Crypto Donations

By Notum DeFi App | Notum DeFi App | 8 Apr 2022

For several years, charitable organizations have not even thought about accepting donations in cryptocurrency. The cryptocurrency was regarded as “Monopoly Money” and did not inspire confidence among non-profit organizations. But everything changed in 2013 thanks to two charities Save The Children and The Water Project, which became pioneers in the world of crypto donations. Next, in 2015, the well-known Fidelity Charity foundation allowed users to make crypto donations. Year after year, other large organizations have jumped on the bandwagon. Among them are The Red Cross, Greenpeace, The Giving Block, and others. In addition, some charitable organizations have launched specialized funds that allow you to make a crypto donation — for example, UNICEF Cryptocurrency Fund.


Crypto And Charity Fit Well Together

The charity benefits significantly from introducing cryptocurrencies and blockchain technology. It is the cryptocurrency that can save the charitable sector from most related problems. Let’s look at the main advantages that cryptocurrency brings to charity:

  • Transparency. Blockchain technology is completely transparent in nature. It increases the efficiency and confidence of donors. Contributors can track donations and verify the reliability and integrity of non-profit organizations. It is also a significant advantage for the foundations because it becomes easier to regulate their activities.
  • Peer-to-peer donations. Crypto donations completely exclude numerous intermediaries in the form of payment services and banks. Here you can note several advantages at once. First, financial regulators cannot block, reject, or freeze a payment. Moreover, since intermediaries are excluded, the payment duration is reduced. Finally, in such an area as a charity, every hour counts, so cryptocurrency is the perfect fit for great things. 
  • Reduction of transaction costs. The traditional financial system imposes fairly high transaction processing fees. Crypto transactions, on the contrary, are favored for their near-zero transaction fees.
  • Global coverage. One of the most influential advantages of cryptocurrencies is their global availability. Blockchain technology allows you to make fast, cost-effective payments, regardless of location.
  • Investment opportunities. Crypto assets are highly profitable investment assets. For example, the price of Bitcoin has been steadily increasing for many years. This opens up ample opportunities for doubling the amount of donations. However, it is worth noting the risks associated with crypto investments. So, in the event of a collapse of the exchange rate, the fund risks losing the collected funds, thereby leaving those in need with nothing and losing their reputation. In addition, it is essential to familiarize yourself with the legal regulation of cryptocurrencies in a particular jurisdiction since some of them oblige you to convert cryptocurrency into fiat immediately.


Crypto Donation Volume Is Constantly Growing 


With the growing popularity of cryptocurrencies, more and more organizations are ready to accept crypto donations. In addition, today, there are many specialized crypto charitable foundations on the market, for example, BitHope, Crypto Charity Fund, Alice, and Pineapple Fund.

Moreover, the well-known crypto exchange Binance has also expanded its ecosystem and launched its own Blockchain Charity Foundation. So, it was possible to collect more than $85 million in cryptocurrency during the fund’s existence. In addition, the foundation took an active part in the fight against forest fires in Australia, launched a fundraiser to fight Covid-19, and now it is possible to donate to residents of Ukraine within the framework of the fund.

Moreover, you can donate to those in need without even spending a Satoshi. So, there are projects ready to rent your equipment for mining cryptocurrencies. All mined coins go to the benefit of charitable foundations. The most notable projects are Charity Mine, Mining for Charity, and Mining for Humanity.

Moreover, the crypto market was flooded with charity coins. For example, Clean Water Coin raises funds to deliver clean water to arid regions. NFT projects are not far behind. According to The Giving Block, more than $12 million has been donated from various NFT projects.


What Hinders the Development of Crypto Charity

Cryptocurrencies are mainstream, and more and more non-profit organizations strive to provide donors with the opportunity to use cryptocurrency for good. However, today the sphere of crypto charity is still not so popular, and the reasons for this are:

  • Volatility. Cryptocurrency is the most volatile financial instrument. So, the $2,000 collected today may turn into $1,000 tomorrow. However, there is a solution to this problem — stablecoins.
  • Crypto regulation. By 2022, more and more jurisdictions are trying to classify cryptocurrencies and establish clear taxation rules. However, it is worth noting that these are not all countries. And the sooner the authorities bring certainty to the legal regulation of cryptocurrencies, the sooner the sphere of crypto charity will blossom.
  • Lack of knowledge. Cryptocurrencies have been around for quite a long time, but many users have no idea how they function, and the terms blockchain, private key, and consensus algorithm puts some in a stupor. Not understanding the technology simply scares off most players.

But as these problems are solved, the number of crypto donations will grow. The volume of crypto donations is growing every year, so The Giving Block notes that the volume of crypto donations has increased throughout 2021. During the year, the project collected more than $69 million in donations in cryptocurrency.


Final Thoughts

People often try to rationally explain their desire to help: they say they want to make the world a better place, support those less fortunate, and restore justice. However, according to psychologists, the true reasons often lie deeper and are based on emotions. First, help affects our reward system. As for crypto users, many of them want to share the wealth that has fallen on them so suddenly. Kind of karma move, so that luck will continue to accompany them. However, the problem with charity is that it is difficult for us to help those we do not see and do not know. Therefore, we are more likely to help an individual whose story we know than an indefinite group of people with the same problems. Why? Because, in this case, it is easier for us to identify ourselves with someone who needs support.

For a particular person with a personal history, we feel a great responsibility and, as a result, great guilt for our inaction. That is why targeted assistance is so widespread: the vast majority of people would instead participate in raising money for a particular child than donate to foundations that deal with palliative care. One more reason is that we simply don’t trust non-commercial organizations. And it is this problem that cryptocurrency can solve. Due to the transparent nature of the blockchain, the level of trust between donors and funds can increase significantly. And advantages such as speed and cheapness of transactions can save more lives in a shorter time.


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