Article by Elisa Lironi: “…Information and communication technology (ICT) can be used to implement more participatory mechanisms and foster democratic processes. Often referred to as e-democracy, there is a large range of very different possibilities for online engagement, including e-initiatives, e-consultations, crowdsourcing, participatory budgeting, and e-voting. Many European countries have started exploring ICT’s potential to reach more citizens at a lower cost and to tap into the so-called wisdom of the crowd, as governments attempt to earn citizens’ trust and revitalize European democracy by developing more responsive, transparent, and participatory decisionmaking processes.
For instance, when Anne Hidalgo was elected mayor of Paris in May 2014, one of her priorities was to make the city more collaborative by allowing Parisians to propose policy and develop projects together. In order to build a stronger relationship with the citizens, she immediately started to implement a citywide participatory budgeting project for the whole of Paris, including all types of policy issues. It started as a small pilot, with the city of Paris putting forward fifteen projects that could be funded with up to about 20 million euros and letting citizens vote on which projects to invest in, via ballot box or online. Parisians and local authorities deemed this experiment successful, so Hidalgo decided it was worth taking further, with more ideas and a bigger pot of money. Within two years, the level of participation grew significantly—from 40,000 voters in 2014 to 92,809 in 2016, representing 5 percent of the total urban population. Today, Paris Budget Participatif is an official platform that lets Parisians decide how to spend 5 percent of the investment budget from 2014 to 2020, amounting to around 500 million euros. In addition, the mayor also introduced two e-democracy platforms—Paris Petitions, for e-petitions, and Idée Paris, for e-consultations. Citizens in the French capital now have multiple channels to express their opinions and contribute to the development of their city.
In Latvia, civil society has played a significant role in changing how legislative procedures are organized. ManaBalss (My Voice) is a grassroots NGO that creates tools for better civic participation in decisionmaking processes. Its online platform, ManaBalss.lv, is a public e-participation website that lets Latvian citizens propose, submit, and sign legislative initiatives to improve policies at both the national and municipal level. …
In Finland, the government itself introduced an element of direct democracy into the Finnish political system, through the 2012 Citizens’ Initiative Act (CI-Act) that allows citizens to submit initiatives to the parliament. …
Other civic tech NGOs across Europe have been developing and experimenting with a variety of digital tools to reinvigorate democracy. These include initiatives like Science For You (SCiFY) in Greece, Netwerk Democratie in the Netherlands, and the Citizens Foundation in Iceland, which got its start when citizens were asked to crowdsource their constitution in 2010.
Outside of civil society, several private tech companies are developing digital platforms for democratic participation, mainly at the local government level. One example is the Belgian start-up CitizenLab, an online participation platform that has been used by more than seventy-five municipalities around the world. The young founders of CitizenLab have used technology to innovate the democratic process by listening to what politicians need and including a variety of functions, such as crowdsourcing mechanisms, consultation processes, and participatory budgeting. Numerous other European civic tech companies have been working on similar concepts—Cap Collectif in France, Delib in the UK, and Discuto in Austria, to name just a few. Many of these digital tools have proven useful to elected local or national representatives….
While these initiatives are making a real impact on the quality of European democracy, most of the EU’s formal policy focus is on constraining the power of the tech giants rather than positively aiding digital participation….(More)”
Book edited by Allan Afuah, Christopher L. Tucci, and Gianluigi Viscusi: “Examples of the value that can be created and captured through crowdsourcing go back to at least 1714 when the UK used crowdsourcing to solve the Longitude Problem, obtaining a solution that would enable the UK to become the dominant maritime force of its time. Today, Wikipedia uses crowds to provide entries for the world’s largest and free encyclopedia. Partly fueled by the value that can be created and captured through crowdsourcing, interest in researching the phenomenon has been remarkable.
Despite this – or perhaps because of it – research into crowdsourcing has been conducted in different research silos, within the fields of management (from strategy to finance to operations to information systems), biology, communications, computer science, economics, political science, among others. In these silos, crowdsourcing takes names such as broadcast search, innovation tournaments, crowdfunding, community innovation, distributed innovation, collective intelligence, open source, crowdpower, and even open innovation. This book aims to assemble chapters from many of these silos, since the ultimate potential of crowdsourcing research is likely to be attained only by bridging them. Chapters provide a systematic overview of the research on crowdsourcing from different fields based on a more encompassing definition of the concept, its difference for innovation, and its value for both private and public sector….(More)”.
