Bitcoin, blockchain and the fight against poverty

Gillian Tett at the Financial Times: “…This month, Hernando de Soto, an acclaimed development economist from Peru, joined forces with Patrick Byrne, a controversial American luminary of the bitcoin and blockchain ecosystem, to launch an unusual project to fight poverty.

What they hope to do is to use decentralised digital ledgers — similar to those used for bitcoin — to record the formal and informal property holdings of dispossessed communities, with the idea of giving them more security.  This innovation might seem a million miles away from the Shining Path saga, and from our normal concept of philanthropy.

After all, at this time of year, we tend to assume that “aid” is about donating money, sponsoring schools and so on. But De Soto is convinced that the key to tackling extreme poverty — and the desperate violence that can accompany it — is to focus on property rights. After all, he argues, when conflict explodes in poor communities, this is usually because people feel insecure and dispossessed. Even if poor people hold property, their ownership is often based on informal rights rather than any official government ledger — and their homes and land can be seized by big companies or government officials.

Giving better property rights to the poor would mean more prosperity and security for everyone, De Soto believes. And he argues that one crucial reason why Shining Path was defeated was that the Peruvian government eventually did precisely that, awarding peasants land rights (partly on his advice). So he wants to repeat the trick around the world, using decentralised digital ledgers that will let poor communities record their formal and informal property rights in a permanent manner — without government interference.

“When you have property rights, you can get credit, you can advance,” De Soto says. “It’s the key to economic growth — much better than aid.” He believes that blockchain technology, which was set up as a platform for digital currencies such as bitcoin, will let the poor help themselves, as he regards cyber rights as more important than charity….(More)”.