Most of the stories coming out of the crypto industry this past year have centered around the huge numbers flowing in and out of the space. Out of more than $100 billion of stablecoins, Circle raised $440 million in private investment in the spring, completing a $314 million fundraiser for decentralized finance (DeFi) projects like Solana, the people of the massive amount of new investments being made in DeFi. Like to discuss. -Time high broke records across the board.
What we don’t see enough are the use cases of how this technological innovation underpinning these new financial instruments can benefit significant cause-and-effect organizations outside of bullish and bearish markets.
Although blockchain technology has grown rapidly over the past decade, the remaining high entry barrier to access this new world of finance is widely known, and it is still long before non-technology-focused organizations can participate and benefit from the industry. There is also a long way to go. . While we are seeing a strong positive movement in the crypto industry with many crypto projects donating their earnings to charity or claiming they will make billions away, there are many ways to benefit from this technology through blockchain and charities. The beach still doesn’t have many straight paths.
Charities can benefit greatly from understanding blockchain. In addition to the ease, transparency and speed of transactions, there are many benefits to charities having cryptocurrencies in their portfolios, and DeFi could open up a new type of earning potential for charities.
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Charities can benefit greatly from understanding blockchain
Most charities around the world are primarily funded by either government grants or donations, and charities within a specific region are all vying for the same grant money year after year. This has made fundraising more challenging, and after more than a year of lockdown caused by COVID-19, most organizations have closed their annual events and initiatives such as in-person fundraising events or face-to-face donation campaigns. Lost the ability to raise funds through
It was reported that charity donations declined by 6% in 2020, suffering a catastrophic loss of funds at a time when additional income was needed. Overall, the global COVID-19 pandemic reduced the volume of giving, but we also experienced a 17.2% increase in online fundraising compared to the previous 12 months ended June 2020.
Integrating blockchain technology with fundraising opens up more avenues for charities to receive donations while providing transparent tools with embedded trust in both donor and recipient alike.
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One of the biggest challenges facing charities is that people simply don’t trust that the money gets there. Earlier last year, the Red Cross in Australia was criticized for not showing where $90 million of donated money was going, acknowledging that it could take years for all proceeds to be distributed. While the fund was managed appropriately, the lack of clarity left the organization under additional scrutiny, damaging the reputation of the influence-led brand.
There is a great expectation today that charities should be able to prove where the charity is going, and get it where it is needed in times of crisis. Using blockchain for charitable donations creates trust so that such a situation does not occur, and that there is a transparent path from donor to recipient.
Our current donation system also has a problem, with the actual donation process full of hassles. Most sites require users to fill out a form, prove their identity, and link a payment instrument before going to the actual giving page. Most sites have third-party fees that can result in a user donating less or not donating at all, and these barriers can deter a generous user.
Removing middlemen ensures that more money can be found where it is needed most. All donations, especially one-time donations, must be quick and transparent and allow the user to donate from an already established crypto wallet.
In addition to the ease and transparent nature of blockchain donations, receiving cryptocurrency donations in stable coins such as Tether (USDT) and USD Coin (USDC) can also help charities provide a hedge against volatile currencies. This is especially important for countries with high inflation rates that affect individuals and communities. If a charity chooses to convert to fiat-accepted assets or accept a variety of crypto assets, the financial value of the donation may remain.
Blockchain and its current relationship with charity
There is also ample opportunity to reduce taxable income when using crypto for charity. In the United States, for example, cryptocurrency donations, similar to stock donations, offer a more tax-efficient way to donate because cryptocurrency is classified as an asset by the Internal Revenue Service in 2014. For payers, this means no capital gains tax and a fair market value deduction. Nevertheless, only a few hundred charities have been set up to accept Bitcoin (BTC) as a charity.
