The United Nations (NYSE:UN) World Food Program might become one of the world's largest users of cryptocurrencies.
The Program plans to use ethereum to transmit funds to over 10,000 people in Jordan starting in May, Coindesk reported. That is just the beginning, the Program plans to use Ethereum to send money to as many as 500,000 people next year.
"At the moment we're paying out in normal currencies, so-called fiat currencies," World Food Program (WFP) Financial Officer Houman Haddad told Coindesk. "That is mainly because a lot of the places in which we work don't accept either bitcoin or ether."
UN Might create Major New Market for Cryptocurrencies
The WFP would like to start making payments in bitcoin or ethereum at some point in the future. This would make it a major user of the currencies because the program transferred $680 million to recipients in 2015. The WFP has plans to make to make up to $2 billion a year in payments to recipients.
The payments are handed out as vouchers used to buy food and supplies for the hungry. The idea behind them is to stimulate local economies and tap the free market for help which is more efficient than charities.
Currently most of the transfers take the form of cash which creates a lot of security and logistical problems. That also exposes the WFP to losses from currency conversation because it has to use unstable local currencies that can be highly vulnerable to inflation.
Under the new program WFP will use ethereum to distribute money to 400 local merchants. That will make a new market because it will get those business used to taking cryptocurrency payments. Many of them will start using the medium for other payments. The merchants sell the UN the supplies it needs such as food and medicine.
This program has the potential to greatly expand use of cryptocurrency by creating a distribution channel that can be adopted by charities, aid organizations and countries like the U.S. that offer foreign aid. The WFP blockchain can also serve as the basis of a financial network that private companies and banks can use to reach people in developing nations.
Blockchain could Save UN $20 Million a Year
This program might be huge Haddad estimates his agency has given money to up to 9.6 million people. He also thinks it might be able to serve as many as one million people a month.
Harnessing blockchain will enable the WFP to save a lot of money which it can use to help more people, Haddad predicted.
"If we reach the two billion mark that we are set to achieve in terms of total spending on cash-based transfer," Haddad said, "we estimate conservatively we could save $20 million a year."
The World Food Program is investigating another use for cryptocurrencies. Haddad said his organization is looking at ways to accept donations in ethereum and bitcoin. It looks as if bitcoin might have the capacity to make the world a better place and help the poor.
If the WFP's efforts are successful, its program might serve as a role model for basic income and reformed welfare programs in developing countries like the United States. That would enable governments to help more people with less bureaucracy which both the needy and taxpayers would appreciate.
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