aim is to benefit the 2 billion people living without recognized identification documents.
So, initially we are depending on government forms of identification documents to prove their identities, and that's not a viable long-term solution because there are a lot of people who don't have that. People who are already in the countries where they're working, who are there legally, and don't have any kind of identity, really. There's a lot of potential there to create an identity for those folks.There are a lot of people living in the Philippines who don't have a government identity, and therefore are not able to open bank accounts or have jobs. So it's a huge opportunity.
What's involved in getting people to use this?
We have one ethical agency — StaffHouse — in the Philippines that wants to roll this out and is working with us really closely. Some initial problems that we've run into include government policy. For example, the Philippines doesn't recognize something as simple as digital signatures yet. It doesn't matter that the digital signature is tied to an identity that you created on the blockchain. Digital signatures are not legal. Period. We've been giving demos and working with StaffHouse in the Philippines and they have connected us with partners in Saudi Arabia, which is interested in the trial as well.
Did you conduct a lot of research on migration, or how did you develop this idea?
We did an enormous amount. Most of what we've done has been research. We don't want to make any assumptions about this space. We want to make sure that we're working really closely with policy experts that have been on the ground for 10, 20 years. I definitely don't want to come in with a shiny new technology and say, “I'm here to fix everything and save everyone.”
And you found contracts were one of the biggest issues in the space that needed attention?
Contract substitution is a huge problem. You have one contract with your agency and then you'll go where you are working and there is a new one, and you have literally no legal recourse. It's a hard problem, which is why I think there are not a lot of companies doing it. It’s a very specific problem.
Is it expensive, or difficult to get this going? How could other organizations try to use blockchain for their own projects?
It hasn't cost us really anything other than hosting costs to put this together. There is a fee, too: a price in Ether just to create a contract and to create an agency but it is not a high cost, just under a dollar.
How do you see smart contracts and other uses of blockchain for development solutions continuing to develop?
I think we're very much in the early stages. We are far away as a society from total decentralization, but I think it's good for us to be able to start the process especially if something does go terribly wrong. If something happens, like all information that the government has is gone, then, somewhere, your information is saved.
I think it's only going to grow. I think we are going to see hybrid models of a combination of decentralized tools used in a centralized society for a while. I don't know what that's going to look like long term.
*Update, Jan. 16, 2018:* This article has been updated to remove mention of the International Organization of Migration, which is not a partner with Handshake."
Read more Devex coverage on blockchain technology.