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Organizations such as UNICEF (United Nations International Children’s Emergency Fund) have embraced the charitable crypto movement. They are able to have an office in a local area and accept cryptocurrency donations, completely removing the need for wire or international transfer fees. You can instantly get the money where it needs to go. This is a great example of why more charities must be set up to receive cryptocurrency donations.
Even if a charity does not have a crypto wallet or accept crypto donations, many people are still benefiting from the money being made in the space. With this recent non-fungible token (NFT) boom, we saw Coca-Cola issue an NFT and donate the proceeds to charity, with many DeFi NFT projects donating a percentage of their sales to global and national charities.
It’s great to see organizations and big figures in the space donating money that is made in crypto, but we hope to capture and accept cryptocurrency donations in order to really get the true value of digital assets for charity. Expect to see more ways, all while transparently and fairly, to incorporate the value of blockchain.
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Direct Paths to Donate on the Blockchain — Looking at DeFi and Charity
Crypto donations and donations are not commercialized, which means there is a huge gap in the market for players in the blockchain space to take action and implement more initiatives for charity to profit from decentralized finance. Right now, there is essentially an equal opportunity for any blockchain or project to integrate with charitable causes. Furthermore, the charity has the ability to receive donations not only in Bitcoin or Ether (ETH), but in stable coins and other currencies across multiple chains.
In addition to donating the money being made in crypto to charity, DeFi applications are also creating direct avenues for donations. With over $150 billion locked in DeFi, more projects are finding ways to advance the charitable crypto movement.
The Giving Block has been a pioneer in allowing charities to receive bitcoin donations. Back in April, The Giving Block launched the Crypto Giving Pledge, and they are constantly getting into new projects so that users can donate directly to the charity of their choice from the DeFi Project platform.
In the Solana ecosystem, Step Finance recently created a charity page that allows any charities with a Solana wallet address to receive donations in USDC. A charity only needs to register a Solana wallet and sign up on the charity page, and then any Solana user can donate USDC directly to that charity. The FTX Foundation has received 25K donations through the Step Finance charity page since its launch in mid-July.
DeFi users known as Degens are constantly cultivating and betting their crypto to earn huge yields on their portfolio. As a produce farmer, I have seen how mechanisms such as a charity button can encourage generous users to donate quickly on the blockchain as they go about their daily business.
The charitable crypto movement has made great strides. Being able to donate in a single click from your wallet opens the door for donations to directly benefit from DeFi, and how blockchain works in a decentralized manner, embodies many of the charity sector’s values, including transparency, inclusion and a global mindset. Is.
Looking Ahead – DeFi’s Growing TVL and Cross-Chain Charities
Research shows that in 2020, $40 billion was raised for charities online. This may sound like a huge number, but the cryptocurrency market itself is worth over $2 trillion. We expect to see the total value (TVL) locked in crypto skyrocket, and we expect to see an increase in charitable crypto donations as well.
It may have been a few years before charities were farming themselves or earning their crypto for themselves, but helping charities with the ability to receive crypto donations goes a long way in allowing them access to the lucrative world of DeFi. It’s a good first step. Receiving crypto donations opens up new earning opportunities and allows the charity to focus on its mission, rather than writing grants and hosting fundraisers.
While progress is being made in finding ways for the blockchain to onboard charitable causes, there is still a long way to go when it comes to sending, receiving and storing crypto donations as a charity. We need to make more blockchain projects actionable tools where donations can be easily onboarded and donations can be received instantaneously from users across all chains.
As blockchain wallets become more user-friendly and more tools are created for charitable causes, we expect more global charities to participate in the crypto economy.
The views, opinions and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
George Harap Co-founder of Step Finance, Front Page of Solana and Head of DeFi at YAP Global. George is a veteran crypto entrepreneur and former CEO and co-founder of Bitspark. He started as an early miner in the crypto world about a decade ago and brought a wealth of experience to build a crypto remittance startup in the world. He built six cryptocurrency exchanges, both centralized and decentralized, and launched 12 stablecoins, raising millions from VC and corporate investors along the way.