Currently, all eyes are fixed on the financial applications of blockchain technology. The idea of transferring money between two parties without the involvement of a bank is revolutionary stuff. The transfer of money for charitable purposes is also full of intermediaries. Beneficial organizations, just like financial institutions, are afflicted by problems arising from centralized governance models.
DLT has attributes that are perfectly suited to the charitable industry. A simple example could be a led book of distributed open source. A donor will transfer some cryptocurrencies, which would automatically be recorded on the blockchain and sent to a local agency instead of a centralized charity conglomerate. There are no accounting costs and no cost for sending money. The process is also much faster.
The first crypt of charity in the world is exploiting this technology. All donations are tracked through a financial page and 100% of the donation goes to those who need it. While the Coins4Clothes team is an innovator in the charity sector, they are by no means the only ones.
Wirex has launched a 'charity initiative to facilitate the adoption and serve a greater good, while the cryptocurrency exchanges are also following the example. Coinbase launched a cryptographic charity fund, while Binance created its blockchain charitable foundation which aims to raise USD 100 million by the end of the year. This figure is quite possible because, last year, the Pineapple Fund saw bitcoin donations for 86 million dollars, and so far has sent over 55 million dollars to 60 different charitable organizations.
DLT can remove the problems afflicting the charitable donations sector, which could eventually lead to more funds and services to reach those who need it most.
The track record of the charity sector is almost shameful to list. Not to denigrate the works of genuine organizations that work hard towards the greater good, but the charitable industry is sadly inefficient and has had its fair share of well-documented public scandals .
The last two years, in particular, have seen a significant decline in the popularity of charitable organizations. The public has lost confidence in them, and charities have a tough battle to fight for fundraising. Blockchain could be the only way to regain this trust .
The main problem of charities is the process of administration and documentation, which consumes funds that should go where they are needed. The second problem is transparency. Organizations do not have clear policies on governance and there is no real way for people to know exactly where their funds are going
DLT to revolutionize the whole sector
Most charitable organizations traditional were reluctant to adopt blockchain technology despite its obvious benefits. It seems that charities, such as banks, are locked in their ways, which could see their replacement by crypto-philanthropy and charitable organizations designed from the beginning to accept only encryption. As in many other industries, unless companies change and adopt blockchain technology, they will probably become extinct.
Aubrey Hansen is a freelance writer, a graduate of the Aarhus University and a passionate cryptic. He writes about blockchain technology, Fintech and cryptocurrencies. He studied the main developments in the encrypted world in the last two years.