For charities, the question of how to demonstrate transparency around donations has long been a problem. A lack of visibility of where the money goes can lead to a lack of trust which in turn leads to a decrease in donations which charities need to help people and to survive. However, some non-profits have found a solution: cryptocurrency. A cryptocurrency is built on blockchain, a distributed ledger technology that certifies records and transactions without the use of a central database.
It cannot be erased or changed. Each block in the chain contains several transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. This means that transparency is an integral feature. This level of transparency just doesn’t exist in the fiat currency system.
For non-profits, this changes everything: it makes tracking donations easier and gives people unprecedented visibility on how their donations are used. Using cryptocurrency brings other benefits too. Sending money using digital currencies involves minimal costs and is much more efficient. Imagine all the money that has been wasted in the past due to expensive exchange fees and the presence of middlemen.
That doesn’t have to happen anymore, for using digital currencies is so much cheaper than the alternatives. Besides, it is almost instant, meaning the money gets to the people that need it at the right time. Some of the well-known non-profits like UNICEF, Save The Children, and the Against Malaria Foundation are already accepting cryptocurrency donations.
Oxfam piloted using cryptocurrency in disaster recovery in Vanuatu. Around 200 residents were given tap-and-pay cards which they could use to unlock the aid payments to buy food from designated local stores that were equipped with a smartphone to receive the payments. This was a welcome change from the previous cash-based payments that were delayed and hampered by the need for ID checks and bank visits. Blockchain technology can help beyond funding too.
The Indian NGO, Akshaya Patra Foundation, runs the world’s largest mid-day meal program of its kind and started to use blockchain technology to track food delivery to make the process much more efficient.
Earlier this year, we partnered with one of India’s leading NGOs, Child Rights and You (CRY), to give warm clothes, books and art supplies to people in rural communities across Chhattisgarh. In a country like India, unlocking the power of cryptocurrency in philanthropy could have a huge impact. Millennials make up over a third of the Indian population; they are also the most likely to own digital currencies.
They also give the most to charity and care the most about transparency and where their money is going. Adopting a donations system based on cryptocurrency could boost the amount of money given to a charity and so help those who are in the most need. There are a number of misconceptions around digital currencies: some people see them as a get-rich-quick investment scheme or a scam. But the truth is that there is nothing about digital currencies that make them more likely to be used illegally than fiat currencies; so cryptocurrency needs to be regulated in similar ways.
If, instead, the Government of India takes the decision to ban cryptocurrency, then it would be the first major democracy in the world to do so. An outright ban closes the door on the potential positive impact that cryptocurrency can bring, not only to individuals and the state but also to philanthropy and charities as well.
Cryptocurrency will have a huge positive impact on the world and build wealth for the people that need it the most. Donation systems based on cryptocurrency mean that donors know where their money is going and who it is helping. This greater transparency will lead to better use of funds and mean that the support reaches the people who need it. This also leads to an increase in public confidence in charities, and so more support. It’s a virtuous circle. Cryptocurrency today is a force for good.