Cryptocurrency’s Role In Charity

The use case of cryptocurrency is limitless and multi-purposeful.

Several groups, individuals, government bodies, and agencies are adopting the use of crypto tokens.

Crypto-based donations are taking over the charity space.

Governments, institutions, and individuals now set up charity programs and sources for financial aid in cryptocurrency.

The roles of cryptocurrency in charity are numerous.

United Way Worldwide conducted the first crypto-based charity program in 2014 by accepting Bitcoin via Coinbase.

Over the years, the amount of crypto-based donations has increased exponentially.

Some of the major roles of cryptocurrency in Charity are the transparency of the process and accountability.

Other roles include global reach, the anonymity of donors, cheaper transaction cost, and tax treatment.

One prominent example of a successful crypto-based donation is the Fundraising platform set up by Ukraine to cushion the effects of a Russian invasion.

The use case of cryptocurrency has no bound. Due to its virtual, decentralized, and unregulated nature, cryptocurrency continues to serve various purposes and functions.

In fact, numbers show that cryptocurrency has dominated the financial market, and it is now the choice for virtual transactions and investment.

Of prominence among the use cases of cryptocurrency is charity.

Several groups, individuals, countries, and government agencies embrace cryptocurrency in sourcing for aid and financial donations.
On the other hand, these institutions set up crowdfunding platforms taking crypto for charity and donating to the needy.

In this article, we shall identify the role of Cryptocurrency in advancing the cause of charity and some of the notable charity programs that crypto has helped to actualize.

Let's start by understanding the role of Crypto in Charity.

The Roles Of Crypto In Charity

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Image: PR Newswire

Since 2014, when the United Way Worldwide announced that they will (now) accept donations in Bitcoin, crypto transactions have kept multiplying across all markets.

Of significance is the amount of crypto-based donations that continue to increase exponentially.

The blockchain network keeps witnessing more investors becoming holders of various digital assets. Blockchain developers are also not left behind in building different crypto tokens regularly.

The availability of numerous crypto tokens and their wide acceptability make it a go-to for all and sundry. Cryptocurrency is now a deciding factor in donor demographics, funding, and charity programs.

The role of Cryptocurrency in charity is numerous and can not be underestimated. Some of these roles include;

Transparency

Cryptocurrency donations and funding of charity programs started a long time ago and have continued to maintain the spotlight. Since its usage in charity, it has continued to affect donation volume.

The technology behind cryptocurrency ensures that every transaction is verified by a network of nodes and recorded on the public ledger. This transparency feature makes it easy to track the donated funds and ensures proper funds management.

In statistics released by Fidelity Charitable, about 45% of crypto investors contributed $1000 or more to charity in 2020.

How do they come about these statistics? It is due to its transparent nature. The transparent nature of cryptocurrency makes it more accessible, user-friendly, and secure.

Depending on the platform or tool for donation, third parties can monitor how the crypto donations are coming in. In some cases, there are advanced tools that allow you to trace the wallet which they are coming from.

Global Reach

The cryptocurrency is a digital token; its digital and decentralized feature makes it easy for anybody from any part of the world to make donations.

You do not have to go through any third party in crypto-based donation or wait for long processing hours. You can donate any amount from the comfort of your home and remain anonymous.

There are no geographical limits or boundaries to crypto-based donations. For instance, the donations to Ukraine to help cushion the effect of the Russian invasion are coming from all walks of life.

Changing Donor Demographics

Hitherto, the older generation used to form the bulk of donors to charity programs and organizations.

Albeit, crypto-based donations have changed the narrative. The significant donors are now millennials.

According to a CNBC Millionaire survey, about 83% of millennial millionaires own various digital currencies.

These categories of population dominate the internet and use social media tools to amplify the cause of these charity programs. So since crypto transactions and donations are on the internet, these millennials help push the cause and achieve milestones.

A prominent example is a Russia-Ukraine war whereby the donations activity is solely on the internet. It is estimated that about $100 million has been received in crypto donations.

Cheaper Transaction Cost And Tax Treatment

Transaction costs for making crypto-based donations and receiving the same donations are relatively low compared to debit/ credit card donations.

For instance, a normal day wire transfer of $2000 from the United States to India may attract a $30 to $50 transaction fee. A crypto-based donation of such an amount will attract a gas fee of about $10 to $15 on the Ethereum blockchain.

Crypto-based donations do not attract taxes. No matter the amount of donations you make in crypto, you do not pay any tax.
You can evade capital gain tax by donating to charity as a donor.

This regulation makes it easy to donate large amounts in crypto compared to fiat donations of such amounts.

Donor's Anonymity

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Image: CIO.com

Most times, donors prefer to be anonymous and unknown, especially those who give out huge amounts in charity.

Donations using credit, debit cards, and fiat have no anonymity. The financial institutions and platforms you are donating to can easily trace the account holder and your donation amount.

This publicity can reduce the amount you want to donate and even make such donors shy away from funding charity programs.

The anonymity feature of crypto donations has helped increase the success these fundraising platforms recorded and has helped to multiply the number of donors in recent times.

Conclusion

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Image: CoinQuora

According to the Crypto Giving campaign, there was a 583% increase in crypto-based donations in 2022 (compared to 2020). This statistic shows how people have embraced donations using digital assets.

At a time when public trust in charity and donations is declining due to financial management and misappropriation of funds by charity organizations, cryptocurrency is playing a huge role in changing that narrative.

The role of cryptocurrency cuts across several spheres of life, and a significant impact is the charity organization. It is expected that crypto-based donations will continue to increase in the coming days.



Author: Valentine. A, Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
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