The application of blockchain in the field of charity: "Digital charity"
Charity often has difficulty succeeding due to lack of exposure and transparency, unclear accountability issues, and limited channels for accepting donations. Digital philanthropy (using blockchain technology to facilitate charitable donations) provides a new solution. In the case of decentralized transactions, charities can receive donations and raise funds more efficiently.
The basics of blockchain
The high transparency and high security of the blockchain system bring many benefits to all walks of life. Although the blockchain existed before the birth of Bitcoin, its basic characteristics have only recently begun to be widely used.
Almost all digital economic networks are built on the basis of blockchain technology. It was first proposed by Satoshi Nakamoto when he was studying the digital ledger of Bitcoin, but its successful application in other fields has proved that blockchain is not only applicable to digital currency, but also widely applicable to many other industries related to communication and data sharing.
The Bitcoin blockchain network operates like a distributed ledger technology (DLT), which is maintained by a huge network of nodes and protected by cryptography. Such a system allows borderless peer-to-peer transactions to take place in a "trustless" environment. "Trustless" means that users do not need to establish contact and trust in advance, because all nodes are required to operate according to a predefined rule system.
The Bitcoin ledger does not rely on a single data center or server for these transactions. Instead, blockchain technology replicates it through a large number of nodes and spreads it around the world. This means that every confirmation of a transaction or change in data requires all participants to update the data (they must reach a consensus before the data change can be confirmed).
These advantages of blockchain are also used in many charitable organizations.
Donate digital currency
The globalization of digital currency still has some way to go, and the popularization of digital charity will take even longer. At present, a small number of charities have begun to accept digital currency as a donation method, and the number is still increasing.
Donors who intend to use digital currency will probably have to limit themselves to organizations that support digital currency or donate large amounts of digital currency to their favorite organizations to encourage them to accept digital donations.
Before a charity can receive digital currency donations, it needs to have a transparent and efficient process system to manage and distribute these donations. Understanding the basic principles of digital currency and blockchain - and knowing how digital currency donations can be converted into legal currency - is very important for formulating specific implementation plans.
The potential value of digital philanthropy
Digital philanthropy has some significant advantages for charities and donors:
Complete transparency: Every digital currency transaction is traceable through blockchain data. Such high transparency and openness can encourage donors to donate and greatly improve the credibility of charities.
Globalization and decentralization: Most blockchain networks are highly decentralized. They cannot rely on a centralized government or institution to operate. Therefore, donations can be transferred directly from donors to charities. The decentralized nature of blockchain makes global transactions simple and reliable.
Digital agreements: Blockchain makes it easier to share and store electronic data. It can also be used to ensure that important documents and contracts cannot be tampered with at will.
Reduced expenses: Blockchain technology has great potential to simplify the way charities are managed, automating operational processes and reducing intermediary fees.
Reduce taxes: Take an American donor as an example. If he donates a sum of money with Bitcoin, the charity can get the full amount of money (because no tax is required). In addition, the donor can also apply for high tax deductions from government agencies.
limitation
Despite the potential benefits, we also have some concerns about digital philanthropy:
Value Fluctuation: Except for stablecoins, most digital currencies usually experience large value fluctuations in rapidly changing markets.
Security: If the private key of the donation is lost, then the donation is lost. Similarly, if the private key is not kept properly, then someone can steal the donation by obtaining the private key.
Public awareness: Most people find blockchain technology obscure and difficult to understand. Many people who intend to donate lack sufficient basic knowledge of digital currency. They do not trust this system and will not use blockchain technology to make donations.
Real-life examples
In recent years, many charities have gradually begun to accept digital charity. In 2017, the global charity organization Fidelity Charitable has received digital currency donations worth $69 million. In the same year, an unnamed donor donated a total of $55 million worth of Bitcoin to multiple charities around the world through the Pineapple Fund.
in conclusion
Digital charity is still a new attempt in the way of donation, receipt and distribution, but with the rapid growth and widespread dissemination of blockchain technology, charities and donors are gradually embracing this new technology to help people in need. If the public continues to use digital currency to donate, then it would be wise for charities to consolidate their operating systems in this regard.
