Blockchain For The Common Good
The following excerpt is based on the book Tomorrow’s Jobs Today, available at fine booksellers from John Hunt Publishers.
Mainstream Interviews with business leaders are generally puff pieces designed to amplify the subject’s success or advertise the company’s product. How boring! We went a different route with Tomorrow’s Jobs Today. We drilled down to discover exactly what made dozens of accomplished and forward-thinking industry leaders and innovators brave enough to harness the very technology that was disrupting their own field- and possibly eliminating their very own job. Their shared perspectives and experiences are so real, so inspiring, that when you read them, you begin to realize you can use the same tricks to start-up your own life.
Old economic models have failed because they look at the ability to help people out of poverty separate from enabling people in poverty to take part in the supply chain.Ashish Gadnis of BanQu
Chapter 1 of Tomorrow’s Jobs Today is an interview with Ashish Gadnis, a recognized visionary in the burgeoning blockchain community. He chairs the Financial Inclusion Working Committee for the Wall Street Blockchain Alliance and travels the world, explaining how this revolutionary new technology is transforming the way we contemplate supply chain economics.
The following excerpt is from Tomorrow’s Jobs Today.
From the interview
Q: Ashish, we first learned about your life’s work at a conference exploring how technology impacts the human condition. You shared the story of selling your firm, Forward Hindsight, and soon after founding BanQu to fight extreme poverty by leveraging blockchain. How did you choose this path?
A: It was a means to an end. I was born and raised in a slum in India 50 years ago. And I grew up hating being poor. Pretty much all my life growing up, I was poor. When I moved to the US and started building my life, and got my own deal and started building Forward Hindsight, I always asked myself, “If somebody will buy this thing, and if it all works out, I could walk away and try to help address the extreme poverty situation in the world.” So, it wasn’t exactly like other entrepreneurs who have that itch to do the next big thing.
For me, it was pretty organized. I sold my company, and I just started volunteering in the Congo for a couple of years and then had some experiences that forced me to reflect even further. That’s when I realized I could volunteer for the rest of my life, or I could actually start something like BanQu and make a dent in the universe. So, the selling of my company was just a means to my end. I knew my calling was around the corner, so I sold it and ultimately just walked away.
Q: With BanQu, people ensure their economic identity with an immutable record of their transactions in a system benefiting the entire supply chain. How does the company go about realizing those goals?
A: Over the last two and a half years, we’ve determined that 2.7 billion people, including refugees displaced and those in extreme poverty zones, participate in some sort of a supply chain. That can mean you’re the most impoverished farmer in Congo growing coffee, cacao, or shea butter, you know, the ingredients that go into cosmetics, and your contributions show up in brands like eight dollar lattes and expensive body lotions. And in examining their participation, we realized that current models for getting people out of poverty have failed.
Old economic models have failed because they look at the ability to help people out of poverty separate from enabling people in poverty to take part in the supply chain. We took another route. Nobody had ever done it. We said, “What if the people who are absolutely in that last mile get to participate equally?” Then the value for the brand is suddenly more relevant.
Let’s use a simple example. If you’re buying cacao in Ghana and you’re a large chocolate company, there’s a good chance today that your last mile farmers are extremely poor and also invisible. No matter how much traceability, transparency, or fair trade you implement, until and unless that farmer can participate in his data, to know, for example, “I’m selling 40 kilos every other week to this big brand,” then that farmer will continue to live in poverty. That poor farmer today has everything stacked against him or her, especially if conditions are rough.
I was just in Zambia a week and a half ago, and I saw a first-hand example of this problem, which was that women farmers have to borrow at a higher price point. Women farmers are often finding themselves on the short end of the stick because they’re not able, in a multitude of cases, to prove their history. What happens if she is selling 40 kilos upstream, and there are seven middlemen? After she sells her coffee, somebody picks it up, then brings it to somebody else, the next one goes to the warehouse, and eventually she’s lost the ability to track her product. You see, while the internet has come to people in poverty, it hasn’t actually pulled people out of extreme poverty, let alone permanently. There’s mobile money, there’s big data, AI, etc., but none of those models have ever allowed that mother, that farmer, to participate equally.