Book by Micah Altman and Michael P. McDonald: “… unveil the Public Mapping Project, which developed DistrictBuilder, an open-source software redistricting application designed to give the public transparent, accessible, and easy-to-use online mapping tools. As they show, the goal is for all citizens to have access to the same information that legislators use when drawing congressional maps—and use that data to create maps of their own….(More)”.
Paper by Christopher Tucci, Gianluigi Viscusi and Heidi Gautschi: “In this article, we explore the use of hackathons and open data in corporations’ open innovation portfolios, addressing a new way for companies to tap into the creativity and innovation of early-stage startup culture, in this case applied to the food and nutrition sector. We study the first Open Food Data Hackdays, held on 10-11 February 2017 in Lausanne and Zurich. The aim of the overall project that the Hackdays event was part of was to use open food and nutrition data as a driver for business innovation. We see hackathons as a new tool in the innovation manager’s toolkit, a kind of live crowdsourcing exercise that goes beyond traditional ideation and develops a variety of prototypes and new ideas for business innovation. Companies then have the option of working with entrepreneurs and taking some of the ideas forward….(More)”.
Paper by Nuran Acur, Mariangela Piazza and Giovanni Perrone: “Firms are increasingly engaging in crowdsourcing for innovation to access new knowledge beyond their boundaries; however, scholars are no closer to understanding what guides seeker firms in deciding the level at which to acquire rights from solvers and the effect that this decision has on the performance of crowdsourcing contests.
Integrating Property Rights Theory and the problem solving perspective whist leveraging exploratory interviews and observations, we build a theoretical framework to examine how specific attributes of the technical problem broadcast affect the seekers’ choice between alternative intellectual property rights (IPR) arrangements that call for acquiring or licensing‐in IPR from external solvers (i.e. with high and low degrees of ownership respectively). Each technical problem differs in the knowledge required to be solved as well as in the stage of development it occurs of the innovation process and seeker firms pay great attention to such characteristics when deciding about the IPR arrangement they choose for their contests.
In addition, we analyze how this choice between acquiring and licensing‐in IPR, in turn, influences the performance of the contest. We empirically test our hypotheses analyzing a unique dataset of 729 challenges broadcast on the InnoCentive platform from 2010 to 2016. Our results indicate that challenges related to technical problems in later stages of the innovation process are positively related to the seekers’ preference toward IPR arrangements with a high level of ownership, while technical problems involving a higher number of knowledge domains are not.
Moreover, we found that IPR arrangements with a high level of ownership negatively affect solvers’ participation and that IPR arrangement plays a mediating role between the attributes of the technical problem and the solvers’ self‐selection process. Our article contributes to the open innovation and crowdsourcing literature and provides practical implications for both managers and contest organizers….(More)”.
Krassimira Paskaleva and Ian Cooper in Technovation: This article is focused on public service innovation from an innovation management perspective. It presents research experience gained from a European project for managing social and technological innovation in the production and evaluation of citizen-centred internet-enabled services in the public sector.
It is based on six urban pilot initiatives, which sought to operationalise a new approach to co-producing and co-evaluating civic services in smart cities – commonly referred to as open innovation for smart city services. Research suggests that the evidence base underpinning this approach is not sufficiently robust to support claims being made about its effectiveness.
Instead evaluation research of citizen-centred internet-enabled urban services is in its infancy and there are no tested methods or tools in the literature for supporting this approach.
The paper reports on the development and trialing of a novel Co-evaluation Framework, indicators and reporting categories, used to support the co-production of smart city services in an EU-funded project. Our point of departure is that innovation of services is a sub-set of innovation management that requires effective integration of technological with social innovation, supported by the right skills and capacities. The main skills sets needed for effective co-evaluation of open innovation services are the integration of stakeholder management with evaluation capacities.”
John Thornhill in the Financial Times: “…All too often today we leave research and innovation in the hands of the so-called professionals, often with disappointing results. Winning a prize often matters less than the stimulus it provides for innovators in neighbouring fields In recent years, there has been an explosion in the number of professional scientists. Unesco estimates that there were 7.8m full-time researchers in 2013.
