Cryptocurrencies and blockchain for charity: an overview
Blockchain technology and cryptocurrencies are often associated with investments, but this is just the beginning of their potential. They can’t only serve to finances but also being an instrument to help others.
Due to the advantages that they can offer and that can’t be found in any other solution, the blockchain and digital currencies have been taken as excellent tools to improve the philanthropic sector, ranging from payment methods to donation transparency.
One of the main benefits that this technology can provide in the charitable sector is the reduction of red tape and costs. Since it can handle a lot of data in real-time for all the parties involved, there’s no need for intermediaries. Therefore, the savings in all the processes are high, and everything is faster.
Traditionally, on the other hand, there’s always a need for some external intermediary. It can be a bank or another financial company, but someone must handle the funds. For this service, the companies invariably charge a certain fee that could have been part of the donation per se, in the absence of such an intermediary.
When receiving donations through a decentralized blockchain or even with cryptocurrencies as a payment method, third parties are eliminated. Likewise, the entire procedure can be fully automatic by using smart contracts configured with specific instructions for donors.
More blockchain for charity
It’s also possible to create a platform where the donor himself chooses the beneficiaries and grants them the donation directly, without the funds having to go through an organization first. Transparency and traceability regarding these donations are also nice advantages that a blockchain can offer. Unlike the traditional route, funds entering a transparent and decentralized blockchain (such as Bitcoin or Ethereum) can be seen and tracked by anyone who can access the Internet.
This way, a proven and fair distribution is ensured for everyone involved. Finally, we can mention a great additional feature. It’s possible to donate not only funds and personal time — in the form of volunteering — but also computational power.
Web and downloadable miners (some simple software) make this possible. The first type allows cryptocurrencies — Monero, generally — to be silently mined just by visiting a webpage. They’re a small and invisible code that works as long as that user keeps the page open. Therefore, computing power is donated to create funds for supporting a certain cause. Meanwhile, the downloadable ones can be handled by the user. They can install them on their devices to fulfill the same function as web miners, but probably faster.
The running efforts
One of the pioneers in the sector is the BitGive organization, founded in 2013 by Connie Gallippi. Its main objective is promoting and allowing donations in Bitcoin (BTC) for any kind of charitable project worldwide. To date, it has its own blockchain platform to track funds: GiveTrack. Another platform of this kind is GiveDirectly.
In the same vein, large companies in the crypto world often promote charitable initiatives or have their own philanthropic divisions. Examples of these cases are the Blockchain Charity Foundation by Binance, and GiveCrypto by Coinbase. Besides, there are companies in charge of designing products with blockchain, specifically to ensure the transparency and traceability of funds.
Among them, we can mention AID: Tech. This one shows to the donors each point traveled by their funds until they reach the beneficiaries. The latter ones receive a unique identification card or voucher with a QR code to claim the donated amount. The Alice platform, built on Ethereum, is an additional example.
Through Alice is possible to trace the funds with blockchain, but donating with fiat currency. As for donations of computational power, Charity Mine and Cudo Donate are good examples. The first page works with a web miner, while the second one is a desktop and mobile application. All the funds mined go, of course, to different charitable causes.
Cryptocurrencies for charity
According to the last Global NGO Technology Report by Nonprofit Tech for Good and Funraise, the NGOs accepting cryptocurrencies only reach between 1% and 5% globally. However, this is a sector growing every day, especially if we consider the benefits. As it was described by The Giving Block:
“When you donate crypto to a nonprofit, you receive a tax deduction for the value of the crypto, and avoid the capital gains tax (…) [Besides] As more nonprofits use your crypto donations to make the world a better place, they also bring crypto to their traditional audiences.”
Accordingly, there are more nonprofits accepting cryptos than you may think. Only The Giving Block lists over 100 in different categories, including Animals, Arts, Children, Disaster Response, Environment, Health, Hunger, Human Rights, Racial Justice, Women, Technology, and more. In addition, they accept over 12 cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), DAI, and Zcash (ZEC).
For its part, the official webpage of Crypto Giving Tuesday lists over 77 NGOs accepting cryptocurrencies. And that’s not all, because there even are some altcoins specially designed to help others.
Among them is AidCoin (AID), an ERC-20 token created to fuel AidChain and AidPay. Clean Water Coin (WATER) is another of these projects. Everyone who mines or buys this cryptocurrency will be collaborating in the distribution of drinking water to the most vulnerable communities since each transaction will donate 0.1% for this purpose. Likewise, as an NGO, Clean Water Coin also accepts donations in Bitcoin and Litecoin.
In general, you don’t have to search for them thoroughly. NGOs and charitable projects accepting cryptocurrencies and/or using blockchain technology are becoming mainstream. And you can always collaborate with them.
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Originally published at https://blog.alfa.cash on April 29, 2021.