How Blockchain Can Save a Child’s Identity

You are who you are… but can you prove it? Around the world, between one and three billion people lack a legal identity. Their inability to authenticate their name, age, and place of residence leaves them exposed to exploitation and excluded from governmental and financial services.

As many as one-third of children in the world today lack a legal identity. Among the remaining two-thirds, many in poor and developing countries may have been registered at birth but do not have the papers to prove it. At the least, their lack of legal identity may complicate their ability to enroll in school; at the worst, it leaves them vulnerable to illegal adoptions, child labor, and human trafficking.

Adults without a legal identity are unable to vote or access government services, including healthcare. They may not be able to work or may be compelled to work under the table at a lowered rate. They may not be able to acquire property or assert property rights, and if they have to emigrate, they can only do so illegally. They cannot acquire a bank account, so they have no path to building credit or benefiting from financial services. They are unable to participate in economies outside of their personal networks or to take advantage of their rights as citizens of their respective countries.

Individuals are not the only ones who suffer from a lack of legal identity. Their governments are also impacted. A government that can’t count its citizens can’t plan for services. It is burdened by the costs of manual processes and paper storage. Corruption and theft are harder to root out, as unscrupulous agency leaders may do things like “hire” ghost workers whose salaries are funneled into their own pockets. Nigeria enrolled its civil servants in an identity management system and saved approximately $74 million by eliminating ghost workers from its payroll.

Blockchain for all 

Today, governments around the world are looking at emerging technologies as a tool to help their citizens live better and more secure lives. While developed countries are seeking to replace their paper processes with digital ones, countries without a strong paper system are more likely to leapfrog directly to digital identification. That was never possible in the past; the need for large amounts of costly servers, secured, climate-controlled data centers to house them, and communications infrastructure to connect with them was out of reach for poorer countries. All of that equipment is no longer necessary, however; blockchain technology can securely transmit, store, and track data without the need for a centralized database.

Blockchain started as a way to enable bitcoin transaction; its users were guys in hoodies. Then it was adopted by the financial sector to replace inefficient trade-clearing systems; its market was guys in suits. Now, blockchain is being considered as a way to provide identity to disenfranchised people around the globe, and perhaps the next wave of blockchain beneficiaries will be kids without shoes.

The beauty of using blockchain to provide legal identity is that it’s paperless. Those shoeless kids aren’t likely to have access to a safe place to store paper documents; they may live on the streets, or in shacks with corrugated roofs that don’t keep out moisture, insects, or thieves. But a lot of them have access to mobile phones. In Somalia, for example, only 3 percent of the population has a legal identity, but 70 percent had a mobile phone in 2013. And not everyone needs to own a phone to access proof of identity; a person can simply log into an ID system from a borrowed phone or an Internet café any time.

Support from NGOs

We talk a lot today about the global economy. We don’t talk a lot about the one-sixth of the world’s population whose futures are limited because their lack of legal identity locks them out of the markets the rest of us easily enjoy. However, some organizations are taking steps to move digital identity for everyone out of the theoretical realm and into the real world.

The United Nations has set the goal of legal identity for everyone by 2030. In support of that, the World Bank launched an initiative called ID4D that offers low- and no-interest loans to help developing countries finance the infrastructure necessary to provide identity services. ID4D also conducts research to examine the scale of the problem and brings together groups that can help implement legal and governance best practices. Even Richard Branson has gotten involved, founding the World Identity Network to focus on the use of blockchain to solve the technology component.

Around the world, financial organizations are taking notice. They have a lot at stake in these efforts to provide legal identity to people who are trapped in cash economies. 

Unlock the borrowing power of 1/6 of our population

The markets that are underserved for financial products may be trivial on a per-customer basis, but they are massive as a whole. At the least, these markets cover a billion people. At most, they are 2.5 times that size. The pennies add up, and since financial organizations are already savvy about using blockchain, the processes and technology required to embrace the people in these markets are already set up.

Of course, people who gain a legal identity are not going to run out the next day to apply for a credit card. But eventually, as they begin to understand how their legal identity can help them achieve stability, acquire property, and grow their businesses, they’ll start to need credit. This isn’t just good for those individuals; it’s good for everyone. Greater economic activity on the local level leads to a more vibrant economy around the globe.

Dan Puterbaugh is Director of Strategic Development at Adobe.