Long time philanthropic agencies are beginning to go digital in the hope of curbing some of their most pressing matters from combatting COVID-19 to earning trust with donors. The implementation of blockchain technologies and cryptocurrencies at an infrastructural level has many charities seeing fantastic results along with recipients. Moreover, donors can get in on the benefits as well. Curating a philanthropic cycle that works towards the betterment of everyone.
Since 2017 Bitcoin proponents have touted the coin’s alleged near-ubiquitous use cases alongside the decentralised nature of the coin. However, despite it seeming like the ideal accompaniment to charitable business, there’s been some lag in adoption. In the last few years, tons of people have begun to invest in digital currencies, giving rise to many exchanges – some tailor-made for trade table, like Bitvavo. As adoption throughout the mainstream public has taken a firmer hold, it seems to have taken a pandemic for philanthropic communities to take notice.
What is Bitcoin?
Bitcoin is a type of digital currency. Debuted in 2008, and popularized in 2017, bitcoin is a virtual, cryptographically-protected monetary system that functions solely online. The coin was created by the unknown person, or group of people, Satoshi Nakamoto, supposedly in response to the 2008 subprime mortgage crisis.
The coin uses a decentralized network, meaning there is no central banking authority, to validate transactions. Users of the network use computers (called nodes) to solve complex mathematical equations in order to ensure that transactions are true and not duplicated. Once these transactions are processed, they are then added to a public ledger called a blockchain. Which gets its name from the “chain” of “blocks” of transaction information that make up the ledger. Once a transaction has been added to the blockchain, it is time-stamped and can never be changed or amended.
The public ledger, working in conjunction with the decentralized and open-source structure, allows bitcoin to operate with complete transparency. Reducing transactional costs and removing institutional fees.
Why Charities Are Turning to Bitcoin
Lower fees and the absence of middlemen are just a few of the reasons more charities are beginning to look towards digital currencies as a better solution for fielding donations. Digital currencies are borderless, making it simple to transact money to any recipient in need, no matter where they’re at in the world. As there are no institutional or conversion fees, a higher percentage of donated funds can be received by recipients, instead of being lost along with the system.
Not only that, but charities can now use digital currencies and their distributed ledger systems to gain the continued and renewed trust of donors, which is something many have been keen to do. Because while people are now giving at an increased rate- up an estimated 2% from years past, there is also a deep-seeded distrust of many large charitable foundations and what is being done with their funds.
A distributed ledger would allow any donor to access the financial logs of the given operation- being able to see the virtual receipts of any and all transactions that took place on the books. Not to mention that there are many startups that are no devoted to providing non-profits with these types of software systems, and philanthropic institutions are jumping at the chance to take part.
How Crypto is Helping With COVID-19
Amidst the pandemic, especially in the early days of 2020, many charitable foundations were in a scramble to get resources and funding to the areas that needed them most. With traditional banking practices, this takes precious time that the industries in need didn’t have.
At this point, many philanthropic communities surged to begin accepting payments in bitcoin and other cryptocurrencies, cutting down on the time and fees associated with older systems, making it that much easier to provide the immediate aid that was crucial in this time. By reducing the roles of intermediaries and offering more inclusive avenues to donate, the trend quickly caught on and has been gaining ground since.
While it could be easy to condemn the lag of adoption with the charitable community, many believe that any change is a good change, even if it was a long time coming. Ultimately, the risks of bitcoin are incredibly low, leaving little more than a reward for many large non-profit organizations. Creating a more inclusive space for the future, where money gets where it’s going, and in such a way that is plain to see.