A revolutionary technology or hype?
The BLM protests across the nation have proved that systemic racism is pervasive across institutions in our country even today. Protests, however, are not enough even though they call attention to the issues. Widespread poverty and lack of opportunities for communities of color due to racial injustices are behind the social and economic backwardness of communities of color. In this post, I want to explore the possibilities offered by cryptocurrencies (like Bitcoin) that use Blockchain technology, to achieve racial equity and justice.
Today, many retail companies accept bitcoin as payment, including Amazon, Microsoft, AT&T, Wikipedia, and so on. While cryptocurrency has not yet supplanted banks and other financial institutions, it has nevertheless gained considerable mainstream popularity. Its disruptive nature has compelled many governments and corporations to actively regulate it or devise alternative technologies.
What are Bitcoin and blockchain?
Bitcoin first broke into the financial scene when it was introduced through a famous white paper written by Satoshi Nakamoto (a group of anonymous people) in 2008. This document defined bitcoin as “an electronic peer to peer cash system that would allow online payments to be sent directly from one party to another without the mediation of a financial institution.”
Therefore, Bitcoin is what is known as a “cryptocurrency” — a digital item that has monetary value. Bitcoin uses what is known as “blockchain” technology.
To explain, let me start with a simple analogy. Say, you are out with a few friends, and you pay for your friend Sam’s food. Your other friends saw that you paid for Sam’s food, and they all have a “record” that you did. Later on, when Sam asks you how much he owes you, any of your friends can validate your answer because they all saw how much you paid for him.
This is similar to how the nodes in a Blockchain network work. Each person or computer that is in a Blockchain distributed ledger is a “node” and these nodes hold a record of all the transactions that have taken place in the network. Therefore, blockchains are digital, distributed, and immutable ledgers, which means it is public and you cannot tamper with it.
To understand blockchain, we must understand what a “block” is. These blocks hold information about three key fields. First, it holds all the information about the transaction, which can include items like a transaction number, the item, and the current location of the transaction. The second part of a block is its hash, which is unique to the transaction information in the block. If the transaction information changes in the block, the hash would change. Finally, each block also includes the hash of the previous block, thus creating a chain.
Characteristics of Blockchain
Two of the major selling points of public blockchain networks are that they are completely decentralized and unhackable, which represents an enormous potential to initiate real social change.
For example, if you go to a bank and deposit money, the bank is the central financial organization that creates and deletes transactions. This means only the bank knows how your money is being handled. However with blockchain, everyone can see every single transaction made in the network, so it is the community’s responsibility to ensure that transactions are done correctly.
Yet, despite this, it is possible to maintain privacy. Even though all transactions are public for everyone to see, each transaction is labeled with the specific user code of the node, instead of a person’s private information (name, age, etc). This means that everyone can see the transactions, to ensure there is no tampering, but no one other than those involved in the transaction can see who was involved. Of course, there is much more to security than this in blockchain, but it varies between public and private networks.
Now, this begs the question, can we use blockchain for anything other than retail transactions? The answer is yes. Blockchain can be used to solve anything from food security tracking to maintenance logs for airplanes. However, one of the most important areas where blockchain can be used effectively is to ensure racial and gender equity.
Blockchain technology can be used on the following fronts to combat discrimination:
Loan verifications using blockchain
Currently, when an individual applies for a housing loan or even a small business loan, they depend on financial institutions or employers to provide bank statements, employment history, and other documentation as guarantees to secure the loan. Within this framework, minorities and African Americans are often subject to biases and are unable to secure collaterals that would enable them to navigate the system and secure the loan, even if they are creditworthy borrowers. Artificial intelligence backed online software, which is supposedly designed to eliminate face to face transactions, is also unable to remove the bias and Latinos/African Americans end up paying higher interest rates than their White counterparts.
