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Cryptocurrency (DAI) distributed as disaster aid in Vanuatu

Posted: 20 June 2019 5:50 pm
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Digital currency has an important role to play in humanitarian aid.

There's a catch 22 in distributing disaster relief.

Handing out free goods such as food or clothing has the unintended side effect of depressing the local economy, as local producers and retailers lose their business to the aid. But going around handing out physical cash is often slow, expensive and dangerous.

In some cases, the ideal solution is a new way of handing out money. That's what Oxfam has been doing in Vanuatu, in partnership with ConsenSys and Australian firm Sempo.

In this case, 200 residents of Vanuatu were given tap-and-pay cards loaded with $50 of the Dai stablecoin to spend as needed.

"As far as we know, this is the first time an NGO has used a stablecoin to provide aid anywhere. This is not a one-off pilot. We believe that using cryptocurrency to allow the unbanked to access finance will completely change the way aid runs," said Sempo co-founder Nick Williams.

It's the digital frontier of the now-quite-standard area of humanitarian response known as "cash transfer programming", which simply refers to giving money to those in need.

As the Mercy Corps notes, beyond simply protecting local economies, it can also create a multiplier effect by actively bolstering economic activity in certain regions as well as act as an entry point for greater economic inclusion. Beyond that, it can help give back a sense of control to people whose lives have been upended, and it can be distributed more discretely than other goods – which helps preserve dignity and improve safety.

Many of the downsides of cash transfer programming can also be mitigated with the help of digital payments. It's easier to distribute funds directly to those in need, and once they have it, people can more easily hide a tap-and-go card than a wad of cash.

"This rapidly changing sub-set of CTP has some exciting advantages: it can be more discreet for program participants (in contrast to public queuing), and it can increase efficiency, safety and cost-effectiveness for the implementing agency," Mercy Corps notes.

It's worth noting that Mercy Corps is one of the founding members of the Libra Facebook cryptocurrency, and it's worth considering some of the potential for this cryptocurrency to actually start banking the unbanked. And for better or worse, few companies can build digital identities of users more effectively than Facebook, and identity is a key issue in disaster response.

Many regulators are currently obsessing over the downsides of the Libra cryptocurrency, but there seems to be comparatively little talk about the potential upsides.



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Disclosure: The author holds BNB and BTC at the time of writing.

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