By: Ben Parker

It’s the dark web’s currency of choice: for drugs, blackmail and worse. Its exchange rate has been wildly volatile. Why then are aid agencies, child rights advocates and land activists getting their heads around Bitcoin? Save the Children, along with drug dealers and extortionists, both accept them as a currency

Unlike other tools for transferring digital value, there is no central database or authority. You also don’t need a credit card or even a bank account, giving Bitcoin interesting possibilities for deployment in the humanitarian world. The blockchain technology behind Bitcoin, the “distributed ledger,” is attracting attention for three main reasons:

  • As a way to transfer value, it can hugely improve what already exists.
  • It can do things previously considered too complicated or inefficient.
  • It has revolutionary potential for new ways of tackling big, complex problems across a range of industries, not only in finance.

Some US$900 million of venture capital has been invested in blockchain-related startups since 2012, even though few have significant revenue. A “killer app” has not yet emerged to fuel the uptake of the technology. Sceptics and enthusiasts alike say the current hype about blockchains often looks like a “solution looking for a problem.”

With or without Bitcoin, the blockchain is a “breakthrough in computer science” that will have as big an impact as personal computers or the invention of the internet itself, according to influential investor Marc Andreessen.

As law enforcement starts to tackle the Bitcoin phenomenon, pushing back its Wild West reputation, many banks have blockchain experiments under way; in September, nine major banks announced a joint venture, R3, to explore the technology further.

“I don’t think anyone can ignore it,” a New York banking executive told IRIN.

Despite the recent focus on “innovation,” humanitarian organisations tend not to be early adopters of new technology. Criminals are. Catherine Haun, of the US Department of Justice, speaking at a blockchain conference in New York, said Bitcoin was no exception.

While two users of a Bitcoin smartphone app can transfer the crypto-currency between themselves almost instantly, worldwide, the system also records every transaction in an indelible ledger spread throughout a vast network of users’ computers. This, as well as oversight of the on-ramps and off-ramps to real money, Haun said, gives law enforcement a rich trail to hunt for criminal transactions.

But what could the applications be for developing countries and humanitarian situations?


One problem is the limited vendors and money transfer operators that accept Bitcoin – even in the tech-friendliest of jurisdictions. The other is the long arm of counter-terrorism and money laundering legislation.

Anti-Money Laundering (AML), Know Your Customer (KYC) and CTF (Counter Terrorism Finance) regulations have already severely threatened other non-conventional money transfer operations, most notably the remittance companies servicing the Horn of Africa, which provide a link between cash, traditional banking and the hawala system of money transfer. Western banks have gradually dropped these money transfer operators as customers, fearing fines if funds flow to or from extremists, even where no failure of compliance has been proven, or even alleged.

Given the reach of US and other jurisdictions, any Bitcoin- or blockchain-based remittance operator would almost certainly come under the same regulation as banks and money transfer operators.

Everything from houses in Tonga to handbags in Nigeria is already on sale for Bitcoin. In Kenya, another venture, BitPesa, has a three-way exchange running between Bitcoin, banks and the mobile money superstar, M-Pesa. Regulators and law enforcement worldwide will have to catch up, a working group of the Commonwealth grouping said in August. The group urged member states, many of whose economies receive significant income from remittances, to strike the right balance “to ensure they are addressing associated risks and avoid stifling innovation”.