The number of scientific journals has also increased, making it difficult even for specialists to remain on top of all the latest advances in their field. In spite of this explosion of knowledge and research spending, there has been a striking lack of breakthrough innovations, as economists such as Robert Gordon and Tyler Cowen have noted.
Maybe this is because all the low-hanging technological fruit has been eaten. Or perhaps it is because our research and development methodology has gone awry.
Geoff Mulgan, chief executive of Nesta, is one of those who is trying to revive the concept of prizes as a means of encouraging innovation. His public foundation runs the Challenge Prize Centre, offering awards of up to £10m for innovation in the fields of energy and the environment, healthcare, and community wellbeing. “Setting a specific target, opening up to anyone to meet it, and providing a financial reward if they succeed is the opposite of how most R&D is done,” Mr Mulgan says. “We should all focus more on outcomes than inputs.”…
But these prizes are far from being a panacea. Indeed, they can sometimes lead to perverse results, encouraging innovators to fixate on just one, original goal while ignoring serendipitous surprises along the way. Many innovations are the happy byproduct of research rather than its primary outcome. An academic paper on the effectiveness of innovation prizes concluded that they could be a useful addition to the armoury but were no substitute for other proven forms of research and development. The authors also warned that if prizes were poorly designed, managed, and awarded they could prove “ineffective or even harmful”.
That makes it essential to design competitions in careful and precise detail. It also helps if there are periodic payouts along the way to encourage the most promising ideas. Many companies have embraced the concept of open innovation and increasingly look to collaborate with outside partners to develop fresh ideas, sometimes by means of corporate prizes….(More)”.
Curation by Andrew Young, Anders Pedersen, and Stefaan G. Verhulst
Readings developed together with NRGI, within the context of our joint project on Blockchain technologies and the Governance of Extractives. Thanks to Joyce Zhang and Michelle Winowatan for research support.
We need your help! Please share any additional readings on the use of Blockchain Technologies in the Extractives Sector with firstname.lastname@example.org.
By providing new ways to securely identify individuals and organizations, and record transactions of various types in a distributed manner, blockchain technologies have been heralded as a new tool to address information asymmetries, establish trust and improve governance – particularly around the extraction of oil, gas and other natural resources. At the same time, blockchain technologies are been experimented with to optimize certain parts of the extractives value chain – potentially decreasing transparency and accountability while making governance harder to implement.
Across the expansive and complex extractives sector, blockchain technologies are believed to have particular potential for improving governance in three key areas:
- Beneficial ownership and illicit flows screening: The identity of those who benefit, through ownership, from companies that extract natural resources is often hidden – potentially contributing to tax evasion, challenges to global sanction regimes, corruption and money laundering.
- Land registration, licensing and contracting transparency: To ensure companies extract resources responsibly and comply with rules and fee requirements, effective governance and a process to determine who has the rights to extract natural resources, under what conditions, and who is entitled to the land is essential.
- Commodity trading and supply chain transparency: The commodity trading sector is facing substantive challenges in assessing and verifying the authenticity of for example oil trades. Costly time is spent by commodity traders reviewing documentation of often poor quality. The expectation of the sector is firstly to eliminate time spent verifying the authenticity of traded goods and secondly to reduce the risk premium on trades. Transactions from resources and commodities trades are often opaque and secretive, allowing for governments and companies to conceal how much money they receive from trading, and leading to corruption and evasion of taxation.
In the below we provide a selection of the nascent but growing literature on Blockchain Technologies and Extractives across six categories:
- Blockchain Technologies and Extractives – Promise and Current Potential
- Blockchain Technologies and the Governance of Extractives
- Beneficial Ownership and Illicit Flows
- Land Registration, Licensing and Contracting Transparency
- Commodity Trading and Supply Chain Transparency
- Global Governance and Disclosure Practices
- Industry-Specific Case Studies
Blockchain Technologies and Extractives – Promise and Current Potential
Adams, Richard, Beth Kewell, Glenn Parry. “Blockchain for Good? Digital Ledger Technology and Sustainable Development Goals.” Handbook of Sustainability and Social Science Research. October 27, 2017.
