About half of the estimated 500 companies attending the 2023 annual World Economic Forum (WEF) event in Davos, Switzerland, are technology companies and startups. You see them stretching out over the Promenade – the main street running through the city center where all the action happens. The showcases are demoing products and services in blockchain technology, artificial intelligence (AI), virtual reality (VR), robotics, 3D printing and the Internet of Things (IoT), offering a taste of the latest and greatest to come.
One of the most notable topics being discussed – on panels, at events, over live broadcast – is the future of money. Of course, when talking about the future of money you must also mention crypto. The conversations I’ve overheard or been a part of, so far, have concerned the pragmatic (using blockchain for traceability), the political (using blockchain for anti-corruption), the futuristic (decentralized finance and the metaverse) and the hopeful (incentivizing climate action through Web3).
Advit Nath is the controller and director of the United Nations International Fund for Agricultural Development and a regional ambassador for the Global Blockchain Business Council.
It shouldn't come as a surprise that people are talking about tech – the conversation was primed. The WEF’s recently released "2023 Global Risk Report" cited “technological disruption” as a top risk. With the high-profile busts of major crypto firms still fresh, there is pessimism among many in Davos about crypto.
See also: Davos 2023: Crypto Is Down but Not Out
As well as being a tech enthusiast, my day job is working in finance and innovation for a United Nations specialized agency and international financial institution called the International Fund for Agricultural Development (IFAD), which often gives me a first-hand look at how technological solutions are being applied. It’s clear, despite the recent negative headlines, that blockchain technology has more promises than problems.
It’s important to make the distinction between blockchain – the technology behind cryptocurrencies – and crypto itself. Decentralized digital currency as a concept is not going to disappear, but cryptocurrencies that are not backed by real assets in a significant way will likely not survive. We are going to see fewer industry players willing to take the financial and reputational risks of being exposed to crypto.
However, blockchain as a technology will continue to grow exponentially and its use cases expand. The real-world applications of blockchain, many already in use by organizations focused on international development, offer far greater utility and cost savings.
On a panel organized by the Global Blockchain Business Council covering the topic of “Blockchain for Public Institutions (Governments and International Organisations),” I spoke about the challenges of previous food crises across the world and how blockchain technology has and can be applied. Blockchain is already being used in development projects to increase traceability and auditability of funds from donors to farmers as well as the traceability of food, raw materials and energy in the agriculture supply chain – at a relatively low cost.
Take just one example of IFAD's Kenya cereal climate-smart agriculture (KCAP) project. Through this initiative we proved that we could trace every dollar of the $100 million project spanning 50 downstream actors by placing the information on a secure blockchain. (While we’re blockchain agnostic, the project is using a hybrid public-private, permissioned version of Ethereum, ensuring that personal data is kept secure off-chain.) This system offers near-real-time development impact results, directly from farmers.
Using blockchain in this way not only brings full transparency of the flow of funds from donors to farmers but ensures compliance through automated checks with our anti-money laundering software. Further, it enables the U.N. to automate a number of services. For instance, farmers can now speed up payments to their vendors with a click of a button on a mobile phone.
Nowhere is the value and utility of crypto more apparent than in stablecoins, a type of cryptocurrency designed to keep its value pegged to a fiat currency. Stablecoins that are backed by reserves that are independently audited could be a means that cut through bureaucratic red tape and enable anyone to move money across borders in a matter of seconds.
Davos is where policy is made and world leaders meet. I like to think I’m helping to support the ongoing digital transformation by sharing stories about on-the-ground use cases of blockchain. Digital money is only becoming a more practical solution as the number of on- and off-ramps between crypto and fiat currencies increases – an easy lesson to remember when surrounded by the snow-capped Swiss mountains.