Namaste Yogis. Welcome to the Blockchain & AI Forum, where your technology questions are answered, mostly correct! Here no question is too mundane. As a bonus, a proverb is also included. Today’s question, comes from Lisa in Naperville, and she wants to know if blockchain technology and charity are a perfect match?
Lisa, you came to the right place. Prior to your question, I hadn’t considered a possible marriage between blockchain technology and charity work. That’s my fault. The answer is … read this article and decide for yourself!
In traditional charity, benefactors expect their donations will be accepted and deployed congruent with their intent by the charity administrator. In other words, based on trusting intermediaries. What if there was a technology that would remove the need for trusted intermediaries? Suppose that technology allowed a peer-to-peer exchange of value, without permission, and need for trust because all transactions are subject to verification on a digital distributed ledger for anyone to confirm, at any time, from anywhere? That would be incredible! Breaking news, the technology exist–its blockchain combined with crypto currency! Holy obvious, Batman! Hold on, the tsunami of reasons for pairing blockchain with charity are only beginning to flood in.
Blockchain technology removes unnecessary intermediaries, making the donation process faster. For example, donations can be sent and received directly on-chain, making transactions quick. What perhaps previously took 8 steps, and several middlemen, can be reduced to maybe 4 using blockchain technology. However, this pairing goes beyond the removal of intermediaries.
With blockchain technology benefactors can verify transactions independently. In other words, matching blockchain and charity flows beyond eliminating middlemen. The point is there is no need to trust because the proof is in the blockchain. Sweet!
A third reason is efficiency. Charities that utilize smart contracts, via blockchains, have a tremendous advantage over their competitors. With smart contracts, charities can automate transactions when predetermined criteria are satisfied. Thus far we have faster, more efficient, and trustless reasons. Let’s talk about international charities.
Speaking from personal experience, sending money overseas is expen$$$ive and s-l-o-w—but not with blockchain technology. With a couple of mouse clicks money is sent instantly and for just pennies. Moreover, with blockchain and smart contracts the potential pool of donors is worldwide, making it reason number five! You are on a roll now Batman, please mention NFTs.
Charities need to raise awareness to succeed and issuing NFTs could be a means to draw attention. NFT stands for non-fungible token, therefore each NFT is unique. A charity could raise funds by selling a series of NFTs or an NFT collection set in a raffle, for example. Holy storytelling, Batman!
Using blockchain technology for charitable purposes is not worry free. For example, crypto currencies fluctuate in value; hence, a benefactor may exceed their intended donation, or under deliver. Either way, it complicates budgeting for the charity. Sending stable coins is a possible solution because they are pegged to specific assets, i.e., U.S. Dollar, Euro, Yen, etc. but that too could be a hurdle.
What hurdle? The challenge of the digital divide. Not every charity organization has the technical skills to handle crypto currencies. Cyber security may be a challenge. For instance, transactions can be hacked or compromised. Send out the Bat signal!
Government regulations are always a consideration. Some nations permit charities to accept crypto donations; others might incarcerate in the BIG house for doing so!
I end with this Panamanian proverb: If you want no disappointments, don’t indulge in illusion
Until next time,
Yogi Nelson
Blockchain & AI Forum 