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Blockchain and Giving: The Ideal Technology to Power Social Causesby@bensoncrypto
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Blockchain and Giving: The Ideal Technology to Power Social Causes

by Isaac BensonOctober 13th, 2022
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A recent study revealed that throughout 2021 alone, a total of $484.85 billion was donated to US charities by individual philanthropists, foundations, and corporations. By utilizing blockchain-enabled technologies, nonprofits can access newer, more advanced financial models that can help usher in positive changes on a global scale. This is because they enable the creation of shared systems capable of recording data in a decentralized and transparent manner. Each validated transaction is permanently recorded on the blockchain such that it cannot be deleted, even by the purveyors of the system.

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Statistical data clearly shows that humanitarian efforts are increasing across the board. To this point, a recent study revealed that throughout 2021 alone, a total of $484.85 billion was donated to US charities by individual philanthropists, foundations, and corporations. Not only that, these efforts have been on a steady ascent since 2017, suggesting that the trend will most likely carry into the foreseeable future. 

That being said, most charities, nonprofits, and non-governmental organizations (NGOs) today — especially those operating across smaller, underdeveloped nations — currently lack the physical and digital infrastructure to access these funding streams seamlessly. Furthermore, issues related to poor fiduciary accountability and financial visibility demanded by most corporate charities today also tend to overwhelm these organizations.

Enter blockchain technology

Firstly, it's worth emphasizing that by utilizing blockchain-enabled technologies, nonprofits can access newer, more advanced financial models that can help usher in positive changes on a global scale. This is because they enable the creation of shared systems capable of recording data in a decentralized and transparent manner, as well as meeting all of the requirements put forth by today's most popular donors (for reasons related to tax accounting, financial transparency, etc.).

Blockchain-centric philanthropic platforms eliminate the need for multiple ledgers while offering immutability and tamper proof-ness. Furthermore, all members of such a network (i.e., nodes) must reach a common consensus to validate each transaction. Lastly, it bears mentioning that each validated transaction is permanently recorded on the blockchain such that it cannot be deleted, even by the purveyors of the system.

The winds of change are already here

Currently, most of the internal administrative processes employed by traditional charities are quite archaic/outdated and, therefore, in dire need of an overhaul. In this regard, Lopez believes that the onus is on the organizations themselves to bolster the trust of their benefactors. It is also on them to ensure that their donations are accounted for in a manner that is efficient, plus very well structured and transparent. 

Lopez believes blockchain technology can aid these efforts by promoting better trust between donors and charities. As a result, this could help catalyze philanthropic efforts as people are more aware of how the money is dispersed and spent.

Lopez stated: "Blockchain doesn't benefit charities only; it's also a huge advantage for those in need on the ground. Peer-to-peer transactions can help enable a more direct approach to donations. This can quite literally change the way giving happens."

Lastly, while many charities are still hesitant about adopting blockchain tech within their existing governance frameworks, the ones that do not get with the times stand to be left behind. "As an organization wanting to change people's lives or the world we live in for the better, how are they able to if they, themselves, are resistant to change?" Lopez pointed out.

In Closing

The popularity of online fundraising campaigns will only grow in the coming years. In addition to addressing concerns like hidden fees and lengthy transfer waiting periods, these new methods also make it possible for users to receive payments in a safe and transparent manner.

Moreover, the crypto market is primed to grow to a total valuation of $32T within the coming decade. There is reason to believe that more and more people will continue to use digital assets for their charitable efforts, which in turn can spur the adoption of blockchain technology on a global scale. It'll be fascinating to see how this area develops in the future.