Cryptocurrencies for good: A guide to philanthropy through digital tokens

Industry

Cryptocurrencies could revolutionise how you donate to your favourite charity or cause. As they’re built on distributed ledger technology, they could provide quicker and more targeted aid, give greater transparency and reduce fees to administrators and middlemen.

The most obvious way that cryptocurrencies can support charities is through direct donations, large and small. One of the largest donations to date came from Pineapple Fund, an initiative launched in late 2017 by a pseudonymous donor – “Pine” – who had amassed a fortune in Bitcoin. Noting that, “once you have enough money, money doesn’t matter,” Pine committed 5,104 Bitcoins – worth nearly $56 million at the time – to 60 charities ranging from the American Civil Liberties Union and the Electronic Frontier Foundation to charity: water, the Open Medicine Foundation and the Multidisciplinary Association for Psychedelic Studies.

“Pineapple Fund was an experiment in philanthropy with cryptocurrency wealth,” Pine wrote on the fund’s website.

While “crypto donations remain small compared to traditional donations”, Forbes recently reported, a growing number of nonprofits are now accepting contributions in Bitcoin, Ethereum, Bitcoin Cash and other digital currencies.

Some charities are even launching their own coins to support their work. Such currencies could be quickly issued for specific relief efforts, with various rules hard-coded into their protocols to “incentivise or disincentivise certain behaviours”, writes Jane Thompson, global ambassador with the British Blockchain Association.

“In principle anyone, anywhere, can participate in these new digital economies before, during, or after they have been created; allowing all parties to have a stake in their success through a form of decentralised ownership,” Thompson writes. “This is a phenomenon that will transform how people collaborate and organise globally – we need to watch these developments closely.”

Some relief organisations have already used decentralisation – though not cryptocurrencies – to provide greater transparency and lower transaction fees when distributing aid. As of October 2018, for example, the United Nations’ World Food Programme has deployed an Ethereum-based blockchain and iris-scanning biometric technology to allow more than 100,000 Syrians in refugee camps in Jordan to purchase food at camp stores more securely and at lower cost.

In fact, researchers at Italy’s University of Cagliari recently analysed some 120 such projects using blockchain for social good.

“Some of the projects manage both kinds of currency: for instance, wallet applications (ChangeBank, BitPay, Unocoin, Kora) which help users to trade fiat for cryptocurrencies, and send (any) assets to someone else, anywhere, in a short time,” the researchers write. “Projects of this kind target people living in unbanked regions and allow them to receive remittances from their family without the need of a bank account.”

Another way in which crypto can support philanthropic efforts is through cryptocurrency-based funds such as the Coinbase-backed GiveCrypto.org. Launched in 2018 by Coinbase CEO Brian Armstrong, the fund’s mission, he says, is to “financially empower people by distributing cryptocurrency globally”.

“People who invested early in crypto have amassed an enormous amount of wealth in a relatively short amount of time,” Armstrong writes in a Medium post. “Yet the reputation of the crypto community has been dominated by images of ‘bros in Lambos,’ whose antics get a lot of attention. This doesn’t represent the best of our community. Most people I respect and know in the crypto ecosystem believe we have a responsibility to help this technology reach a much wider audience.”

He adds, “It’s still very early days in crypto and yet we’re already seeing philanthropy in cryptocurrency, from Ripple giving away $29 million to public schools to the Pineapple Fund or projects like EatBCH. Now is the time to make sure we fold philanthropy and giving back into the fabric of this new industry.”

The charity world itself is also beginning to recognise crypto’s potential to improve how it works.

“Around the globe, innovations in this space continue to move forward as regulators play catch-up, and they don’t show any signs of stopping,” Julia Travers writes in Inside Philanthropy. “Blockchain systems can move funds in a direct, secure, and egalitarian manner, and seem to many like a fertile area for philanthropists and nonprofits to keep (cautiously) exploring.”

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