- This chapter in the Handbook of Sustainability and Social Science Research seeks to reflect and explore the different ways Blockchain for Good (B4G) projects can provide social and environmental benefits under the UN’s Sustainable Goals framework
- The authors describe the main categories in which blockchain can achieve social impact: mining/consensus algorithms that reward good behavior, benefits linked to currency use in the form of “colored coins,” innovations in supply chain, innovations in government, enabling the sharing economy, and fostering financial inclusion.
- The chapter concludes that with B4G there is also inevitably “Blockchain for Bad.” There is already critique and failures of DLTs such as the DAO, and more research must be done to identify whether DLTs can provide a more decentralized, egalitarian society, or if they will ultimately be another tool for control and surveillance by organizations and government.
Cullinane, Bernadette, and Randy Wilson. “Transforming the Oil and Gas Industry through Blockchain.” Official Journal of the Australian Institute of Energy News, p 9-10, December 2017.
- In this article, Cullinane and Wilson explore blockchain’s application in the oil and gas industry “presents a particularly compelling opportunity…due to the high transactional values, associated risks and relentless pressure to reduce costs.”
- The authors elaborate four areas where blockchain can benefit play a role in transforming the oil and gas industry:
- Supply chain management
- Smart contracts
- Record management
- Cross-border payments
Da Silva, Filipe M., and Ankita Jaitly. “Blockchain in Natural Resources: Hedging Against Volatile Prices.” Tata Consultancy Services Ltd., 2018.
- The authors of this white paper assess the readiness of natural resources industries for blockchain technology application, identify areas where blockchain can add value, and outline a strategic plan for its adoption.
- In particular, they highlight the potential for blockchain in the oil and gas industry to simplify payments, where for example, gas can be delivered directly to consumer homes using a blockchain smart contracting application.
Halford-Thompson, Guy. “Powered by Blockchain: Reinventing Information Management in the Energy Space.” BTL, May 12, 2017.
- According to Halford-Thompson, “oil and gas companies are exploring blockchain’s promise to revamp inefficient internal processes and achieve significant reductions in operating costs through the automation of record keeping and messaging, the digitization of the supply chain information flow, and the elimination of reconciliation, among many other data management use cases.”
- The data reconciliation process, for one, is complex and can require significant time for completion. Blockchain technology could not only remove the need for some steps in the information reconciliation process, but also eliminate the need for reconciliation altogether in some instances.
Blockchain Technologies and the Governance of Extractives
Koeppen, Mark, David Shrier, and Morgan Bazilian. “Is Blockchain’s Future in Oil and Gas Transformative Or Transient?“ Deloitte, 2017.
- In this report, the authors propose four areas that blockchain can improve for the oil and gas industry, which are:
- Transparency and compliance: Employment of blockchain is predicted to significantly reduce cost related to compliance, since it securely makes information available to all parties involved in the supply chain.
- Cyber threats and security: The industry faces constant digital security threat and blockchain provides a solution to address this issue.
- Mid-volume trading/third party impacts: They argue that the “boundaries between asset classes will blur as cash, energy products and other commodities, from industrial components to apples could all become digital assets trading interoperably.”
- Smart contract: Since the “sheer size and volume of contracts and transactions to execute capital projects in oil and gas have historically caused significant reconciliation and tracking issues among contractors, sub-contractors, and suppliers,” blockchain-enabled smart contracts could improve the process by executing automatically after all requirements are met, and boosting contract efficiency and protecting each party from volatile pricing.
Mawet, Pierre, and Michael Insogna. “Unlocking the Potential of Blockchain in Oil and Gas Supply Chains.” Accenture Energy Blog, November 21, 2016.
- The authors propose three ways blockchain technology can boost productivity and efficiency in oil and gas industry:
- “Greater process efficiency. Smart contracts, for example, can be held in a blockchain transaction with party compliance confirmed through follow-on transactions, reducing third-party supervision and paper-based contracting, thus helping reduce cost and overhead.”
- “Compliance. Visibility is essential to improve supply chain performance. The immutable record of transactions can aid in product traceability and asset tracking.”
- “Data transfer from IoT sensors. Blockchain could be used to track the unique history of a device, with the distributed ledger recording data transfer from multiple sensors. Data security in devices could be safeguarded by unique blockchain characteristics.”
