Though non-communicable diseases (NCDs) are responsible for seven out of 10 deaths worldwide and cost health systems billions of dollars every year, they attract only a tiny percentage of of total global health financing. Innovative funding strategies like blockchain could be the unexpected remedy to NCD financing shortages.
The non-communicable disease (NCD) community is no stranger to innovation and evolution, from new pharmaceuticals and devices to increased access and empowerment of people living with NCDs. However, the financing deficit from traditional public and philanthropic funders has persisted. Even though non-communicable diseases—including cancer, diabetes, cardiovascular disease, chronic respiratory conditions and mental health conditions—are responsible for 71% of annual deaths worldwide and 85% of premature deaths in low- and middle-income countries (LMICs), NCDs have received just 1-2% of total global health financing since 2000.
This misalignment between global health needs and financial allocations prompted the Health Finance Institute (HFI) to host a panel of blockchain experts during the 76th session of the UN General Assembly to better understand how the technology can be applied to impact investing and development finance.
We noticed recent developments in blockchain and cryptocurrency that are revolutionising the way donations are made and outcomes are measured. These developments have exciting implications for the achievement of the UN Sustainable Development Goals (SDGs), including Good Health and Wellbeing, which at times has been slow due to misaligned incentives and lack of accountability. Blockchain innovations may hold some of the solutions.
Blockchain demystified
Blockchain is a distributed ledger technology that facilitates the recording of transactions and the tracking of assets in a network of users. While bitcoin was the first digital currency to gain popularity, there are now more than 10,000 publicly traded cryptocurrencies, including Ethereum, Cardano and Tether. Also within the world of blockchain exist non-fungible tokens (NFTs), which are one-of-a-kind assets stored on the blockchain ledger. NFTs have created the concept of scarcity in a digital world typically defined by replicability.
Some cryptocurrencies, like bitcoin, have yet to gain significant traction as payment mediums and instead are bought and held for speculative purposes, which has led to wild swings in the currency’s value. Further, the immutability of crypto transactions, while often touted as an advantage, can present problems for payers who wish to reverse or amend transaction mistakes.
Finally, crypto’s regulatory landscape is largely still taking shape and its ultimate form may dilute some of the technology’s benefits seen today. For example, it has been used in nefarious ways, though cryptocurrency defenders are quick to highlight the scale of issues like fraud are much higher for traditional currencies than crypto.
Living up to its potential
Despite the challenges, these technologies have already begun to make their mark on philanthropy, impact investing and progress towards the UN SDGs. Cryptocurrencies have already started reducing transaction costs associated with charitable giving, improving transparency available to donors and better enabling peer-to-peer giving.
These developments are particularly encouraging combined with the strong adoption rate of mobile devices and cryptocurrencies in emerging economies, which are among the highest in the world. Blockchain platforms facilitating the low-cost transfer and acceptance of funds bring banking to many developing regions for the first time.
New fundraising methods have also arisen, including digital auctions of NFTs held by philanthropic and non-profit organisations. Several such auctions have successfully taken place to date, including UNICEF’s digital auction of ‘land’ in Sandbox’s metascape. In October, HFI and Sandclock, a crypto investment company, launched an NFT digital artwork auction to raise funds for type 1 and 2 diabetes programmes in Mexico and Armenia.
Similarly, a wave of new charitable organisations, including the Pineapple Fund and BitGive, are making donations to causes directly in cryptocurrency. This could catalyse a new trend towards more health funding from crypto or NFT sources.
Exploring new applications
In addition to traditional philanthropy, revolutionary new models within the “crypto-economy” are emerging that support development goals. For example, in Axie Infinity, a mobile blockchain game, players can earn tokens through battles or adventures that have real-world value. Axie Infinity was a source of income that allowed people in developing nations to put food on the table for their families during the pandemic.
Alongside ‘gamification’ are models like that of Steemit, which enables users to earn crypto tokens for publishing or editing social media content. These concepts could open the door to gamification or rewarding of NCD prevention behaviours or disease management. Blockchain holds promising applications outside of just cryptocurrency, including data security and accountability in contracts. Data security applications are exemplified by Prescrypto, a Mexican company with a secure blockchain network enabling the sharing of sensitive health information between healthcare providers.
As for accountability, some cryptocurrencies can be used for ‘smart contracts’, in which payments are only released if certain contract terms, like the delivery of goods or services, are met. Applications in the health space are growing and we are hopeful that more technologies that support people living with NCDs and equitable access are created and scaled in the years to come.
Funding of the future
This could be a ‘Kodak moment’ when it comes to blockchain—much as film companies were when digital photography emerged. While uncertainties remain, organisations across the public and private sectors have the opportunity to embrace these new technologies to better fund and serve NCD prevention and people living with NCDs. We hope the transparency, decentralisation and data-driven characteristics of blockchain will unblock new funding to address the outsized burden of NCDs and save lives.
The opinions expressed are those of the author and do not necessarily reflect the position of Re:solve Global Health.