Bitcoin Is Humanitarian And Environmental

Can Bitcoin reduce aid corruption, help end dependency and bootstrap renewable energy for emerging markets?

Bitcoin is typically thought of as an investment and a strictly financial innovation.

But what if some of its greatest impact over time ends up being in the humanitarian and environmental spaces?

This essay will explore some of the major challenges in the realm of international development and will argue that donors should be looking at Bitcoin payments and mining as tools to reduce corruption, diminish dependency and help renewable energy overcome adoption obstacles worldwide.

In his searing 2010 essay “Alms Dealers,” Philip Gourevitch tells the history of aid. The industry, he wrote, was largely born in 1968 from Western compassion triggered by the televised starvation of children in Nigeria’s breakaway Biafra province. The impulse to help those less fortunate in the world around us has become a vast $200 billion foreign aid industry.

The 22 wealthiest governments provide approximately 60% of that sum, with private NGOs, companies and foundations funding the rest. Around a third of government foreign aid is classified as development assistance, a third as humanitarian relief and a third as military or security support. In total, over the past six decades, more than $4 trillion of aid has been sent from rich countries to poorer countries.

This is a staggering sum, and, on its surface, a seemingly impressive display of altruism. Public figures like Jeffrey Sachs and Peter Singer argue that aid is a moral imperative. But not everyone agrees on the overall impact. As Gourevitch asks: “Does the modern humanitarian industry help create the kind of misery it is supposed to redress?”

In the end, he credits humanitarianism with doing a lot of good. But there are three striking flaws with international development that prevent it from more fully achieving its mission.

First, aid is usually directed through and distributed by local governments. At that point, these often-autocratic regimes often siphon a portion of the funds or goods off to their cronies or troops, or develop patronage networks. When aid is not outright stolen, fees can be trimmed at every point along the path to the intended recipient. Significant percentages of aid gets extracted by middlemen as it makes its way from Washington or Brussels to farmers or refugees halfway around the world.

In his critique, Gourevitch wrote that there is a “deeper decadence of a humanitarianism that paid war taxes of anywhere from fifteen per cent of the value of the aid it delivered (in Charles Taylor’s Liberia) to eighty percent (on the turf of some Somali warlords), or that effectively provided the logistical infrastructure for ethnic cleansing (in Bosnia).”

Second, aid is often structured in a way that creates dependency. From shoes being dropped out of a helicopter only to ruin demand for local production, to entire nations whose food and basic goods industries have been so destroyed by the competition from free alternatives that they permanently rely on imports from abroad, aid has at times stymied the economic and political independence known to governments and citizens in places like the U.S., France or Japan.

Gourevitch described the “ignoble economies that aid feeds off and creates: the competition for contracts, even for projects that everyone knows are ill-considered, the ways in which aid upends local markets for goods and services, fortifying war-makers and creating entirely new crises for their victims.”

A third, related problem is that aid is not leveraged enough to help communities and developing nations become energy independent, because there is rarely a clear path to economic sustainability for renewable energy farms, whose harvest points are often far from population centers, and lacking grid infrastructure.

Could Bitcoin help humanitarians overcome these three challenges?

On the one hand, it seems obvious how this new digital currency can help connect donors to recipients, in a peer-to-peer way, that cannot be stopped and could significantly reduce “middleman” corruption.

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