Som, Indranil. “Blockchain: Radically Changing the Mining Paradigm.” Digitalist, September 27, 2017.
- In this article, Som proposes three ways that the blockchain technology can “support leaner organizations and increased security” in the mining industry: improving cybersecurity, increasing transparency through smart contracts, and providing visibility into the supply chain.
Identity: Beneficial Ownership and Illicit Flows
- This paper discusses the features of blockchain and distributed ledger technology that can improve collection and distribution of information on beneficial ownership.
- The FATF and OECD Global Forum regimes have identified a number of common problems related to beneficial ownership information across all jurisdictions, including:
- “Insufficient accuracy and accessibility of company identification and ownership information;
- Less rigorous implementation of customer due-diligence (CDD) measures by key gatekeepers such as lawyers, accountants, and trust and company service providers; and
- Obstacles to information sharing such as data protection and privacy laws, which impede competent authorities from receiving timely access to adequate, accurate and up-to-date information on basic legal and beneficial ownership.”
- The authors argue that the transparency, immutability, and security offered by blockchain makes it ideally suited for record-keeping, particularly with regards to the ownership of assets. Thus, blockchain can address many of the shortcomings in the current system as identified by the FATF and the OECD.
- They go on to suggest that a global registry of beneficial ownership using blockchain technology would offer the following benefits:
- Ensuring real-time accuracy and verification of ownership information
- Increasing security and control over sensitive personal and commercial information
- Enhancing audit transparency
- Creating the potential for globally-linked registries
- Reducing corruption and fraud, and increasing trust
- Reducing compliance burden for regulate entities
Herian, Robert. “Trusteeship in a Post-Trust World: Property, Trusts Law and the Blockchain.” The Open University, 2016.
- This working paper discusses the often overlooked topic of trusteeship and trusts law and the implications of blockchain technology in the space.
- “Smart trusts” on the blockchain will distribute trusteeship across a network and, in theory, remove the need for continuous human intervention in trust fund investments thus resolving key issues around accountability and the potential for any breach of trust.
- Smart trusts can also increase efficiency and security of transactions, which could improve the overall performance of the investment strategy, thereby creating higher returns for beneficiaries.
Karsten, Jack and Darrell M. West (2018): “Venezuela’s “petro” undermines other cryptocurrencies – and international sanctions.” Brookings, Friday, March 9 2018,
- This article discusses the Venezuelan government’s cryptocurrency, “petro,” which was launched as a solution to the country’s economic crisis and near-worthless currency, “bolívar”
- Unlike the volatility of other cryptocurrencies such as Bitcoin and Litecoin, one petro’s price is pegged to the price of one barrel of Venezuelan oil – roughly $60
- And rather than decentralizing control like most blockchain applications, the petro is subject to arbitrary discount factor adjustment, fluctuating oil prices, and a corrupt government known for manipulating its currency
- The authors warn the petro will not stabilize the Venezuelan economy since only foreign investors funded the presale, yet (from the White Paper) only Venezuelan citizens can use the cryptocurrency to pay taxes, fees, and other expenses. Rather, they argue, the petro represents an attempt to create foreign capital out of “thin air,” which is not subject to traditional economic sanctions.
Land Registration, Licensing and Contracting Transparency
Michael Graglia and Christopher Mellon. “Blockchain and Property in 2018: At the End of the Beginning.” 2018 World Bank Conference on Land and Poverty, March 19-23, 2018.
- This paper claims “blockchain makes sense for real estate” because real estate transactions depend on a number of relationships, processes, and intermediaries that must reconcile all transactions and documents for an action to occur. Blockchain and smart contracts can reduce the time and cost of transactions while ensuring secure and transparent record-keeping systems.
- The ease, efficiency, and security of transactions can also create an “international market for small real estate” in which individuals who cannot afford an entire plot of land can invest small amounts and receive their portion of rental payments automatically through smart contracts.
- The authors describe seven prerequisites that land registries must fulfill before blockchain can be introduced successfully: accurate data, digitized records, an identity solution, multi-sig wallets, a private or hybrid blockchain, connectivity and a tech aware population, and a trained professional community
- To achieve the goal of an efficient and secure property registry, the authors propose an 8-level progressive framework through which registries slowly integrate blockchain due to legal complexity of land administration, resulting inertia of existing processes, and high implementation costs.
