In a bid to safeguard the identities of individuals navigating borders in precarious situations, the United Nations High Commissioner for Refugees (UNHCR) is actively pursuing the development of a decentralized digital ID system utilizing blockchain technology. The initiative aims to address the challenges faced by the 114 million displaced people globally and enhance the efficiency of aid distribution.

UNHCR’s Financial Management Division Embraces Blockchain

Carmen Hett, Treasurer of the UNHCR Division of Financial and Administrative Management, disclosed this strategic move during a panel discussion held at Decentral House in Switzerland towards the end of 2023. The panel, featuring representatives from the World Trade Organization and International Telecommunication Union, primarily centered on garnering support and acceptance for integrating blockchain within traditionally conservative operational agencies.

Global Displacement and the UNHCR’s Challenge

Highlighting the urgency of the situation, Hett emphasized that there are currently 114 million displaced individuals globally. The UNHCR faces the challenge of delivering necessary assistance and supporting the financial inclusion of these individuals based on accurate information. Aid is now deposited into refugees’ digital wallets, providing them with a level of control over the utilization of these funds.

Overcoming Skepticism and Scaling Up

Acknowledging initial skepticism among UNHCR staff regarding blockchain adoption, Hett revealed that successful implementation of the first use case has paved the way for scaling up the project. The utilization of blockchain for aid payments allows the UNHCR to provide swift assistance “within literally minutes” and at “zero cost,” challenging skeptics within the organization to articulate reasons against its continued use.

Promoting Digital and Financial Literacy

Hett advocates for the use of blockchain in aid distribution, particularly in the form of USDC stablecoins deposited into digital wallets. Beyond immediate aid, this model contributes to the digital and financial literacy of refugees, fostering a sense of empowerment and control over their financial resources.

Award-Winning Project and Future Use Cases

The success story extends to aid delivery during Russia’s war against Ukraine, where biometrics were employed to verify recipients’ identities. The project earned recognition, receiving the “Best Impact Project Award” at Paris Blockchain Week 2023. Looking ahead, the UNHCR envisions future use cases for blockchain, including fundraising through a staking pool and the creation of NFTs to raise awareness of the agency’s vital work.

Addressing Risks with Zero-Knowledge Proofs

Recognizing the inherent risks associated with digital identity for refugees, Hett revealed that the UNHCR is exploring the use of zero-knowledge proofs (ZKPs) to safeguard refugee data. While acknowledging the potential benefits of technical tools like ZKPs, Hett emphasizes the necessity for additional regulatory efforts to fully realize their advantages.

Conclusion

The UNHCR’s pursuit of blockchain technology for decentralized digital IDs reflects a commitment to enhancing aid distribution efficiency and empowering displaced individuals. As the organization overcomes initial skepticism and achieves success in practical applications, the future holds promises of expanded use cases and heightened protection of refugee data through innovative solutions like zero-knowledge proofs.