HONG KONG - Blockchain is a word that is now bandied around with alarming regularity, so when Papua New Guinea became the latest country to be associated with it, there were plenty of skeptics.
Contrary to naysayers’ expectations, PNG is exploring how to use blockchain to viably address some of the country’s economic issues.
Loi Bakani, Governor of the Bank of PNG, has been vocal about blockchain trials currently underway in partnership with the Australian government-funded PNG Governance Facility and also Abt Associates, an organization working on poverty relief.
According to Abt Associates, the majority of the population in PNG lack access to banking, while mobile-phone penetration is approximately 50%, making blockchain a possible solution to people with limited access to financial services.
“Some of it is noise and some real, but the big proponent of blockchain is actually the Bank of PNG. The governor is interested in financial inclusion and 85% of the population are ‘unbanked’, so he has been keen to try and examine how blockchain is going to help them with the issue,” Jane Thomason, the chief executive of Abt Associates-Australia told Asia Times.
The Bank of PNG also sees blockchain as an ideal way to provide a legal identity for the ‘unbanked’ and the trials with Abt Associates and the Australian government are on a project that aims to create an inexpensive solar-powered digital fingerprint device that could power blockchain-based banking.
The idea is that the device will upload biometric data of a person onto a blockchain and this will allow them to withdraw money without it having to be connected to a power grid or even the internet.
The device, made by IDbox only has to rely on an “individual’s access to a basic analog mobile phone and has the potential to work in areas where there is no electricity, no internet and no smartphones,” its makers say.
It seems an incredible example of how blockchain might be used to further financial inclusion in an area that has complex infrastructure issues. But is it pie in the sky?
“We have taken that to the point where there is a working prototype, it’s been demonstrated that it can work. There is an interest, but whether there is funding or not is to be determined. The bank would like to roll it out into a much bigger pilot,” Thomason adds.
Abt Associates has identified several issues that could be alleviated using blockchain. These include confirming legal identities, land registration and digitization of assets through smart contracts, promoting transparency, and preventing the leakage of funds from the ‘unbanked’.
“PNG is also leading discussions on how to breach the digital divide among APEC economies. They are trying to see if this is something that can solve some of the pretty big problems surrounding lack of connectivity,” Thomason adds.