- Level 0 – No Integration
- Level 1 – Blockchain Recording
- Level 2 – Smart Workflow
- Level 3 – Smart Escrow
- Level 4 – Blockchain Registry
- Level 5 – Disaggregated Rights
- Level 6 – Fractional Rights
- Level 7 – Peer-to-Peer Transactions
- Level 8 – Interoperability
Thomas, Rod. “Blockchain’s Incompatibility for Use as a Land Registry: Issues of Definition, Feasibility and Risk.“ European Property Law Journal, vol. 6, no. 3, May 2017.
- Thomas argues that blockchain, as it is currently understood and defined, is unsuited for the transfer of real property rights because it fails to address the need for independent verification and control.
- Under a blockchain-based system, coin holders would be in complete control of the recordation of the title interests of their land, and thus, it would be unlikely that they would report competing or contested claims.
- Since land remains in the public domain, the risk of third party possessory title claims are likely to occur; and over time, these risks will only increase exponentially.
- A blockchain-based land title represents interlinking and sequential transactions over many hundreds, if not thousands, of years, so given the misinformation that would compound over time, it would be difficult to trust the current title holder has a correctly recorded title
- The author concludes that supporters of blockchain for land registries frequently overlook a registry’s primary function to provide an independent verification of the provenance of stored data.
Vos, Jacob, Christiaan Lemmen, and Bert Beentjes. “Blockchain-Based Land Registry: Panacea, Illusion or Something In Between?“ 2017 World Bank Conference on Land and Poverty, March 20-24, 2017.
- The authors propose that blockchain is best suited for the following steps in land administration:
- The issuance of titles
- The archiving of transactions – specifically in countries that do not have a reliable electronic system of transfer of ownership
- The step in between issuing titles and archiving transactions is the most complex – the registration of the transaction. This step includes complex relationships between the “triple” of land administration: rights (right in rem and/or personal rights), object (spatial unit), and subject (title holder). For the most part, this step is done manually by registrars, and it is questionable whether blockchain technology, in the form of smart contracts, will be able to process these complex transactions.
- The authors conclude that one should not underestimate the complexity of the legal system related to land administration. The standardization of processes may be the threshold to success of blockchain-based land administration. The authors suggest instead of seeking to eliminate one party from the process, technologists should cooperate with legal and geodetic professionals to create a system of checks and balances to successfully implement blockchain for land administration.
- This paper also outlines five blockchain-based land administration projects launched in Ghana, Honduras, Sweden, Georgia, and Cook County, Illinois.
Commodity Trading and Supply Chain Transparency
Ahmed, Shabir. “Leveraging Blockchain to Revolutionise the Mining Industry.” SAP News, February 27, 2018.
- In this article, Ahmed identifies seven key use cases for blockchain in the mining industry:
- Automation of ore acquisition and transfer;
- Automatic registration of mineral rights and IP;
- Visibility of ore inventory at ports;
- Automatic cargo hire process;
- Process and secure large amounts of IoT data;
- Reconciling amount produced and sent for processing;
- Automatically execute procurement and other contracts.
Brooks, Michael. “Blockchain and the Fight Against Illicit Financial Flows.” The Policy Corner, February 19, 2018.
- In this article, Brooks argues that, “Because of the inherent decentralization and immutability of data within blockchains, it offers a unique opportunity to bypass traditional tracking and transparency initiatives that require strong central governance and low levels of corruption. It could, to a significant extent, bypass the persistent issues of authority and corruption by democratizing information around data consensus, rather than official channels and occasional studies based off limited and often manipulated information. Within the framework of a coherent policy initiative that integrates all relevant stakeholders (states, transnational organizations, businesses, NGOs, other monitors and oversight bodies), a international supply chains supported by blockchain would decrease the ease with which resources can be hidden, numbers altered, and trade misinvoiced.”
“Conflict Free Natural Resources.” Global Opportunity Report 2017. Global Opportunity Network, 2017.
- In this entry from the Global Opportunity Report, and specifically toward the end of ensuring conflict-free natural resources, Blockchain is labeled as “well-suited for tracking objects and transactions, making it possible for virtually anything of value to be traced. This opportunity is about creating transparency and product traceability in supply chains.
