Stamp or token? A blockchain for funding a postal revolution

In my previous article, I was introducing the notion of smart investment contracts for development in order to spur much needed funding for critical postal and delivery infrastructure projects all over the world. One of the key advantages of blockchain technologies is to accelerate and smooth complex processes that were usually requiring a trusted third-party, typically reducing weeks or month-long treatments until settlement to just a few days and even a matter of hours. Hence one of the main features of a blockchain is to be “trustless”. This confusing terminology simply means that, with blockchain technologies, the trusted third-party is not required anymore. A fragile centralized trusted third-party mechanism can be replaced by many decentralized copies of the same ledger in hands of all parties involved in the transaction. Most importantly, none of these parties can change past records of this decentralized ledger: they are simply immutable.The postal and delivery infrastructure needs to speed up access to critical funding, that is often either postponed or never made available once handled in the classical development funding paradigm, diversify and widen its sources of funding and mobilize huge amounts of investments that can enable its sustainable digital transformation. In order to achieve these objectives, and given the multiple stakeholders involved in today’s postal and delivery infrastructure development plans, only a massive adoption of blockchain can lead to unlock massive amounts of capital.So how would postal development be funded through a blockchain? Postal and delivery infrastructure investors, be they big players such as Alibaba or small e-tailers, would receive tokens for their investment. These tokens would have a hybrid function not only allowing access to capital but also to postal and delivery services in a future. Indeed, these postal and delivery tokens could be converted in a quantity of delivery services transactions, at a conversion rate pegged to the evolutions of quality of service on the delivery market. Typically, this conversion rate mechanism would lead to more units of local currency per token, the higher the quality of service, or individualization of delivery convenience, provided to the recipients of e-commerce items.

Instead of traditional stamps or postage, customers could pay in convertible tokens the value of which would be directly linked to the quality of postal service.

In such a framework, tremendous incentives for Quality of Service and Delivery Convenience Improvements would be created for postal and delivery companies. At the same time, given that quality of service and delivery convenience will reach an upper limit one day, the value of postal and delivery coins (or tokens) will tend to stabilize naturally (thus avoiding speculative bubbles that backfire on the very merits of the blockchain technology itself).The smart development contract through a blockchain would also ensure that multi-sided issues, typical in complex postal supply chains, are prioritised and funded. All relevant organizations and institutions called to deal with a specific problem resolution would be jointly funded to achieve a common goal, and as a result, this would consistently increase the odds of successful development project outcomes. It would also perfectly deal with the current weaknesses in many postal investment frameworks, such as the UPU Quality of Service Fund (QSF).Indeed, a first weakness in such an investment scheme was to believe that quality of service was one-sided, or more specifically, that relying on one side of the receiving network, multi-sided issues, so typical in complex postal supply chains, could be resolved. Postal networks were then stuck in a chicken-and-egg problem since the low quality of service in destination countries were not triggering enough traffic so that they could receive higher development funding, itself dependent on higher mail volumes. By leaving destination posts alone in managing multi-sided issues, the risk of not successfully increasing quality of service were multiplied.Funding both the Post and its related partners when trying to solve a quality-of-service issue would have certainly produced better results than funding one side of the solution only. The UPU would have been required to build truly transversal projects that would have systematically connected its quality of service goals to other relevant issues, or enablers of success. This would have certainly increased the odds of successful postal and delivery infrastructure development. However, could the different parties have trusted each other in such a collaborative investment framework? To be fair with the UPU QSF founders, there was no such technology as blockchain when it was created that would have fostered instantaneous trust between partners. Everything would have been depending on complex check-and-balances and controls between different institutions with a de jure strong yet de facto weak centralized component for projects monitoring.

Now a blockchain-driven investment mechanism can revolutionize the governance of funding postal and delivery infrastructure development projects, and rebuild trust for huge investment in this field.

Are postal and delivery infrastructure stakeholders ready for it? We’ll keep you posted.