Bitcoin and other digital currencies (also called cryptocurrencies) may, in fact, have the potential to drive profound social impact and transform the social sector along the way.
These currencies are built on a breakthrough technology called “blockchain.”
The application of blockchain and digital currencies in the social sector is just getting started, but at least five prominent use cases have already emerged:
1. Philanthropy and international aid
To expand fundraising opportunities, a number of charities and foundations are accepting bitcoin and other cryptocurrency donations from donors directly. They exchange cryptocurrency donations through an online wallet for dollars or other fiat currencies at the going exchange rate. In addition, a handful of organizations have created customized “charity coins” to raise money for specific nonprofits or social impact projects. Donors can buy Clean Water Coins, for example, to help fund the work of the NGO Charity:Water. Other examples include Root tokens, issued to fund anti-poverty work projects, and impak coin, created as an impact investing mechanism.
Some organizations are using blockchain technology to reduce the cost of remittances transferred across borders by migrant workers, which total about $440 billion annually—nearly three times the amount of international aid provided to developing countries each year. Currently it is estimated that at least $32 billion in remittances is failing to reach recipients, due to high transaction fees associated with sending and receiving money internationally.
3. Identity and land rights
The World Identity Network and Humanized Internet project can store identifiers such as birth certificates and university degrees on a blockchain, in the form of distributed digital lockboxes. Users can keep their information private and secure, but also give permission for anyone to access it anywhere in the world.
4. Governance and democracy
Government and civil society can also leverage blockchain technology to strengthen democratic processes and participation. Blockchain systems such as Ballotchain can manage online elections with secure and anonymous voting that participants can verify at any time. The system ensures that voters cannot vote twice or commit electoral fraud, thus ensuring the integrity of election processes.
5. Environmental protection
In the environmental arena, new blockchain-supported supply chain management systems, which are transparent but cannot be tampered with, can track products from the farm to the table, and show whether or not a food product is organic or Fair Trade.
NGOs and philanthropies should begin learning more about blockchain’s unique capabilities and help shape the field. There are many more potential opportunities than the ones mentioned above, including the use of blockchain for impact monitoring and measurement. These applications and others could help remake the field and provide powerful new benefits to both organizations in the social sector and their beneficiaries. (Story courtesy:ssir.org)