The global refugee crisis has reached unprecedented levels in recent years, with millions of people fleeing their homes from conflict, persecution, and other life-threatening circumstances.
The United Nations High Commissioner for Refugees (UNHCR) has been at the forefront of assisting these displaced individuals and, in an innovative move, has turned to blockchain technology to provide immediate aid and step up its fundraising activities.
The UNHCR is responsible for more than 114 million people who are forcibly displaced and in need of assistance.
One of the significant challenges that refugees face is a lack of proper identification documents. Many refugees lose their official papers while fleeing conflict zones, or they may not have access to them at all. This makes accessing critical services such as healthcare, education, and financial assistance difficult. It also poses challenges for humanitarian organizations in tracking and delivering aid.
Adopting blockchain-based digital wallets and IDs provides refugees with a secure and portable form of identification that cannot be easily lost or destroyed, allowing them to access essential services more efficiently, whether medical care, education, or financial assistance.
This also empowers refugees by giving them greater control over their personal information. With the ability to grant or revoke access to their data, refugees can ensure their privacy is respected while still receiving the assistance they need.
The use of digital wallets also enhances the overall efficiency of aid distribution. Humanitarian organizations can track and manage resources more accurately, ensuring that assistance reaches those who need it most. This transparency reduces the likelihood of fraud and corruption, creating a more accountable and reliable system for delivering aid.
UNHCR’s Adoption of Blockchain Technology
Recognizing the potential of blockchain technology to address these challenges, UNHCR has introduced several initiatives that employ digital wallets, explained Carmen Hett, Treasurer of the UNHCR’s Division of Financial and Administrative Management, at the launch of the Decentral House Web3 hub in Geneva, which you can watch in full here.
Instant Aid Payments
Blockchains, particularly distributed ledger technology (DLT), provide a fast and efficient way to send funds to displaced individuals who may not have access to the traditional banking sector.
Blockchain’s decentralized and tamper-resistant ledger technology ensures that information cannot be easily altered or manipulated once information is recorded. This is key for verifying identities and distributing payments, especially when trust and security are paramount.
Hett noted that while traditional banks close over the weekend, blockchain-based payments allow the agency to make immediate payments while fulfilling Know Your Customer (KYC) requirements.
“The motivation really comes that you can deliver very, very fast, very accurately, very, very transparently with speed money to people in need and more so to make sure that they are financially included.
“When we have the donations, the funds that we can put to work and provide to the needy, that means we can execute that over the weekend if we have to. So people can receive aid assistance in their digital wallets and have them cashed out anywhere, any time, on any device.
“This is really enticing to us to use this technology and to make sure that we can deliver to as many people as we possibly need to assist.
“I think at some point my colleagues probably thought I was going a little crazy, but UNHCR has since delivered its first use case, and it is successful, and then we are scaling up so there will be more to come.”
$5B Cash Assistance to 35m people in 100 countries
Since 2016, the UNHCR has issued almost $5 billion in cash assistance to 35 million people in 100 countries. The agency launched blockchain-based payments in December 2022. The UNHCR and the International Rescue Committee (IRC) piloted Stellar Aid Assist on the Stellar blockchain, powered by a back-end bulk disbursement system called the Stellar Disbursement Platform, to distribute relief payments in Ukraine.
The platform allows individuals to receive relief payments from aid organizations or governments in the form of digital dollars that they can hold securely in a digital wallet on their mobile.
The funds can serve as a stable store of value—which is particularly important for individuals from countries with rapidly fluctuating currencies — but holders can also exchange their digital currency for dollars, euros, or local currency at MoneyGram locations.
The project won “Best Impact Project Award” at the 2023 Paris Blockchain Week.
The effective practical application of blockchain technology has convinced other leaders in conservative organizations such as UNHCR that it can be used more widely.
“It means that we actually can deliver aid within minutes, so that is really compelling to anyone, and I say to my colleagues: ‘the key is find me a reason why we would not use blockchain to do that because we can deliver this solution at zero cost’.
“We deliver USDC stablecoin onto a wallet. For the wallet, we have design options that are contextual, so the refugees, the internally displaced people, can go and cash their money.
“So it’s not just about giving them right now the funds that they can survive, but it’s also [helping them] to go about their lives across borders and carry the money with them in safe storage in their wallet.”
He added that using digital wallets and stablecoins has the added benefit of educating the displaced individuals about the technology.
