Crypto – Is it the Gift that could keep Giving?

By  Dr Jane  Thomason

 

“Some who have become rich from early adoption of bitcoin and other cryptocurrencies, have chosen to turn to philanthropy and  a number of prominent figures in crypto have made sizable personal philanthropic donations.”

Ethereum founder Vitalik Buteron has made several philanthropic donations exceeding $ 4 million. Brock Pierce started a conference called Restart Week to encourage entrepreneurs to give back to the Puerto Rico community through innovation and philanthropy, he is also the chairman of the Integro Foundation which helped raise $1 million for PPE masks in April 2020. Rapper Akon announced he was working with the Senegalese government to build a tourist-city with a cryptocurrency-based economy named Akoin.

 

“Others have started crypto-foundations.”

An anonymous bitcoin investor, who bought bitcoin when it was cheap, established a foundation to give away 5,057 bitcoins — $86 million at the time, to the Pineapple Fund.

BitGive was the world’s first Bitcoin non-profit. Since 2013, it has partnered with non-profits, including Save The Children, The Water Project, Fundación Parlas and TECHO. 

Binance Charity Foundation is a spin off of the highly successful crypto exchange, Binance, which aims to support global sustainable development by using blockchain technology for transparency. 

The Stellar Development Foundation announced the launch of the XLM-donation-matching program powered by Stellar-based Lumentrhopy, a fundraiser that helps charitable organizations accept Stellar Lumens. 

BitMEX, a derivatives exchange announced that it is donating $2.5 million to fight coronavirus through the Nuclear Threat Initiative, the Gates Philanthropy Partners, Our World in Data and OpenMinded.

Fidelity Charitable, which houses the US  largest donor-advised fund, reportedly received $69 million in cryptocurrency donations in 2017, up from $7 million received in 2015 and 2016 combined.

 

NEW SOURCE OF FINANCE

“With this new source of finance, a number of charities and foundations have been trialling crypto donations,
Red Cross, United Way, the Wikimedia Foundation, the Electronic Frontier Foundation, UNICEF, Save the Children and the Against Malaria Foundation.”

As a result new organisations have responded to assist them to understand how to use and receive crypto. The Giving Block provides cryptocurrency assistance, enabling them to accept charitable donations by cryptocurrency which are then exchanged for fiat currency. Bitpay, a blockchain payments provider, has processed more than $37 million in cryptocurrency-denominated donations since 2017. BitPay donations are treated as cash contributions, meaning donors will receive donation acknowledgements for tax purposes. 

“Others have developed projects using blockchain
to improve accountability and reporting around charitable and philanthropic giving.”

For example,

Alice is a social funding and impact management platform built on the Ethereum blockchain, which aims to bring transparency to social funding.

Maanch provides digital solutions to mobilise the financial response towards achieving the Sustainable Development Goals (SDGs) by 2030. Maanch report that 289 projects have been submitted looking to raise £45,874,705 for global Covid-19 efforts from 41 countries with the potential to have an impact on over 208,973,835 lives; and 791 projects that have already been funded by their funding partners for a total of £82.5M.

WWF Panda Labs and ConsenSys founded the Impactio platform in 2019 to bridge the funding gap in funding necessary to achieve the United Nations Sustainable Development Goals.

Alibaba affiliate, Ant Financial has opened up its blockchain-powered charity platform, called Ant Love, enabling relevant parties to better track information on donation history, project disclosures and governance rules. Ant Love records the donations made by about 450 million Alipay users and connects them to various charitable groups and non-government organisations.

These are all welcome additions to the philanthropy sector, but utilise fairly standard models
– where the wealthy gave and the poor receive.

The more interesting question about blockchain is whether ‘Crypto-economics’,
a combination of cryptography, computer networks and game theory,
can enable innovative, new incentivised models, which can benefit the poor.

New Models of Social Benefit

 

At the same time, ground breaking developments are those using blockchain to create micro-economies
built by mathematicians, cryptographers, economists, and developers, with the governance and incentive systems
that enable a decentralised ecosystem to self perpetuate and be maintained and built by the community.

Three of these which have potential for sustainable benefit are profiled below, notable in all three is the substantial uptake in emerging markets.

Steemit

Steemit launched in 2016, enables users to earn STEEM tokens for publishing and curating content on a blogging and social media website. people can earn STEEM for: posting content (75% of a post’s earnings go to the author); commenting on a post; earning upvotes for a post or comment and upvoting a post or comment (25% of earnings are shared amongst “curators” who upvote). Steemit also creates incentives to facilitate transition from consumers to active producers, and to transition from being workers to being investors, giving people a stake in the project they are working on. The top Steemit user countries are from India, Indonesia, Venezuela and Nigeria, suggesting that Steemit has provided a valuable income earning opportunity for some of the fastest growing emerging markets.

eToro

eToro, has launched the GoodDollar (G$) which aims to deliver Universal Basic Income (UBI), on the blockchain. GoodDollar, launched publicly in September and enables citizens to claim Basic Income via the G$ coin, a digital currency that any cell phone owner can claim, and convert to local currency. GoodDollar has already onboarded thousands of users from over 40 countries including South Africa, Nigeria, Ghana, Kenya, Senegal, Argentina, and Venezuela. The governance of the protocol is through a decentralized autonomous organization (the GoodDAO), which will be managed by GoodDollar stakeholders. The GoodDollar team wants to place liquidity in the hands of those who need it.

Electroneum

Electroneum is another crypto project designed for social benefit, which already has over 4 million registered users. Electroneum’s objective is to unlock the global digital economy for millions of people in the developing world. The wallet is entirely mobile-based and makes instant transfers, maximimises usability and empowers users by reducing the lag between earning and receiving. As of May 2020, there were 1,510 merchants and service providers on ETN in 174 countries across 25 business categories. Electroneum has partnered with a number of mobile network operators and now has 140 countries around the world where you can receive airtime. Most vendors currently accepting ETN are in Uganda, South Africa, Brazil, and Argentina.There are also about 300 e-commerce websites accepting ETN for purchases. Users can also use the ETN they hold or earn on AnyTask, a global freelance platform powered by Electruneum.

 

Community Token Economies

In Community Token Economies. Jamie Burke predicted that digital communities
will connect and form networks or cooperatives through token economies.
Users can have direct access to token capital, investment and a real interest in the system.
They can be rewarded or paid with tokens.

The more the user uses or promotes the product, the stronger the product and underlying blockchain become. The user is no longer a passive consumer of a service; they are a stakeholder. In a Community Token Economy, individuals rather than companies or sectors become the agents of innovation in a distributed model of collaboration.The ability to record transactions on an incorruptible public ledger and the ability to encode a particular set of rules linking these interactions to a specific transactions (e.g. the allocation of micro-payments) enables the design of new sophisticated incentive systems.

While it is early days, it is possible to start to see how blockchain is creating sustainable ways to distribute wealth to the poor. We are only at the beginning. There are some risks including volatility, security and public awareness and understanding. As Breakermag points out, the most interesting thing is what the technology itself enables, both for the mechanics of philanthropy and for the issues philanthropy is trying to address.

There is a real need for serious examination of such models and
understanding the technical mechanisms as well as the impacts, positive and negative.

However , it is hard not to be optimistic, when you see how widespread Steemit, Good Dollar and Electroneum uptake is.

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