Blockchain technology has been the talk of the town for a while now. The new kid on the block of computing technology has disrupted every aspect of life; charity and philanthropy have also joined the list.
Society has built systems that are sustained by the creation and management of trust between parties. If we can use technology to expedite the process, make it easier and more efficient, it has the power to change the world. Blockchain makes it possible to sidestep costly foreign exchange fees and complex banking infrastructure to send and receive aid around the globe. Imagine being able to access public records to confirm what was donated and how it was sent: such is the potential of blockchain technology in the world of philanthropy.
Encountered Success Barriers
The past few years have seen a rise of different options as far as giving is concerned. The introduction of online or digital giving for charity increased giving from 6.4% of all giving in 2013 to 8.5% in 2018. The rise in philanthropy coincided with the rise in popularity of blockchain technology and cryptocurrency; this is not a coincidence. There are good reasons why donors are choosing this emerging technology.
In the past, scandals rocked the public’s perception of charitable organizations. Headline-grabbing scandals led to the decline in faith towards the organizations. Aid organizations encountered success barriers as a result of fading transparency and accountability. The entry of crypto-philanthropy or the use of blockchain technology to facilitate charitable contributions is now a better alternative. Blockchain features decentralized and direct transactions that may can these organizations receive donations and raise funds more efficiently.
Used and Abused
Charities today face declining donations from the young. Skepticism remains about high administrative costs and where the donations end up. They struggle with underfunded, inefficient administration that can’t direct aid adequately and frequently see the most vulnerable and needy miss-out. Charity has been used and abused that the public is no longer willing to take charities’ word as bond.
Blockchain technology can give charities a new lifeline. The Distributed Ledger Technology (DLT) can help minimize administrative costs and provide accountability by giving traceable milestones. Also, blockchain allows donors to see exactly where their funds are going. Blockchain has the potential to restore the lost credibility to charities that want to prove worthy of public trust.
Potential to Transform the Aid Sector
Blockchain technology creates trust between donors, recipients and all other stakeholders. The donor funds reach the right people, and administrative costs are used with efficacy. The technology will also enable charities to deliver results in an entirely new way. Blockchain technology can transform the aid sector. However, it requires figuring out the technical, ethical and social implications of this emerging technology. Among the tangible benefits of crypto-philanthropy include total transparency, global and decentralized, digital agreements, and reduced expenses and reduced taxes.