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UNICEF investment in 6 blockchain startups extends mission

UNICEF's investment in blockchain startups extends its mission and also underscores the particularity of scenarios where blockchain promises to be the optimal solution.

Most patients in Mexico get handwritten prescriptions on paper slips.

It's an outdated method of relaying sensitive medical information, rife with inefficiencies and potential security issues. Clinicians can't easily share legitimate prescription information, while bad actors can easily forge written prescriptions or steal patient information.

Everardo Barojas, CEO of Prescrypto, a startup based in Mexico City, believes he can fix those problems using blockchain.

Officials at UNICEF think so, too.

In fact, leaders at UNICEF, the United Nations program dedicated to protecting children, see potential in blockchain's ability to solve some of their most intractable problems and are investing in Prescrypto and five other blockchain startups around the globe that are targeting similar scenarios.

The UNICEF Innovation Fund announced in December 2018 that it would invest up to $100,000 in Atix Labs, Onesmart, Prescrypto, StaTwig, Utopixar and W3 Engineers to deliver open source prototypes of blockchain applications within 12 months.

The first objective is to have these blockchain startups build prototypes and systems to tackle global problems such as transparency in healthcare delivery, affordable access to mobile phone connectivity, and the ability to direct finances and resources to social-impact projects.

The second objective is to determine whether, where and how blockchain can help UNICEF and organizations throughout the world in ways that conventional technologies can't.

"It's about finding new technology that we find exciting, has value for our investors and also has benefits for humanity," said Christopher Fabian, senior advisor at UNICEF's Office of Innovation.

As UNICEF explores blockchain's potential, Fabian said the organization has a three-prong interest in it:

  • to tap into the resources within the cryptofinance community and apply them within the UNICEF community;
  • to determine where blockchain could be used within UNICEF's own organization; and
  • to create more transparency and accountability around the value of programs receiving UNICEF support.

Fabian said the Innovation Fund's investment in blockchain startups helps support other companies in the startups' respective developing countries, as well as the exploration of emerging technologies for good causes. Moreover, UNICEF's backing of the blockchain startups, together with events such as blockchain hackathons, helps the agency's own teams learn more about the technology and determine where they can use it to support the agency's work around the globe.

That is already happening with blockchain, Fabian said. UNICEF has three full-time and two part-time people working on blockchain projects and expects to add at least that many people to the blockchain team in the next two years. Additionally, the UNICEF team in Kazakhstan is helping to develop and prototype a smart contract on the Ethereum blockchain to track transactions between UNICEF and its partners.

The goal here, Fabian added, "is to make sure we're ready for the future."

The future for enterprise use of blockchain, however, is far from clear. Some see blockchain’s promise in unique or unusual use cases, such as those funded by UNICEF, but remain skeptical about whether and how much value blockchain can actually deliver to most organizations. They’re watching pilots, such as the UNICEF test cases, to better gauge what benefits blockchain can truly produce.

Healthcare blockchain startup targets sensitive data

Prescrypto, founded three years ago, is building RexChain, a healthcare blockchain designed to guarantee the portability of sensitive clinical data. As described on its website, RexChain stores prescriptions in an encrypted database, ensuring its security and accuracy, while also giving individuals the ability to control when, how and with whom they share their prescription data.

"We are shifting the ownership of data toward the end user," Barojas said in an email response to questions about Prescrypto's work.

Barojas said Prescrypto's "mission [is] to enable electronic prescriptions in Mexico, Latin America and any other developing country with a lack of infrastructure" by developing a system for clinicians, patients, pharmacies and researchers to send, receive and track electronic medical prescriptions.

Barojas drew on his prior work with the first Bitcoin exchange in Mexico, where he worked on software that interfaced with the Bitcoin blockchain.

"I went deep into the data structure and mechanism, [and] it was clear to me that this technology would be instrumental in the next generation of data sharing applications," he said.

