Using Blockchain Technology for Transparent Social Funding: Alice

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RAPHAEL MAZET: Alice was started in 2015.It comes off the back of another startupthat I created with one of the co-founders at Alice,was focused on advocacy-- so helping advocacy groups,political groups, activist groupsto mobilize supporters to do more than just sign a petition

RAPHAEL MAZET [continued]: or like a Facebook page.But one of the main issues with that previous companywas that it also asked people to donate,and the difference between people taking action and peopledonating was pretty vast.And so we started looking into why people weren't givingas much as we were expecting.

RAPHAEL MAZET [continued]: And it was pretty clear that it'sbecause there was a lack of trust or a lack of transparencyinto how their money was actually making an impactand improving people's lives.So we thought that was a really interesting problemto tackle as well, started lookingat how we could leverage blockchain technologyto do that.We started looking at how we could generalize the platform

RAPHAEL MAZET [continued]: to focus on impact data, because that'swhat it's all about really.One of the great properties of blockchain technologyis that it is very transparent.So everything that happens on a public blockchainis auditable and visible.So when you give--take the example of Alice's donation platform--when you give to a charity, you can

RAPHAEL MAZET [continued]: see how much was given, when the outcomes were achieved,which outcomes were achieved.So you can, sort of, start drilling downinto the different projects.It's really great for sharing data,so other organizations and funderscan learn from what went well and what

RAPHAEL MAZET [continued]: didn't go so well in any given social or environmentalproject.

ARETI KAMPYLI: So Ralph and I were the first co-foundersof Alice, and we realized after working togetherat the first startup that we neededto solve the problem of transparency and socialfunding.Ethereum-- the Ethereum blockchain,which is the second biggest public after Bitcoin--

ARETI KAMPYLI [continued]: had just launched their token cell in July 2015.We found out that the Ethereum blockchain, in particular,had this thing called smart contracts.So what smart contracts do is basicallyyou can set a specific event that willtrigger another event, right.

ARETI KAMPYLI [continued]: So once event A happens, trigger event B,which [INAUDIBLE] technology itselfdoes that and no human intervention needs to happen.

RAPHAEL MAZET: Alice works with Ethereum in the sensethat it's built on top of Ethereum.So the smart contracts that we use or, for example, the escrowcontract that holds money until a claimis validated and evaluated.The way that impact investors funnel money through the system

RAPHAEL MAZET [continued]: so that they can register their loanand receive payment automaticallyfrom escrow donations things like that, that'sall managed by small contracts.They're literally built on top of the Ethereum.Smart contracts are really just little computer programsthat are built on top of that spreadsheetor that ledger that will set conditionsas to how the money can be moved around.

RAPHAEL MAZET [continued]: Everybody has an account in the spreadsheet,and you can send money or whatevertoken is in that spreadsheet like, for example, bitcointo other people that also have an account.But the major difference is that it doesn't need a bank for youto do that.You can just send it.It's the protocol itself.It's the technology itself that secures the transaction.

RAPHAEL MAZET [continued]: So if you have one bitcoin and I wantto send you half a bitcoin, then I can do that.And then the technology will automaticallyupdate both of our accounts, so I can't send the same bitcointo somebody else, essentially.One of the first pieces of the protocolis a conditional donations platform--a performance-based donation platform.

RAPHAEL MAZET [continued]: So what that means is that when yougive to a social project on Alice,your money only gets paid out when the charity can provethat it's achieved its goals.So what we build into the system is a validation mechanismwhere an independent validator or evaluator verifiesthose claims.

RAPHAEL MAZET [continued]: And it can vary from project to project.

ARETI KAMPYLI: The St. Mungo's Homelessness charity in the UKand the appeal that we launched with themwas to get 15 homeless people off the streetinto a permanent home.To achieve that, we put together five main goals.One was to find them temporal accommodation in between.

ARETI KAMPYLI [continued]: Another one was to help them with drug and alcohol abuseissues.Every single one of those goals had a sum attached to it,and this is how we used, in particular, the Ethereumblockchain.Because every time a goal was achieved and validated--in this case, of St. Mungo's, we had the mayorof London, the housing team at the town hall

ARETI KAMPYLI [continued]: being the validator of its goal.So every time a goal was achieved and validated,we in the meantime were holding donationsinto an escrow account, a piggy bank basically.And once a goal was achieved, the donationswere getting drawn down from our escrow accountinto the charity's account.And that's how we made sure that the charity had indeed

ARETI KAMPYLI [continued]: achieved the goals.This is a validation token.It's basically a hash on the blockchainon the basis of which you can track the on the blockchainthat this has really happened.And you can be completely secure that the validationdid happen like that or the goalshave really been achieved.

RAPHAEL MAZET: So the way that the system works in orderto track a donation through the systemis that you essentially need to make the real world connectto the blockchain world.So what we do with Alice, for example,is we take the donations that are made in pounds,put them in a segregated account,and then tokenize that so that it's represented

RAPHAEL MAZET [continued]: in our smart contracts.And then when it comes out the other end, when a charity hasmade a claim that it's being validated by whoever'sevaluating that project, and they've receivedthe tokens representing the donations in their wallet,they can then convert those back into normal moneythat they get into their bank account.

RAPHAEL MAZET [continued]: I mean, obviously, the longer term objectiveis for the whole world I guess to run on cryptocurrencies.So you wouldn't be giving in pound sterlinganymore but maybe in crypto sterling or even bitcoinor ether or whatever it is that you're using.And that will make it much easierto process on a blockchain system.

