Marc Andreessen famously quoted ‘software is eating the world’. Now, it is time for blockchain to eat the world! From high-tech to low-tech industry, there are blockchain startups working in many different niches. One industry that we’ve not seen a lot of projects in though, is charity.
Charitable giving is a $400 billion industry just in the United States. That should tell you something about the scale and potential for growth, and capturing even a small percentage of this huge market. People are generous in donating money to causes they care about. However, the industry is still very stodgy and old, and not close to how efficient it can be.
This is why, we would like to see even more startups come up in the charitable giving industry. Today, we discuss one such project, called Giftcoin.
Transparency with Blockchain
The main premise of Giftcoin is that you can bring a lot of transparency to the charitable giving industry with the help of blockchain. This helps donors know their money is being put to good use, and also prevents unscrupulous charities from siphoning off that money for their own uses. It helps the industry as a whole, since people would be more willing to donate if they know their dollars are actually hard at work helping those it is supposed to help, not just going into ‘operating expenses’ for the charity, which can unfortunately be really high.
In addition, charities receive money via expensive payment methods that charge a high fee for their services. This isn’t good, because the people most in need are the ones that lose out on this fees, helping the large payment processors instead.
With the help of crypto, transfers are pretty much free, which is what Giftcoin is working to create.
The funds that get sent to charities are sent in Giftcoin. However, this isn’t an unconditional ‘gift’ yet. Instead, Giftcoin wants to create a transparent but also accountable system. Therefore charities need to show progress and milestones. The charities get the money when they submit a record of purchase to the blockchain, showing how the money is spent. This way, it is clear for everyone how the organization is using donor money.
Again, this is a huge improvement over the current system where you have no idea how the money is being used. Instead, with a blockchain based charity, it is very clear how the funds are being used, and you cannot go back and change any records. If you say you spent money on X, then it’s recorded on the blockchain for everyone to see. The records are publicly auditable. If there are any shenanigans going on, the public will know. It is a powerful system to increase donor trust in charities.
Photo Credit: Chris Yarzab