The emergence of cryptocurrencies, commonly referred to as crypto, has opened up new possibilities in various areas of society. It has become more than just an investment tool, as it is now also being used for charitable giving due to its advantages such as transparency and efficient internal transfers. However, as with everything else, there is always a flip side or a bad side to consider. Risks like volatility and fraud are not uncommon in the world of crypto.
With the increasing number of cryptocurrencies and advancements in blockchain technology, many individuals and organizations are exploring the use of crypto in philanthropy. In recent years, crypto-philanthropy has been gaining traction. In 2017, an anonymous Bitcoin millionaire, Pine, established the Pineapple Fund, a philanthropic purse that donated $55 million worth of BTC to 60 non-profit organizations.
Pine stated that their reason for giving was to support what they aspired our world to be. The donor gave to organizations focused on innovative approaches to technology challenges, poverty alleviation, conservation efforts, and medical research. As more organizations worldwide accept donations in BTC, Ethereum (ETH), and other crypto, crypto-philanthropy has become a great way to connect with the young and tech-savvy.
Fidelity Charitable received $331 million worth of donor crypto contributions in 2021, liquidating the assets for philanthropy. This amount was significantly higher than the $28 million received in 2020, and numerous other organizations also saw a rise in crypto-philanthropy.
However, when deciding to donate digital coins, it is important to weigh the positive and negative impacts. One of the major advantages of using crypto is transparency. With blockchain technology, all transactions are recorded and publicly available, allowing donors to view where their funds are going and how they are being utilized in real-time. This transparency can be useful in building trust between donors and charitable organizations, increasing accountability.
Another advantage is the speed of transactions. Regardless of the donor's or the charity's location, transactions can be completed within minutes. This speed can be especially important in emergency situations where funds need to be quickly distributed to those in need. It also allows for fast and low-cost international transfers, which is particularly critical for charities that operate in developing countries where traditional banking systems can be slow and expensive. By using crypto, charities can efficiently dispatch funds to where they are needed most.
On the flip side, there are risks associated with crypto-philanthropy. One concern is that crypto is highly volatile, meaning its value can fluctuate rapidly, resulting in a negative impact on the organization's finances. Additionally, scammers have set up fake charities to solicit crypto donations due to the largely unregulated nature of crypto. Therefore, it is essential to research charities before donating.
Cybercriminals and scammers are taking advantage of the urgent need for aid, launching fake online donation platforms and charities to cheat donors out of their money. To prevent this, donors should validate the legitimacy of charities they wish to support and stay cautious of non-traditional payment methods.
Following the earthquake in Turkey and Syria, Chainalysis reported that around $5.9 million in crypto donations have been made so far to support earthquake relief efforts. However, it also identified 18 suspected scam donation addresses tied to the earthquake disaster. Experts warn that charity scams leverage social engineering to exploit the generosity and goodwill of populations as they seek to express their solidarity with those in most need of resources.
In conclusion, crypto-philanthropy has its advantages and disadvantages. Donors should be aware of the potential risks associated with it and take measures to mitigate them. Despite the challenges, the use of crypto in philanthropy can be a powerful tool to increase transparency, accountability, and efficiency in the charitable giving process.
#crypto #difi #philanthropy #cryptocurrency #blockchain #bitcoin #ethereum #charity
Comments
Post a Comment