RAPHAEL MAZET [continued]: But as the technology matures and as adoption, sort of,increases, everybody's having to tryto find interim solutions to makethis work with what we used to.There are scalability issues.There are security issues that have to be managed.

RAPHAEL MAZET [continued]: When you're building a blockchain system,you have to take those into account.The cost sometimes of making these small contractswork, because they burn a little bit of native tokens.So in our case, Ether has to be used every time that somethingis triggered on a smart contract, which can quickly,sort of, rack up the cost.So these are all technical challenges

RAPHAEL MAZET [continued]: that have to be addressed.It's is more of an engineering problem than anything else.It's about analyzing what can be takenoff chains, what computations that can be taken off chain.Because the more computations there are in a smart contract,the more expensive it becomes.People don't necessarily have the patienceto wait for three or four five minutes before the transaction

RAPHAEL MAZET [continued]: is processed, because they're used to just lightning fast UXfrom all the other websites that they use.So it's just-- these are just engineering questions thatneed to be to be solved.So in order to make that work, you obviouslyhave to put the systems in place,secure systems where the validator can

RAPHAEL MAZET [continued]: verify those things.You need to put into place dispute resolution mechanisms,governance protocols in case thereis a dispute between the validator and the charity.You have to also integrate the voice of beneficiariesor clients, however, you want to call them.

RAPHAEL MAZET [continued]: So you have to be able to give them a voice,so that they can also weigh in if they feel that somethinghasn't been achieved that the charity and validator both sayit has.And this is very much coming back to that decentralizationaspect of what we're building.When you're working on the blockchain,you really are working in, kind of,

RAPHAEL MAZET [continued]: a different environment conceptually to whatwe're used to.

ARETI KAMPYLI: There is also the case where the charity may notachieve some of those goals.And if there's any remaining part of a donation,then we send an email to the donorand ask them whether they would be willing to donate,the whole sum, the rest of the sum basically to the charityor get their money back.So this how we show transparency at the donor level.

ARETI KAMPYLI [continued]: We make sure that we showcase exactlywhat the charity achieved.And if they haven't, return the donation.

RAPHAEL MAZET: The security factors involved with workingwith Ethereum-- but I would say a public blockchainsin general--is that because it's quite a new technology stillthere are still a lot of different waysthat smart contracts can be attacked or hacked,

RAPHAEL MAZET [continued]: for example.So there have been quite a few high profilecases in the past of smart contractsthat have just been blown up and money has been stolen,and it's still a relatively frequent occurrence.Because you can think of blockchains in some waysas just, like, kind of, a big honeypot with lots of money

RAPHAEL MAZET [continued]: in it just waiting for someone to try to come and take it.And because it's a completely decentralized sensor resistantnetwork, there isn't, sort of, policethat can take the money back.All of these things are very particularto public blockchains.

RAPHAEL MAZET [continued]: The way that you mitigate all of thatobviously is that you have to build things properly.So it's really important when your codingyour smart contracts to have them peer-reviewed to tryto use best practice.So there are lots of different organizations and coalitionsthat are popping up to work on those standards,like the OpenZeppelin coalition, for example.

RAPHAEL MAZET [continued]: But in general, it's really important to,sort of, stick to best practice.

ARETI KAMPYLI: The next product that weare going to be releasing is, as we call it,the Impact Management Platform.

RAPHAEL MAZET: And the aim of that platformis to provide the working capital, the seed capitalthat charities need.Because by definition with the donationsthey only get paid after the fact.So they need money up front to run a project,and then we have various other pieces of the protocol thataim to integrate--validate a market.

RAPHAEL MAZET [continued]: So all these organizations and peoplethat are verifying the claims of the charities,decentralize governance protocols,impact management protocols.It's a fairly broad network that triesto be as inclusive as possible to integrate all the actorsin the social impact space.

ARETI KAMPYLI: That entails and it addresses actuallytwo audiences.One is the charges themselves.So for example, they St. Mungo's programcame after a long list of feasibility studiesthat defined the goals that we had.However, small charities are not able to do that.So what we're offering them is a list of different programs

ARETI KAMPYLI [continued]: in their sector, right.That's what they would like to see.What has failed, what has succeeded,so they can do their own due diligenceand design their own programs very, very well.The other ideas that we're addressingare the impact investors who are basicallypeople that invest in those different programs,

ARETI KAMPYLI [continued]: they expect a return on their investment rather than donate.And those, kind of, people reallywant to see exactly how well the program run.

RAPHAEL MAZET: We've been workingwith Imperial College in London, in particular,with the Cryptocurrency Research Center and Engineering Center.We've had some great students coming in and helpingus build tools.Everything is open sourced as well,so everybody can get involved and build on what

RAPHAEL MAZET [continued]: everybody else is building.So I'd encourage everybody to at least considerworking with blockchain technologyand see what they can come up with.And the great thing about workingwith blockchain technology and the waythat everybody is working with that blockchain technologyis that on the one hand everything is working on,

RAPHAEL MAZET [continued]: kind of, similar systems.So there are a lot of synergy between allof these different systems.So if someone builds a really great ID solution,we could actually implement it and put it into-- plugit into Alice.But also everything is open source,so everybody is like constantly recycling, reinforcing,strengthening what everybody else is working on, testing it.

RAPHAEL MAZET [continued]: And that's the really interesting and exciting thingabout the space that we're in.[MUSIC PLAYING]