It seems that charity isn't just for charities or billionaires. More and more cryptocurrencies are now choosing to support causes. And this approach is proving highly successful. Several of these initiatives have emerged very recently. They enable associations to raise hundreds of thousands of dollars. In addition to UNICEF, other organisations have become aware of the strong funding potential of cryptocurrencies, and are no longer hesitating to approach them. Very recently, for example, NEXT for AUTISM organised a Bitcoin donation campaign. The latest news is that Elongate and Munch have broken all records. These cryptocurrencies managed to raise $3 million for various NGOs.
A quick look at the main principles of cryptocurrencies
Cryptocurrencies are virtual currencies. Most of them are built on blockchain technology. In practical terms, this process is a database that takes into account the transactions recorded on its network.
The price of cryptocurrencies is determined by several different factors, the main one being the law of supply and demand. The most popular cryptocurrencies today are Bitcoin, Ethereum, Binance Coin and XRP. See the current price of cryptocurrencies.
Cryptocurrencies are generally used for :
Payments, whether for goods or services
Investing, using tokens as financial assets
Mining, i.e. validating transactions on the network, usually in exchange for a token reward.
The potential of cryptocurrencies in the charity sector
Certain intrinsic characteristics of cryptocurrencies make them prime candidates for the charitable world. They could even breathe new life into donation campaigns. In our view, there are two main aspects driving this enthusiasm for cryptos in charity:
Decentralisation: Not being dependent on a government or central bank makes transactions much easier. They will therefore be less expensive.
Transparency: This is guaranteed by blockchain technology, among other things. Network participants can trace the transactions that have been carried out.
[bctt tweet="#Crypto and charity? it's possible!" username="coinaute"]
Cryptocurrencies increasingly involved
The phenomenon is growing. On the one hand, it's a desire on the part of charities to be aware of the realities of their time and to adapt to new means of transaction. It is also an effective way for them to maximise their donations, while minimising costs (transaction costs, for example). This is made possible by the decentralised nature of many cryptocurrencies. The use of these assets also guarantees greater transparency, thereby reducing the risk of fraud.
On the other hand, it allows cryptoassets to reveal their full potential to an audience that is very different from their usual clientele. Officially allowing donations to be made via cryptocurrencies will give much greater visibility to these assets, which are still unknown to the general public.
The feat of Elongate and Munch
Elongate and Munch very recently pulled off a feat: raising more than $3 million in one month for various associations.
For Elongate, $2 million was raised for organisations working in South Asia, a region particularly hard hit by the pandemic. Among the contributors to this crypto are Action Against Hunger and Big Green.
Elongate has become a very important cryptocurrency for associations, despite being based on an ElonMusk meme:
"In just one month, the Elongate ecosystem has grown to change the face of charity and crypto trading."
This was explained by the project's CTO, according to Plato blockchain.
On top of that, the cryptocurrency said its token could be traded as early as 10 May 2021 on BitMArt.
Meanwhile, the DeFi (or decentralised finance) project Munch has raised $1 million for a number of charities, including GiveWellMaximum Impact. Munch raised this sum directly in ETH (Ethereum) tokens. Operating costs were 10%, which was redistributed between the charities and the token users.
Before Elongate and Munch, Bitcoin and Ethereum had already entered the charity sector
Elongate and Munch are following in the footsteps of Bitcoin and Ethereum, two behemoths of the cryptocurrency world.
At the end of April 2021, the NEXT for AUTISM association organised a campaign to collect donations to be given to autistic people in the United States. The association wanted to collaborate with The Giving Block, a donation facilitator. The Giving Block told CoinTelegraph that it had raised $440,000:
"The event raised over $440,000 in crypto donations from around 100 donors. In general, the crypto community continues to be incredibly generous, especially during bull markets. We're seeing millions of dollars donated on a monthly basis."
The future of cryptos in charity
This trend has great potential for the future and is set to grow from strength to strength. There are even cryptocurrencies based on this principle of donations, such as AidCoin's project. Without going that far, the fact that major, globally recognised associations are putting their trust in cryptocurrencies could pave the way for this process to become more widespread. This will only encourage the adoption of cryptocurrencies by as many people as possible.
The democratisation of cryptocurrencies in the charitable world will surely encounter obstacles too. For example, cryptocurrencies are not yet fully developed on certain levels to fully adapt to this particular world:
Anonymity. It is in fact very easy for many users to make their transactions anonymous. This prevents transactions from being properly traceable. This could make it more difficult to identify donors.
Donor profile. This is closely linked to the anonymity of donors. Associations must ensure that their donations do not come from criminal organisations or people who do not correspond to their values.
Cryptocurrency pollution. The mining and operation of cryptocurrencies is highly polluting. From an ethical point of view, these assets would therefore not be suitable for any charity.
The impressive scalability of cryptocurrencies will undoubtedly help them adapt to this new environment. Other cryptos should soon seize these opportunities.
