Blockchain Technology To The Rescue For Charity & Donation Relief Industry
Charity Navigator proposes to revolutionize the way help is provided to those in need using blockchain technology. However, we must take into account the opinion of nonprofit organizations, which, along with governments, have always been the main handlers of these cases. All expectation now is whether they will accept the change or not.
In recent years, more and more companies have tried to take advantage of a good social angle. For example, Robo Advisers have added socially responsible investment options; the Lemonade insurance company will donate unpaid money in claims to charities; Uber has a community impact initiative. And now, from the field of cryptocurrency, the CryptoKitties platform is being auctioned off for charity.
Bids are already coming in for @HonuKitty 🐢 🐱! This could be your chance to support an environmental cause and own an Exclusive, one-of-a-kind art piece on the #Blockchain. Bid now at: https://t.co/EOb9r0v6Hw! #HonuKitty #BlockchainForSocialGood pic.twitter.com/DmGjYv9b2V
— CryptoKitties (@CryptoKitties) July 10, 2018
The CryptoKitties game is sometimes known as the digital version of the classic collection of stuffed animals from the 90's, Beanie Babies. Now he's running a charity auction for a computerized kitten.
The CryptoKitties platform took off in 2017 along with growing interest in crypto assets worldwide. The company raised a large amount of funds from investors such as Andreessen Horowitz and Union Square Ventures. And all while users were rushing to pick up the digital collectible kittens.
The blockchain technology of the Ethereum network is used to create these digital kittens. A user is able to pay for a kitten of these sometimes up to more than $100,000. All in order to use them to raise and create more kittens.
The new kitten being auctioned is called Honu. CryptoKitties has put its efforts into this kitten to raise funds for oceans and wildlife charities.
“I am excited by the potential of cryptocurrencies and cryptogoods to change, and hopefully improve, the way we raise funds for charity,”
Fred Wilson, partner at Union Square Ventures and early crypto investor, wrote in a blog post.
Honu is not the first charitable gesture of the blockchain industry. In late June, The CEO of Coinbase Inc. Brian Armstrong launched GiveCrypto.org. It is a platform for raising funds in cryptocurrencies and then distributing them to people in need around the world.
According to market feedback, consumers have been willing to make donations through crypto assets. This may be because as the value of many currencies rose dramatically around the end of 2017, they could use the donations as a tax deduction.
Fidelity's charity arm has been accepting bitcoin on its platform since 2015. Last year it received $69 million in cryptocurrencies donations, compared to only $7 million the year before. At the same time, an anonymous person created a website called the Pineapple Fund and donated more than $55 million in Bitcoin to 60 different charities worldwide.
Blockchain And Charity
But not just all the help you can give are simple donations. Several projects already hope to increase charitable responsibility through blockchain technology. Some of these efforts do not even require a monetary contribution. For example, UNICEF allows it to donate to its Australian branch office by donating part of its computer capacity to operate cryptocurrencies.
“Blockchain will be one of the most important revolutions of international relief efforts, without any question.The efforts will be completely updated because of the blockchain technology,”
said Larry Lieberman, the chief operating officer of Charity Navigator, an independent charity watchdog.
A digital ledger could solve quite a few problems that some nonprofit organizations have. But the industry still has some difficulties to resolve. For example, when it comes to understanding what is essentially a speculative asset, it is difficult for organizations that are responsible for alleviating poverty.
Other drawbacks being studied for blockchain and cryptocurrency adoption in the charity industry would be, for example, that if many of these charities turn around and sell the coins for cash to fund their programs, this adds an extra layer of difficulty for themselves.
Another stretch to climb is volatility: What happens if someone picks up an expensive CryptoKitty at a charity auction, but the dollar value of the Ethereum currency they bought drops by 20 percent at the time the auction closes?
The biggest stumbling block for the charity industry is that charities don't know what to do with the cryptocurrencies they send them. One solution to this is for them to start using cryptocurrencies in the same way they use stock donations. That is, selling them as if they were selling shares through a third party. But, this also means incurring transaction costs, however, sites like Coinbase and BitPay typically discount fees for non-profit organizations.
For charities, all this should feel like an opportunity to have a stake in the new and thriving digital economy. Although populated by high-priced digital creatures, and a turning point in the way charitable dollars are tracked, others would surely prefer to keep the classic cash. But if blockchain and bitcoin continue to become more popular, this will not always be the case.