“The refugees themselves will acquire digital and financial literacy so that first step that we have done to bring the most needful people on that journey of blockchain prepares them for the future. So it really makes sense.”
Staking Pools for Fundraising
A second use case for blockchain that UNHCR employs is using the rewards from cryptocurrency staking pools to raise financing. Switzerland for UNHCR uses the Cardano blockchain to help raise funds to support refugees, enabling a larger community to donate.
On Proof of Stake (PoS) blockchains such as Cardano, staking pool operators and delegators receive rewards for locking their crypto coins to the network as an incentive. The WRFGS staking pool for UNHCR instead pays the rewards to the agency on a five-day basis as donations.
The staking pool allows holders of Cardano’s ADA coin to connect a supported wallet and donate their staking rewards without affecting the value of their digital assets. There is no locking period, and they can withdraw their funds from the pool at any time.
All of the staking rewards are sent to UNCHR, of which 80% goes towards UNHCR’s field operations and 20% goes towards its innovation funds, which promote blockchain applications.
The UNCHR has used non-fungible tokens (NFTs) since 2021 to raise funds from artwork. In 2021, to mark its 70th anniversary, the agency held a fundraising sale of seven NFT artworks created by Syrian-Palestinian cartoonist Hani Abbas, who grew up in the Yarmouk refugee camp in Damascus, Syria, before he fled to Switzerland.
Ten copies of each piece of art were sold as NFTs on the OpenSea online marketplace to raise funds for UNHCR’s response to the Afghanistan crisis. The agency has since collaborated with The First Arabs, Goat Tribe, WEYU, and others to sell NFTs to raise funds.
The sales aim to raise visibility for UNHCR’s causes and the plight of refugees among a new, tech-savvy audience and bring in financing.
“The key is to have a targeted kind of fundraising in that space but also with the communities — they would understand us best because we are using their technology as well. It goes hand in hand — the technology that we are using, the blockchains that we are using, the funding mechanisms that we can have, whether it’s staking pool or NFTs, and this community is helping us to get these products out there,” Hett said.
“Between traditional and Web3 potential donors, there is obviously a learning curve but it’s easier to reach the community in Web3 than currently it is to reach our traditional donors. You can reach many more people.
“What is really inspiring to us will be a system like direct donations, so any of you could directly give money and you could see that that money reached the recipient, and we give you the trust that your money really arrived there, so it’s extremely powerful.”
The UNCHR is now looking to implement digital IDs with its digital wallets. “In the refugee context, identity and data protection [is essential]. Making sure that it is borderless, building trust, making sure that we also can employ zero-knowledge proofs—there are a lot of techniques to make this even more secure on the data protection side of things,” Hett said.
Digital IDs create a secure and transparent system for recording and verifying refugees’ personal information. Each individual can be issued with a unique digital identity stored on a blockchain, which would provide a verifiable record of their background, biometrics, and other essential details accessible from any Internet-connected device. This would negate the need for them to retrieve or re-apply for documents that may have been lost during their displacement.
Storing digital IDs on a blockchain ensures that the information is accessible to authorized parties, such as aid agencies and healthcare providers, without compromising the security and privacy of the refugees. The decentralized nature of the blockchain prevents a single point of failure and reduces the risk of data loss or corruption.
“It’s more on the regulatory side where things need to change and to be adopted as well,” Hett said.
“When you imagine yourself being a refugee going across borders, not all the laws in every country are the same, so the key is that a system can ensure the trust that we can guarantee as UNHCR, to make sure that identity is secure and safe for the people at risk.”
Hett added: “The fact that we have the three use cases gives us more confidence to then go into other areas like financial inclusion, promoting different financing schemes for refugees, for businesses, for going about their lives and going forward. The potential is to develop from there and get that confidence of understanding… and come together to be able to build upon these experiences with others.”
UNHCR’s integration of blockchain into aid payments and fundraising could serve as a model for broader applications in the humanitarian sector. By providing a secure and verifiable means of identification, the UNHCR has shown that blockchain technology not only facilitates access to essential services for displaced individuals but also streamlines the delivery of humanitarian aid.
As the world grapples with the ongoing refugee crisis, the adoption of blockchain digital IDs demonstrates the potential for the technology to make a positive impact on the lives of those in need.
The collaboration between organizations, governments, and the private sector will be key to developing innovative solutions that improve the lives of displaced populations around the world.