When I say participate equally, it’s very basic. To me, participate equally means that one, she has a physical, digitally stored copy of that transaction that nobody can ever steal or manipulate. Two, she can prove her transaction history, which legitimizes her existence in that supply chain. Three, it allows her to now leverage that data in a way that reduces her cost of borrowing. It allows her to be portable. That’s how we decided to look at blockchain. Nobody has ever done this. People keep talking about how they’re going to use blockchain for good, but we’re one of the only ones doing it every day, taking a commercial approach while being simultaneously profoundly purpose-driven.
We started a for-profit, for-purpose software company, and now the largest brands are coming to us because it solves two sides of the problem for them. One side is that the supply chain now becomes more cost-effective and efficient. They get better visibility into the supply chain in terms of quality, market access, and forecasting, which enables an ecosystem for crop insurance, climate protection, education. The other side of the coin is that they can start addressing issues like gender equality and labor rights.
Q: In your model, BanQu offers a software-as-a-service software (SaaS) platform that supports six key United Nations Sustainable Development Goals (UN-SDGs) out-of-the-box. Together, this “Economic Identity Passport” is used by corporations, governments, and International Non-Government Organizations (INGO’s) looking to meet their UN-SDG goals and other commitments. Since launching, what have you found are the most utilized of the tools?
A: They’re intertwined. This is why we took a platform approach and why it’s software as a service. A lot of companies are going to focus on water, healthcare, or gender. We looked at these six UN-SDG’s and realized that they should always be looked at together. Let’s look at an example. We’re live in eight countries. As I mentioned, I was recently in one in Sub-Saharan Africa, and we’re talking the bottom of the pyramid. No running water, no sanitation, no paved roads, high malnutrition. Tough as it gets. Yet their farmers (especially the women) are knowledgeable and resilient, and they grow crops because there is a market. BanQu gives them confidence and dignity because their harvest can be sold with full traceability and transparency. At the end of the day, it’s a circular economy, and now the woman farmer has an economic identity.
Q: Can you explain that concept, economic identity, in detail?
A: For us, economic identity is the ability to prove our identity in those types of transactions. So, if I sold you 40 kilos every three weeks, you pay me money for the quality and the quantity, and now it’s history. But one aspect of identity alone is useless. If you just show up at a bank and say, “Hey, I’m so-and-so, this is my driver’s license, and you should give me a good interest rate on a car loan….” Well, they’re[RM1] going to ask you to take a hike. Whereas if you showed up with your social security card and your education, you’re taken seriously. It’s just the way the world works. If I know a little more about you, I’m going to treat you with a bit more dignity, and that’s what our solution supports.
Q: For organizations applying this private blockchain solution, are there some modules or some components more useful than others in the immediate term?
A: The most pressing one is the supply chain connection. For example, some of the largest brands in the food business will sign up with us for immediate traceability and transparency into their existing crop flows. Just like they’re buying Salesforce.com or Oracle or SAP. They subscribe to our platform. We configure for things like language, currency, workflow, asset classes. We also have a meta-data framework that our clients can now create themselves for KPIs and metrics in real-time. We go live, and it gets deployed to the farmer who doesn’t have a smartphone, just via SMS, and now the last mile is connected in real-time. Traceable, transparent, and the farmer participates equally.
So, when a transaction happens, they bring a bag of cacao or coffee or whatever to market, you, as the farmer get an SMS message confirming the transaction, and the location and an authentication token. We don’t mess with cryptocurrencies. We use pure blockchain. Now you have a copy that says you dropped off 40 kilos, plus here’s the quality, plus here’s the payout and it’s secured and private.
The key empowering impact is that you have permanent digital proof of that asset from tree-to-cup or mine-to-battery. As the transaction progresses, you have a record of the payout, which is a big deal in emerging markets, especially around security and in terms of building your credibility in that crop flow. If you were dropping 40 kilos every two weeks and a broker was taking it off of your hands, you cannot prove that you have been growing a good crop. So, as the weeks go by, now the farmer can see her entire history, and it’s validated in the ledger, which makes her bankable. It benefits both the brand and the farmer as well as the entire supply chain.
Q: Have you begun to tap the big data aspect of it? If so, what challenges will that bring in terms of our evolving regulatory climate?
A: Yes and No. We have an open API, and that lets banks, mobile operators, and others integrate with BanQu. Also, we integrate with backend accounting systems, ERP’s, inventory management, record-keeping systems, and so forth. So, when these steps are happening, clients are already starting to do their analysis because they can say, hey, we’re starting to see a good quality crop in this region. We’ve had cases where the fraud detection piece, because of blockchain, is already showing results because everybody entering the supply chain is known and wants to be known. Everybody is now getting a copy of the transaction they participate in and its improving transparency.