Investment in blockchain startups

The other five blockchain startups receiving UNICEF funding are equally impressive in the problems they're trying to solve. They are:

  • Atix Labs in Argentina, which is developing a platform for small to medium-sized enterprises to gain access to funding, while creating traceability into where the funds are used and measuring the funding's impact;
  • Onesmart in Mexico, which is working on an application to ensure the delivery of state-provided social services to children and young people;
  • StaTwig in India, which is using blockchain to ensure the efficient delivery of vaccines through an enhanced supply chain management system;
  • Utopixar in Tunisia, which is building a social collaboration tool for communities and organizations to facilitate participative decision-making and value transfer; and
  • W3 Engineers in Bangladesh, which is aiming to improve connectivity within the refugee and migrant communities through an offline mobile networking platform without the use of SIM cards and an internet connection.

Worldwide blockchain involvement, need for caution

Steve Wilson, principal analyst, Constellation ResearchSteve Wilson

UNICEF's investment in blockchain startups mirrors in one sense what's happening in organizations around the world.

PwC, the professional services firm, surveyed 600 executives from 15 countries and found that 84% of them said their organizations have some involvement with blockchain technology.

Deloitte in its 2018 global blockchain survey found that 39% of the 1,053 executive respondents report that their organizations will invest $5 million or more in blockchain technology in the upcoming year.

[UNICEF is] going into environments with far less existing infrastructure and authority structures than we are accustomed to in healthcare technology, so decentralized decision-making is sensible.
Steve Wilsonprincipal analyst, Constellation Research

Yet, Deloitte also found that the same percentage -- 39% globally -- believe blockchain is overhyped.

Steve Wilson, vice president and principal analyst at Constellation Research, said executives are wise to be balanced in their assessment of blockchain's potential.

"People need to remember that blockchain isn't just a distributed storage mechanism or a database; it's quite complicated and quite arcane, but it's the sound bites -- like immutable -- that they've latched onto," he said. Those blockchain attributes can be essential for specific use cases, such as in cryptocurrency, "however, they're not universal requirements."

In some instances, Wilson said, blockchain is a solution looking for a problem. "So we have to be careful to not throw blockchain willy-nilly at use cases where it was never designed to go," he said.

Healthcare blockchains, pros and cons

Wilson pointed to the healthcare sector, where a lot of blockchain exploration is taking place.

"Healthcare might not need an immutable distributed ledger," he said. "The information needs of healthcare are super complex, and can't really be condensed into slogans like 'immutable, open, decentralized.'"

Indeed, Wilson contended that the "sacred cow" of immutability is a creature of the blockchain movement. "No one ever wanted 'immutability' in business before 2009 [and the advent of blockchain]. What people really want is resistance to unauthorized tampering, while remaining editable. Conventional database technologies with digital signatures are in my judgment immutable enough," he said.

UNICEF's investment in blockchain startups around the globe, however, involve scenarios where blockchain could deliver real solutions and provide genuine value in ways other, more traditional technologies cannot, Wilson said.

"They are going into environments with far less existing infrastructure and authority structures than we are accustomed to in healthcare technology, so decentralized decision-making is sensible. Some of them also leverage the high availability and reliability of blockchain storage," Wilson said.

'No burning need' for most CIOs?

Most CIOs aren't dealing with scenarios like UNICEF's, where administrative structures are either nonexistent or ill-defined, Wilson said.

"In terms of generalizing [UNICEF's investment in blockchain] to lessons for other CIOs, we have to be very careful to remember the place of authority," he said. "If your use cases have inherent administration, it can be hugely inefficient to switch to blockchains, as though you're deliberately forgetting the existence of managers, registrars and database admins."

Furthermore, the applications being explored by UNICEF are greenfields, but they too will change in time. "As they grow and evolve, recentralization is inevitable -- it's almost a law of physics or ecology that decentralized networks revert to centralization over time -- and then you have to review if the blockchain is still the right type of architecture when it's simpler, faster and cheaper to leverage central data administration," he said.

As such, Wilson said executives need to be diligent in understanding the problems that they're trying to solve, whether blockchain is the best solution and why it's better than other technologies that could be more efficiently used to deliver the desired results.

"Does blockchain have the potential to solve tough problems? Yes, but you have to be really selective about the problems you're trying to solve," he said. "For the typical CIO, there's still not a burning need to jump into blockchain."

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