“Blockchain for Traceability in Minerals and Metals Supply Chains: Opportunities and Challenges.” RCS Global and ICMM, 2017.
- This report is based on insights generated during the Materials Stewardship Round Table on the potential of BCTs for tracking and tracing metals and minerals supply chains, which subsequently informed an RCS Global research initiative on the topic.
- Insight into two key areas is increasingly desired by downstream manufacturing companies from upstream producers of metals and minerals: provenance and production methods
- In particular, the report offers five key potential advantages of using Blockchain for mineral and metal supply chain activities:
- “Builds consensus and trust around responsible production standards between downstream and upstream companies.
- The immutability of and decentralized control over a blockchain system minimizes the risk of fraud.
- Defined datasets can be made accessible in real time to any third party, including downstream buyers, auditors, investors, etc. but at the same time encrypted so as to share a proof of fact rather than confidential information.
- A blockchain system can be easily scaled to include other producers and supply chains beyond those initially involved.
- Cost reduction due to the paperless nature of a blockchain-enabled CoC [Chain of Custody] system, the potential reduction of audits, and reduction in transaction costs.”
Van Bockstael, Steve. “The emergence of conflict-free, ethical, and Fair Trade mineral supply chain certification systems: A brief introduction.” The Extractives Industries and Society, vol. 5, issue 1, January 2018.
- This introduction to a special section considers the emerging field of “‘conflict-free’, ‘fair’ and ‘transparently sourced and traded’ minerals” in global industry supply chains.
- Van Bockstael describes three areas of practice aimed at increasing supply chain transparency:
- “Initiatives that explicitly try to sever the links between mining or minerals trading and armed conflict of the funding thereof.”
- “Initiatives, limited in number yet growing, that are explicitly linked to the internationally recognized ‘Fair Trade’ movement and whose aim it is to source artisanally mined minerals for the Western jewellry industry.”
- “Initiatives that aim to provide consumers or consumer-facing industries with more ethical, transparent and fair supply chains (often using those concepts in fuzzy and interchangeable ways) that are not linked to the established Fair Trade movement” – including, among others, initiatives using Blockchain technology “to create tamper-proof supply chains.”
Global Governance, Standards and Disclosure Practices
Lafarre, Anne and Christoph Van der Elst. “Blockchain Technology for Corporate Governance and Shareholder Activism.” European Corporate Governance Institute (ECGI) – Law Working Paper No. 390/2018, March 8, 2018.
- This working paper focuses on the potential benefits of leveraging Blockchain during functions involving shareholder and company decision making. Lafarre and Van der Elst argue that “Blockchain technology can lower shareholder voting costs and the organization costs for companies substantially. Moreover, blockchain technology can increase the speed of decision-making, facilitate fast and efficient involvement of shareholders.”
- The authors argue that in the field of corporate governance, Blockchain offers two important elements: “transparency – via the verifiable way of recording transactions – and trust – via the immutability of these transactions.”
- Smart contracting, in particular, is seen as a potential avenue for facilitating the ‘agency relationship’ between board members and the shareholders they represent in corporate decision-making processes.
Myung, San Jun. “Blockchain government – a next for of infrastructure for the twenty-first century.” Journal of Open Innovation: Technology, Market, and Complexity, December 2018.
- This paper argues the idea that Blockchain represents a new form of infrastructure that, given its core consensus mechanism, could replace existing social apparatuses including bureaucracy.
- Indeed, Myung argues that blockchain and bureaucracy share a number of attributes:
- “First, both of them are defined by the rules and execute predetermined rules.
- Second, both of them work as information processing machines for society.
- Third, both of them work as trust machines for society.”
- The piece concludes with five principles for replacing bureaucracy with blockchain for social organization: “1) introducing Blockchain Statute law; 2) transparent disclosure of data and source code; 3) implementing autonomous executing administration; 4) building a governance system based on direct democracy; and 5) making Distributed Autonomous Government (DAG).
Peters, Gareth and Vishnia, Guy (2016): “Blockchain Architectures for Electronic Exchange Reporting Requirements: EMIR, Dodd Frank, MiFID I/II, MiFIR, REMIT, Reg NMS and T2S.” University College London, August 31, 2016.
