While water is an essential for life and the sustainability of the planet, up to 844 million people around the world, don’t have access to clean drinking water.

Our interconnected world is ready to respond to this — organizations such as UNICEF spend more than $900 million in aid annually on water, sanitation and hygiene projects globally to respond to these conditions. Other global NGOs and organizations such as the OECD and the World Bank raise hundreds of millions for WaSH programs. A significant portion of this aid, however, never reaches those in need. Aid funds are used to maintain organizational structure, allocated to projects through bureaucratic mechanisms and, unfortunately, there are waste and inefficiency in last mile financial supply chains. Furthermore, lack of data and opacity of economic pathways between sources of aid and air recipients discourages both organizations and private individuals from donating more to realize critical humanitarian goals.

BANKEX has responded to these issues with WaterCoin, a token based water supply project that securely connects donations from sources worldwide directly with families in Narok, Kenya that need water. The project eliminates intermediaries in the charitable giving supply chain and presents an entirely new perspective on providing aid that could not only save millions of dollars but millions of lives.

Solving global humanitarian problems in the sphere of water, sanitation, and hygiene is not only about raising funds but about managing funds, so they are secure and go where they are needed. The lack of precise, reliable data about aid allocation is often cited as an impediment to better, more effective financial planning and performance tracking.

Lack of transparency discourages institutional investors from committing funds for water infrastructure development. The poor last mile traceability and the abundance of local contractors mean true costs are unclear and returns are unpredictable. Individuals trying to make a difference are dissuaded because of it impossible to measure the real impact of each particular donation. People want to know that their donations are helping people, not paying for paperclips and office space.

In the wake of Blockchain Commission for Sustainable Development established at the 72nd Session of the United Nations General Assembly in August, 2017, BANKEX has been inspired to develop the first blockchain based near-field communication protocols for secure transfer of donations to registered families who will use the funds to purchase clean drinking water from a public access clean water system in Narok, Kenya. The pilot project is a transparent way for funding from private, public and charity organizations to allocate funds directly to those who need them. The public access clean water system in Narok provides 1,000 people with 10,000 liters of clean drinking water monthly. Just $0.02 buys 1 WaterCoin redeemable for 1 liter of drinking water for the person in need. A donation of $1 provides 50 liters of clean drinking water — much more affordable than many other sources of clean water.

Just Clean Water, No Middlemen

To donate, individuals or organizations anywhere in the world can purchase stable WaterCoins, each redeemable for 1 liter of water. Donors choose how to allocate their donations and can track the allocation with granularity up to end customer. Donors will be able to know precisely how much water they provide and measure tangible outcomes — the health of families. The direct transfer of value without intermediaries is a critical part of the system that enables real impact for a low threshold that will ideally encourage both larger and more frequent donations.

The pilot project in Kenya, launched at the beginning of June this year, will verify the efficiency of WaterCoins as a vehicle for direct charity. If successful, new WaterCoins will be issued or previously issued WaterCoins diluted for use with new public access clean water systems installed in other towns and villages. All the information about the purchase, donation, and redemption of WaterCoins will be stored on blockchain for transparency and analysis needed for more accurate planning, allocation and cost reduction for development of local clean drinking water systems. Each contributor will be able to see how funds are spent, inspiring trust in the system and repeat donations to move the development forward.

A unique feature of WaterCoin is that it is a true utility token. This means that WaterCoins can only be redeemed for water and so the potential for waste and other forms of abuse is greatly reduced.

KYC for Distribution

To have access to the local clean water system in Narok, locals will pass through a know your customer procedure and be issued NFC smart cards. The KYC will define the identity and water allocation needs of each cardholder. The cards will secure water for individuals or families and direct the allocation of donations. Some people, heads of families, for example, may need more water redeemable donations than individuals. The cost of each contactless smart card is less than $1.

NFC Smart Cards vs. QR Codes

This same operation could be managed without cards by using well-known QR-codes often used for other blockchain transactions. QR-code verification, however, has two important disadvantages when compared with NFC smart cards. Firstly, to complete QR-code verification, participants of a given system must have a mobile device, far more expensive than the one dollar NFC smart cards. Secondly, the information on a QR-code can be easily copied, corrupted, or stolen. The NFC smart cards are more durable and registered to individuals, making them harder to misuse.

The First Step in Evolving Supply Chain Operations

Until now, it’s been incredibly difficult for those giving to charitable causes to know the true value and impact of their donations because of the significant lack of transparency in the supply chain systems that turn much-needed support for others in difficult circumstances and different parts of the world. Leaders in the global charity segment are the first to acknowledge that as a result of the growth of organizations and their capacity to respond to humanitarian needs, the significance of individual donations and the opacity of financial supply chains are diminished. Similarly, it’s extremely difficult to audit supply chains when there is suspicion of illegal or unethical practices in the last mile of the of humanitarian aid.

Blockchain offers an immutable shared ledger system that is updated and validated in real time for each action and for every network participant. It renders the financial activities of charitable organizations visible and reveals where an asset is at any point in time, who owns it and what condition it’s in. The ability to trace funds on a granular level will no doubt initiate a sea-change in the way funds for charity are raised, allocated and used. This could enable smaller charitable organizations to to reach more potential donors and do more with less funding.

At the same time, large charities and NGOs could be held more accountable for their activities. Transparency could inspire more people to trust the viability and integrity of charitable institutions with reputations for the efficient use of funds. What’s more, blockchain based charitable giving will allow for more accurate documentation of the impact of aid and then a more accurate picture of what could be done to reduce or eliminate the issues that charitable organizations and nonprofits seek to address.

The advantages of blockchain-based technology for global supply chain management aren’t limited to aid for water, food and medical charities. The tracking capabilities that blockchain based technologies provide could be used in any kind of supply chain operation, from tracking agricultural products from farm to table to the efficient production and shipping of FMCG and other products and services. This tracking will help improve efficiency, reduce waste and cost for producers and reduce cost, negative health effects and other benefits for consumers. The efficiency and low cost of blockchain-based supply chain services could also help create new forms of charitable giving that have not been possible in the pre-blockchain world — creating donor networks for grocery stores, restaurants, and other enterprises to address food waste, for example.

It is fitting that this new era of advanced blockchain based supply chain operations begin with the most pressing issues of our global society. Encouraging the best motivations in ourselves through the possibility of genuinely effective charitable giving will transform our world not only by helping those with the greatest need but by making our most noble ideas have more practical value and impact.