The Blockchain Is Helping Plastic Bank Clean Up the Oceans in Haiti

The blockchain is helping clean up the oceans. That’s thanks to the efforts of Plastic Bank, a non-profit that pays people in developing countries for handing over recyclable plastic using a cryptocurrency-like token system. The team has already been operating in Haiti for the past three years, and now tells Inverse they’re planning on expanding the concept to other countries.

“When we began the programming in Haiti, we knew that we needed to create financial inclusion, we knew that we needed to create a sense of security,” David Katz, CEO and co-founder of Plastic Bank, tells Inverse. “If you were to visit Haiti, you would more fully understand why it’s so critically important.”

The idea sounds like a gimmick at first, but using the blockchain has tangible benefits relative to more conventional compensation like cash. While the hype may have cooled off around Bitcoin since dropping from a high of roughly $20,000 per coin to just above $6,500 at the time of writing, developers are still finding new applications for the technology. Katz explained the blockchain is transparent, offers high security, and reduces many of the risks associated with handling cash. It also helps smooth out price fluctuations, creating a more sustainable economy.

“Many of the areas where they tried to introduce new recycling programs…it is largely children and women who are collecting the plastic, ocean and otherwise, and they would go to a reclamation center, and be mugged for the proceeds,” Marie Wieck, general manager of IBM Blockchain, tells Inverse. “There was a fair amount of crime associated with the redemption of money that wound up taking it away from the people who did the work.”

Rather than simply giving users an off-the-shelf cryptocurrency in exchange for their work, Plastic Bank worked with IBM to develop a custom-made solution. The team is using the Hyperledger Fabric enterprise standard, created by IBM and Digital Asset and hosted by the Linux Foundation, running on LinuxOne servers. Katz also claims the Plastic Bank app that helps collectors manage their tokens is the only French Creole app on the market right now.

The project allows collectors to choose between two tokens. One is a freely tradable token tied to the U.S. dollar, similar to Tether, that collectors can exchange with other people like a regular cryptocurrency, or exchange for fiat currency at the non-profit’s stores. The other is a token that can be exchanged for goods directly from Plastic Bank for essentials like school supplies, or a smartphone to manage the tokens and access the internet. The latter token enables the firm to strike deals with businesses looking to buy certain types of plastic or agree on a bulk price, which means it could hold more value than the freely tradable token.

“That gives us the best of both worlds,” Shaun Frankson, co-founder and chief digital strategist of Plastic Bank, tells Inverse. “When we have certain programs intended for things like school supplies, and important necessities such as medication, that can be enforced.”

The system also allows Plastic Bank to manage fluctuations in the market value for plastic, an innovation that could have widespread consequences. Brent crude oil prices dropped from $112 per barrel in June 2014 to $62 per barrel in December of that year. Plastics for Change recorded a 60 percent drop in the price that pickers received for their collections in the following year. Frankson claims this led to a 90 percent reduction in the world’s informal recycling schemes, with with few returning. Frankson declares this “the world’s dirty little secret.”

“We came to learn very quickly that someone doesn’t see it as, ‘the price of plastic went down,’ they see it as, ‘someone’s trying to take advantage of me,’” Frankson says. “If I show up tomorrow, and the price drops, it’s not that the price is now cheaper around the world, it’s that this person is now taking advantage of me, this industry is now corrupt, and this is very much what happened with the fluctuating prices.”

This issue also works in the opposite direction. If there’s a sudden spike in the perceived value of the rewards, then you can get an unsustainable economy that suddenly collapses when the reward’s value drops again.

“When we look at some things that have been set up charities in the past, you get temporary economies where there’s a certain point where something is free, and if something’s free in that economy, because it’s been giving out of the charitable handout, there’s really no one distributing in that as their own business, doing it as an entrepreneur,” Frankson says. “And then if that charitable handle disappears, all of a sudden, there becomes a gap in something that that economy needs.”

The project is more modest in scope than bitcoin and others that seek to fully supplant traditional monetary systems. Instead, initiatives like IBM’s aim to look for more practical applications for the technology that can be put into place today. Wieck says she believes the two approaches “will definitely coexist because there is a benefit to the liquidity of trading on a public network for certain instruments of value.” They could even complement each other: one IBM project, focused on cross-border financial payments, uses the Stellar network as a bridge token to leverage that liquidity for a more targeted use case.

While it initially started in Haiti, Plastic Bank’s early success has been encouraging, and the organization plans to expand the concept to Indonesia and the Philippines.

The author of this story has a stake in bitcoin and Ethereum.