Blockchain technology could eventually be used to carry out many of the functions of a traditional regulator, according to a new paper by the Charities Aid Foundation.
Blockchain technology is creating a new model for charities, which manage large amounts of money, require complex accounting and conduct a lot of research, have much to gain from blockchain technology as digital transactions and smart technology increase.
Last year, charities in the US brought in over $2 trillion in revenue. $373 billion of that came from charitable contributions. And while charitable donations are increasing in popularity. The industry still has problems that have persisted for years, and that prevent many from contributing as much as they otherwise would. In some cases, it prevents people from donating at all.
The Charities Aid Foundation recently released a 20-pagereport, “Giving Unchained – Philanthropy and the Blockchain,” which examines how blockchain technology will affect the way charities raise money and operate.
Is this the future of Charities?
The report claims that blockchain technology could change the way people contribute to charities and the way funds address social problems.
- Can digital colored coins that represent assets create a way to make donations of intangible assets like intellectual property?
- Can self-governing contracts provide new opportunities for businesses to embed philanthropy as well as new ways for charities to raise funds and address social problems?
- Can the blockchain offer a “radical transparency” to overcome the lack of public trust?
- Will the “Internet Of Things” supported by blockchain technology deliver an environment in which smart machines become a “hyper-rational” donor class?
The Benefits of Blockchain Technology
- Transparency: The ledger is public and can be seen by any user. Any system based on it is fully transparent.
- Reduced transaction costs: The ledger is maintained and owned by users, so there is no need for a third party, thereby reducing associated costs.
- Building trust: Since blockchain technology eliminates the need for third parties and makes transactions open, it could deliver significant benefits in improving trust.
- Integrating the physical and the digital: Blockchain technology provides a way to represent any asset, tangible or not, in the digital world. It does this in a way that ownership status can be identified at any point in time while being completely integrated with digital payment mechanisms.
Examples to look at:
The BitGive Foundation, which describes itself as the world’s first Bitcoin nonprofit.
The organization partners with nonprofits like Save The Children and The Water Project, explains founder and executive director, Connie Gallippi, and harnesses Bitcoin’s benefits — namely cheaper, faster and more secure transactions — in order to raise charitable funds.
In March, BitGive unveiled a water well at a girls’ school in Western Kenya funded entirely with $11,000 in Bitcoin donations culled from members of the Bitcoin community.
The well serves 500 Kenyans who wouldn’t otherwise have access to water, says Gallippi, ork City. “It has made a huge impact.”
“While very few charities or donors may at this stage even be aware of the blockchain, it seems almost certain that the technology is, in one form or another, going to play an increasingly important role in the years to come. Those who want to prosper in this new environment would thus do well to think through the implications now.”
What Are The Benefits?
Radically reduced transaction costs.
- Blockchain technology is decentralised.This means that it is not owned or operated by any one person or organization, but rather shared between users. Transactions on the blockchain do not require middleman (PayPal, Charity reps) as the ecosystem can be used to create things like “smart contracts” which are computer protocols (think lines of code) that record and active based on triggers.
- Blockchain technology is by its nature entirely transparent (Well, not 100% exactly). Any user of the system can see exactly who owns what at any given time, and who has given what to whom. So, when it comes to money; since cryptocurrency is non-fungible (i.e. each piece is unique so one piece cannot simple be exchanged for another), an individual donor would literally be able to track their donation right through a charity and out the other side.
- Trust should be the most important element in charities, but these days that seems not be the case. Blockchain technology offers real opportunities to show trust. The removal of the need for third parties (Payment systems, organizations, and governments) means that the new 2.0 charities (You to the needed) and non-profits would no longer have to rely on other institutions such as banks, lawyers and government bodies in the same way
- Almost zero transaction cost
What is Your Next Step?
Buy some cryptocurrency and get used to using it.Read the CAF report on blockchain based currencies. And finally become the change, instead of waiting for change to happen.