Evaluating for Trust in Blockchain Applications
by Mike Cooper
This is the fourth in a series of blogs aimed at discussing and soliciting feedback on how the blockchain can benefit MEL practitioners in their work. The series includes: What does Blockchain Offer to MERL, Blockchain as an M&E Tool, How Can MERL Inform Maturation of the Blockchain, this post, and future posts on integrating blockchain into MEL practices. The series leads into a MERL Tech Pre-Workshop on September 5th, 2018 in Washington D.C. that will go into depth on possibilities and examples of MEL blockchain applications. Register here!
Enabling trust in an efficient manner is the primary innovation that the blockchain delivers through the use of cryptology and consensus algorithms. Trust is usually a painstaking relationship building effort that requires iterative interactions to build. The blockchain alleviates the need for much of the resources required to build this trust, but that does not mean that stakeholders will automatically trust the blockchain application. There will still need to be trust building mechanisms with any blockchain application and MEL practitioners are uniquely situated to inform how these trust relationships can mature.
Function of trust in the blockchain
Trust is expensive. You pay fees to banks who provide confidence to sellers who take your debit card as payment and trust that they will receive funds for the transaction. Agriculture buyers pay fees to third parties (who can certify that the produce is organic, etc.) to validate quality control on products coming through the value chain Often sellers do not see the money from debit card transaction in their accounts automatically and agriculture actors perpetually face the pressures resulting from being paid for goods and/or services they provided weeks previously. The blockchain could alleviate much of these harmful effects by substituting trust in humans by trust in math.
We pay these third parties because they are trusted agents, and these trusted agents can be destructive rent seekers at times; creating profits that do not add value to the goods and services they work with. End users in these transactions are used to using standard payment services for utility bills, school fees, etc. This history of iterative transactions has resulted in a level of trust in these processes. It may not be equitable but it is what many are used to and introducing an innovation like blockchain will require an understanding of how these processes are influencing stakeholders, their needs and how they might be nudged to trust something different like a blockchain application.
How MEL can help understand and build trust
Just as microfinance introduced new methods of sending/receiving money and access to new financial services that required piloting different possible solutions to build this understanding, so will blockchain applications. This is an area where MEL can add value to achieving mass impact, by designing the methods to iteratively build this understanding and test solutions.
MEL has done this before. Any project that requires relationship building should be based on understanding the mindset and incentives for relevant actions (behavior) amongst stakeholders to inform the design of the “nudge” (the treatment) intended to shift behavior.
Many of the programs we work on as MEL practitioners involve various forms and levels of relationship building, which is essentially “trust”. There have been many evaluations of relationship building whether it be in microfinance, agriculture value chains or policy reform. In each case, “trust” must be defined as a behavior change outcome that is “nudged” based on the framing (mindset) of the stakeholder. Meaning that each stakeholder, depending on their mindset and the required behavior to facilitate blockchain uptake, will require a customized nudge.
The role of trust in project selection and design: What does that mean for MEL
Defining “trust” should begin during project selection/design. Project selection and design criteria/due diligence are invaluable for MEL. Many of the dimensions of evaluability assessments refer back to the work that is done in the project selection/design phrase (which is why some argue evaluability assessments are essentially project design tools). When it comes to blockchain, the USAID Blockchain Primer provides some of the earliest thinking for how to select and design blockchain projects, hence it is a valuable resources for MEL practitioners who want to start thinking about how they will evaluate blockchain applications.
What should we be thinking about?
Relationship building and trust are behaviors, hence blockchain theories of change should have outcomes stated as behavior changes by specific stakeholders (hence the value add of tools like stakeholder analysis and outcome mapping). However, these Theories of Change (TOC) are only as good as what informs them, hence building a knowledge base of blockchain applications as well as previous lessons learned from evidence on relationship building/trust will be critical to developing a MEL Strategy for blockchain applications.
If you’d like to discuss this and related aspects, join us on September 5th in Washington, DC, for a one-day workshop on “What can the blockchain offer MERL?”
Michael Cooper is a former Associate Director at Millennium Challenge Corporation and the U.S. State Dept in Policy and Evaluation. He now heads Emergence, a firm that specializes in MEL and Blockchain services. He can be reached at emergence.cooper@gmail.com or through the Emergence website.