From a data analytics perspective, the big brands like us because now it gives them the visibility into their last mile that they never had. Especially from a cash flow perspective, from a standpoint of trying to reduce fluctuation around receivables, supply chain insurance, and production planning. In a lot of these markets, it’s all cash-based and manual 90-day reconciliation process to complete.
Having said all that, we don’t own anybody’s data, which is a key piece. We will never own anybody’s data because that would then defeat the purpose of creating a blockchain application. So, the data ownership is with the brand in terms of the transactions that they are participating in, but the data ownership is also with the farmer or the homeless person or the refugees. They now have a copy of their data that they can use.
The way we built it, the end-user can now prove their existence or the right to be forgotten. So, we have this permission-based ledger where the farmer can say, “I want to be able to show a bank my data.” And he can give permission to the bank. Or she could say, “I don’t want to participate anymore, and I have the right to go dark.” Because at the end of the day, that last mile farmer in BanQu has the ability to own, access, monetize, and permission their data. So, the analytics applies but not at the last mile.
Q: One of the goals in conducting these interviews is gaining a better understanding of the evolving role of data and its impact on society and governance. You’ve lived and worked with people on all levels of the pyramid. What role is blockchain playing here?
A: Occasionally, people push back on the work we do and say, you know, farmers aren’t literate. And I take offense to that because I’ve never met a farmer or any person in poverty who said, “Don’t tell me how much crop or garments or diamonds I sold you,” or “don’t tell me the price or confirmation of the payout.” So actually farmers, miners, garment workers, they’re very literate and brilliant. Here’s the data issue there. And it has a big implication for governance. In my past life, I worked in Sarbanes-Oxley, in compliance and audit, on segregation of duties. I was deep into the compliance framework and familiar with all those kinds of issues. In the example of the farmer I’ve given, what happens is that the world takes for granted that the farmer’s data rights don’t exist. The rights for poor women that are growing your coffee are compromised every day. We took a different approach and found that distributed ledger blockchain technology empowers the poorest while strengthening the largest global brands.
If you decouple the currency side, blockchain is immutability, consensus. Currency is currency. The real value is consensus and immutability. And that’s where a lot of people miss the true value of blockchain. We took an approach saying the farmer, the slave labor that’s making the jeans, and also the refugee, should have bleed control over all the data that he or she is either forced to participate or is willing to participate in. And that has kind of solved part of the confusion around the General Data Protection Requirement and data privacy because at the end of the day, if you implement it the right way, which we’ve proven in the last 18 months, the farmer owns their data, right?
So, if the farmer is selling to the coffee company, but the coffee company says, “Hey, I don’t want to buy your coffee from now on,” in today’s world, that coffee company is just going to walk away with all this amazing data on the farmer. That’s the way the world works today. Yet if you use blockchain, yes, the farmer and the coffee company relationship changes. The company walks away with all this data, but the farmer now has a copy of the data that nobody can ever take away. That’s how we implement it. And that’s why we’re upfront. BanQu doesn’t own anybody’s data. And at the end of the day, if my bank customer goes away, in my last mile, because we have a B to B to C model, the customer never loses access to that data because we have the proper safeguards.
Q: This all seems like the ideal career track for those who want to use their education to advance a good cause. What is your advice for a young person just starting their journey? How do they even begin to think about getting into something like blockchain?
A: For one, you’ll probably have to fail a million times. That’s the easiest answer. But from a career standpoint, I would definitely get into computer science or some technology stack. The big five – the internet of things, blockchain, big data, artificial and quantum computing. Those five technologies will transform every aspect of our lives, good or bad. If you want to start the next charity or the next big thing, you’d better be knowledgeable about these areas because although you might end up being a brain surgeon, you’re still probably going to need to understand one of these five. That would be number one.
Number two would be just jump in, get a good startup going, and be willing to fail. Only have an expectation that you’ll fail. A lot of young people make the mistake of joining a large company just for a safety net or join a startup because they want to make a million dollars overnight. Both of those motivations can result in the wrong approaches to success, in my mind.
In my opinion, if you’re in your 20’s until you’re 35, you’ve got to say, “I’m going to live in eight different countries, fail 15 different times and be completely broke.” But then, after that, you might just have a much better chance of hitting it big.