- This paper offers a solution based on blockchain architectures to the regulations of financial exchanges around the world for trade processing and reporting for execution and clearing. In particular, the authors give a detailed overview of EMIR, Dodd Frank, MiFID I/II, MiFIR, REMIT, Reg NMS and T2S.
- The authors suggest the increasing amount of data from transaction reporting start to be incorporated on a blockchain ledger in order to harness the built-in security and immutability features of the blockchain to support key regulatory features.
- Specifically, the authors suggest 1) a permissioned blockchain controlled by a regulator or a consortium of market participants for the maintenance of identity data from market participants and 2) blockchain frameworks such as Enigma to be used to facilitate required transparency and reporting aspects related to identities when performing pre- and post-trade reporting as well as for auditing.
“Blockchain Technology and Competition Policy – Issues paper by the Secretariat,” OECD, June 8, 2018.
- This OECD issues paper poses two key questions about how blockchain technology might increase the relevance of new disclosures practices:
- “Should competition agencies be given permission to access blockchains? This might enable them to monitor trading prices in real-time, spot suspicious trends, and, when investigating a merger, conduct or market have immediate access to the necessary data without needing to impose burdensome information requests on parties.”
- “Similarly, easy access to the information on a blockchain for a firm’s owners and head offices would potentially improve the effectiveness of its oversight on its own subsidiaries and foreign holdings. Competition agencies may assume such oversight already exists, but by making it easier and cheaper, a blockchain might make it more effective, which might allow for more effective centralised compliance programmes.”
Michael Pisa and Matt Juden. “Blockchain and Economic Development: Hype vs. Reality.” Center for Global Development Policy Paper, 2017.
- In this Center for Global Development Policy Paper, the authors examine blockchain’s potential to address four major development challenges: (1) facilitating faster and cheaper international payments, (2) providing a secure digital infrastructure for verifying identity, (3) securing property rights, and (4) making aid disbursement more secure and transparent.
- The authors conclude that while blockchain may be well suited for certain use cases, the majority of constraints in blockchain-based projects fall outside the scope of technology. Common constraints such as data collection and privacy, governance, and operational resiliency must be addressed before blockchain can be successfully implemented as a solution.
Industry-Specific Case Studies
Chohan, Usman. “Blockchain and the Extractive Industries: Cobalt Case Study,” University of New South Wales, Canberra Discussion Paper Series: Notes on the 21st Century, 2018.
- In this discussion paper, the author studies the pilot use of blockchain in cobalt mining industry in the Democratic Republic of Congo (DRC). The project tracked the movement of cobalt from artisanal mines through its installation in devices such as smartphones and electric cars.
- The project records cobalt attributes – weights, dates, times, images, etc. – into the digital ledger to help ensure that cobalt purchases are not contributing to forced child labor or conflict minerals.
Chohan, Usman. “Blockchain and the Extractive Industries #2: Diamonds Case Study,” University of New South Wales, Canberra Discussion Paper Series: Notes on the 21st Century, 2018.
- The second case study from Chohan investigates the application of blockchain technology in the extractive industry by studying Anglo-American (AAL) diamond DeBeer’s unit and Everledger’s blockchain projects.
- In this study, the author finds that AAL uses blockchain to track gems (carat, color, certificate numbers), starting from extraction and onwards, including when the gems change hands in trade transaction.
- Like the cobalt pilot, the AAL initiative aims to help avoid supporting conflicts and forced labor, and to improve trading accountability and transparency more generally.
Book by Andrew Leigh: “Experiments have consistently been used in the hard sciences, but in recent decades social scientists have adopted the practice. Randomized trials have been used to design policies to increase educational attainment, lower crime rates, elevate employment rates, and improve living standards among the poor.
This book tells the stories of radical researchers who have used experiments to overturn conventional wisdom. From finding the cure for scurvy to discovering what policies really improve literacy rates, Leigh shows how randomistas have shaped life as we know it. Written in a “Gladwell-esque” style, this book provides a fascinating account of key randomized control trial studies from across the globe and the challenges that randomistas have faced in getting their studies accepted and their findings implemented. In telling these stories, Leigh draws out key lessons learned and shows the most effective way to conduct these trials….(More)”.