Binance Explains How the Blockchain Charity Foundation Will Work
Binance, the world’s largest cryptocurrency exchange by 24 hour trading volume, has announced details of its Blockchain Charity Foundation.
Binance’s new Blockchain Charity Foundation aims to bring much-needed transparency to the world of charity organizations. In a blog post from earlier today, Binance CEO Changpeng “CZ” Zhao explained how the company’s Blockchain Charity Foundation (BCF) will work.
— Binance (@binance) October 9, 2018
“Lack of transparency has been a problem for charities today. Some estimate up to 80% of donations do not reach the intended beneficiaries. With the ability to track every single transaction, blockchain technology seems tailor-made to solve this problem.”
Binance outlines plans for a three or four layer donation tracking system. The layers of that system would include:
- Blockchain Charity Foundation Charity Programs
- Charity Partners
- Ultimate Beneficiaries
To be clear, Binance isn’t ready to release its Blockchain Charity Foundation to the world at this time. Instead, the company’s latest blog post outlines plans for the charity foundation, including basic details of how it will operate. Changpeng Zhao’s post also mentions that Binance is currently seeking partners and developers for their BCF initiative.
Using blockchain technology, the Blockchain Charity Foundation would be able to track money as it flows from donors to its final destination. Blockchain would make it easier to see which charities are wasting money, which charities are donating the maximum amount to their intended causes, and where your money goes as a donor.
Binance envisions a system where donors can choose different charity programs to donate to. Donors can also choose whether to make contributions public or anonymous:
“Each BCF program will have its unique receiving address(es). BCF may choose to donate directly to the Ultimate Beneficiaries, or work with other Charity Partners who then distributes the funds to the Ultimate Beneficiaries. Either way, the funds will be tracked in a transparent manner.”
Binance has also explained how they plan to get around the “last mile” issue. It’s straightforward to track funds as they go from donors to charities, but it’s harder to track donations on the “last mile”, as they trickle through the charity and ultimately arrive at their intended destination.
Binance believes we can use blockchain to solve that issue:
“In order to track the funds all the way, the Ultimate Beneficiary will need to have crypto wallets themselves. Either BCF or our Charity Partner will need to educate the users on how to use a crypto wallet, and potentially how to convert crypto to fiat.”
Changpeng Zhao admits this might be problematic: some of the places in the world that need charity the most do not have access to the internet, smartphones, or computers. Nevertheless, Binance proposes their Binance Academy as a way to educate users.
Finally, Binance’s blog post outlines how the organization can combat fraud using a certain level of ID verification.
“To combat fraud, a certain level of ID verification will be required. We could use existing KYC solutions used by exchanges (expensive and cumbersome), plus a network of Certified Volunteers who can check on the beneficiaries periodically, possibly randomly assigned by the platform. A certain level of disclosure of ID information (first name) to the public will be needed to ensure transparency.”
Binance also wants to accept multiple coins through its Blockchain Charity Foundation.
“Given that we expected to receive donations from multiple projects/coins teams, each of whom will likely prefer donations in their own coin, and have their coin used by the ultimate beneficiaries, the tracking platform needs to be able to track transactions on multiple blockchains.”
“We Are Against Creating a New Blockchain” or Coin “Just for Charity”
Binance also clarifies that they have no plans to launch a separate coin exclusively for charity work. Instead, they plan to use existing coins to maximize participation across the crypto industry. Instead of limiting people to using just a single charity coin, the Blockchain Charity Foundation will allow people to use all types of coins.
Ultimately, Binance is not ready to release its Blockchain Charity Foundation at this time. However, the exchange is currently seeking participating partners as well as developers who want to help design and develop the tracking platform. Stay tuned for more information about Binance’s Blockchain Charity Foundation platform as it gets closer to release.