With blockchain, “cryptographic verification” may be performed so that “the degree to which someone can influence the consensus process is proportional to the number of economic resources that they bring” to the table. This would prevent banks and biased employers with vested interests from having an undue influence on the distribution of loans. As Wulf Kahl states in his paper, Blockchain Technology and Race in Corporate America, “blockchain validation technologies are more transparent and less prone to error and corruption” because they secure guarantees through “democratized trust and disintermediation”.
Say the blockchain stores relevant information about an individual as blocks in the network. A smart contract can hide information that may introduce bias in the transaction, e.g. a person’s race, ethnicity, or gender. Therefore, if a loan processor or online software opts to search for unauthorized information, that search may also be logged as a transaction because the blockchain is open and immutable. By checking the transaction history during audits by a third party, the bias behind the decision making may be uncovered easily through blockchain. Thus, a person’s creditworthiness can be evaluated using unbiased financial data.
Break the glass ceiling
The conversations surrounding race struggles in America have evolved from basic human rights to more complex issues like lack of representation in corporate America, especially in fields like technology. According to Wulf Kahl, across America, only 17% of women and 6% of minorities hold management positions, and executive-level management positions have an even lower representation with 6% women and 3% minorities.
This is because most promotion processes are not transparent and require not merely technical or business skills, but a lot of political positioning, which invariably introduces bias due to the stereotypical perceptions of minorities in America. However, ideal executive qualities can be easily quantified through characteristics like “leadership skills”, “personality”, “judgment”, “attitude”, “initiative”, and so on. Using blockchain, anyone can be evaluated based on feedback from all parties without relying on the biases and prejudices that exist in traditional corporate hierarchies.
Prevent college acceptance and hiring discrimination
To overcome discrimination in education and corporate hiring based on race or ethnicity, we can utilize blockchain technology. The focus may be on data surrounding the socioeconomic status of the student (for financial aid) or the high school profile (to determine resources available to the student) instead of the student’s name or race. Similarly, job applications could focus on qualifications instead of geography or racial identity that would help to select the best candidate for the job. Often, minorities are hired just to meet the numbers and often stagnate in their careers because they are not given the support or judged by the right milestones. Blockchain enables an auditor to review the transaction history. So, if any other information other than the necessary qualifications are reviewed, it can be logged and easily flagged.
Blockchain can introduce transparency in the voting process by enabling greater security. West Virginia was the first US state to allow Internet voting by blockchain in the 2020 primary elections in a pilot project to test its feasibility. If people have equity when it comes to digital access, Internet voting through blockchain can reduce voter fraud, boost voter turnout, minimize the cost of conducting elections, streamline the process of counting votes, and ensure that all votes are counted. Biometric tools like a thumbprint scan may be used to verify a voter’s identity. Each vote can be a block in the blockchain that is validated by a third party and recorded on a publicly verifiable ledger while maintaining the privacy of the individual voter and generating results instantly.
Prevent wealth accumulation
Income inequality and wealth gap are at an all-time high, especially among minorities because investment opportunities are not usually offered to them. However, using bitcoin, investors may own parts of a real estate building instead of the whole, which can enable minorities to invest in lucrative projects and own assets. The barrier to entry is low and only requires access to a smartphone.
Additionally, Initial Coin Offerings (ICO) using Blockchain can be used by entrepreneurs for funding startups instead of relying on venture capitalists. ICOs can help to raise money irrespective of who you are and users just pay for your service and become shareholders of the corporation. This removes bias and the need to network with established financial organizations.
Currently, there are several initiatives underway to enable people of color to use blockchain to create an ecosystem based on racial equity. Coinbase has launched an advertising campaign to show that crypto-currencies can be used as a tool to curb racial injustice in the financial sector. Venture capitalists like Draper Goren Holm have started the “Blacks On The Blockchain” initiative and allocated $1 million in Bitcoin and 10,000 free passes to the LA Blockchain Summit for members of the Black community so that they can learn from and interact with blockchain industry leaders.
Republished with permission from Aroshi Ghosh. Art, technology, politics, and games as a high school student sees it.