Blockchain

Blockchain Technology: What Is It and How Is It Relevant for Nonprofits?

Voiced by Amazon Polly

May 30, 2019

By Paul Lamb, Principal at Man On A Mission Consulting, has over 25 years of experience in business, nonprofit management, technology, and public policy.


We’ve all heard about blockchain, or at least its most famous application – bitcoin. But what exactly is blockchain it and how is it relevant for nonprofits?

Blockchain Simplified

At its core blockchain is a database technology. What makes blockchain unique as a database, however, is its distributed nature. This means that its software sits on a network of separate computers (called nodes). Each node is required to verify transactions and store the same records in the database it hosts. Most current databases used by companies and nonprofits are centralized on in-house or cloud based servers, which makes them easier to hack and alter. With a distributed system a majority of database nodes would have to be hacked simultaneously for any records to be changed. The Bitcoin blockchain, for example, is supported by roughly 10,000 nodes hosting its freely downloadable database software, and it has never been hacked during its ten-year history.

Transactions on a blockchain are cryptographically secured, unchangeable, and enable the peer-to-peer exchange of information or transaction processing. Cryptocurrencies such as bitcoin can be sent directly from you to me or vice versa in minutes for a very low transaction fee using an online wallet. This exchange does not require a payment processor or other institutional middleman to manage the process. It is the virtual equivalent of moving cash or a document directly from one safe to another, with each of the safe holders possessing the only key or combination to their individual safes.

The reason that the platform is called blockchain is because transactions or the recording of information occurs in batches or blocks, with each block cryptographically tied to the next in a linear fashion. Database node owners are incentivized to verify a block’s information because they receive a reward (e.g., bitcoin) for doing so. These so called “miners” compete to win the reward by solving a difficult mathematical equation generated by a blockchain-based algorithm. Once the puzzle is solved by one mining node, all nodes must confirm that the transaction is correct before it is approved and recorded as part of a block. The production of a block can be likened to gold panning. When one panner discovers a nugget all of the other panners must agree that it is indeed gold. The public announcement that a nugget has been found and validated, say in a newspaper, creates a transparent record of the occurrence for all to see. Putting this into blockhain-parlance, a block has been added to the chain and the information it holds can no longer be changed. (Note: Public blockchain transactions such as with bitcoin are “pseudonymous,” meaning that the time and characteristics of the transaction are made public, but not the names of the transacting parties).

As a database platform, a blockchain can support a range of applications, of which bitcoin is only one. There are numerous blockchain types, both public and private, which can do much more than simply support digital currencies. Some offer faster and even more private recording of data, while others enable “smart contracts.” A smart contract is essentially a piece of code imbedded in a blockchain to require the execution of a particular action when certain conditions are met. For example, a smart contract to support charity donations might enable the automatic and instantaneous release of funds to a charity once the donor receives proof of a promised action by the charity. More specifically, if a homeless shelter agreed to provide 100 meals to clients for a donation of $1,000, once the 100th meal is served the $1,000 would be automatically moved to the homeless shelter bank account. The transaction would then be recorded in a secure and immutable database.

Bottom line: Blockchain is a database platform to support the secure, rapid, transparent, and immutable recording of information or transactions; all independent of any central authority.

Relevant Use Cases for Nonprofits

Much more interesting than blockchain technology itself are the ways in which nonprofits and other social sector organizations can benefit from it. The most common opportunity area is donations using bitcoin and other cryptocurrencies. It is estimated that 1% of nonprofits or NGOs worldwide now accept bitcoin, and hundreds of millions in cryptocurrencies have been donated to a range of organizations over the past couple of years. The donation page of the nonprofit Heifer International, shown below, accepts bitcoin and other cryptocurrencies such as EthereumRipple, and Litecoin.

Even some foundations are making grants through cryptocurrency collection, and the cryptocurrency noveau riche are creating their own organizations to financially support social causes through digital currencies and blockchain ecosystems.

A related application of blockchain in the social sector is the transparent tracking of donations and international aid. In this regard, blockchain systems can provide a public record of when donations occurred, to whom they were made, and even for what purpose they were used. The Bitgive Foundation’s bitcoin donation tracking System, GiveTrack, which shows donation activities and project impact in real time, is just one example.

In addition, we see emerging blockchain applications in the social sector for uses such as low cost money transfers across borders by migrant workers, virtual banking for the unbanked, the hosting of secure and private databases for refugee identities, land rights documentation, supply chain tracking of sustainable products, Universal Basic Income (UBI) distributions, and the provision of secure and verifiable voting systems.

Overall blockchain is still very much a nascent technology. Just as the Internet, email, social media, and other now mainstream technologies saw slow uptake in the social sector during their early years, blockchain will take time to become truly user friendly and to fully find its nonprofit legs. But the conversation will eventually turn from “what is it” and “why should I care” to “what do I need to do to take advantage of it for my organization?” Despite the hype and complexity, blockchain is a truly disruptive technology and one worth keeping an eye on by all nonprofit technology innovators.

Additional Blockchain and Crypto-philanthropy Resources:
Crypto-philanthropy: How Bitcoin and Blockchain Are Disrupting the World of Giving
Digital Currencies and Blockchain in the Social Sector
Cryptocurrency and Blockchain for Good

Resources*

Blockchain in the Social Sector, International Development, and Charity Work: 

  1. Can Bitcoin Be Used for Good, The Atlantic, April 2016
  2. How Blockchain Tech Can Help Solve Problems in Charity, Finance Magnate, August 2016
  3. Giving Unchained: Could blockchain transform charity? (YouTube video), Rhodri Davies, 2014
  4. A Revolution in Trust: Distributed Ledger Technology in Relief & Development, Mercy Corps, May 2017.
  5. End Poverty, Restore Trust: World Bank Dives into Blockchain with Blockchain Lab, Coindesk, June 2017
  6. Blockchain and Economic Development: Hype vs. Reality. Center for Global Development, Michael Pisa and Matt Juden, July, 2017.
  7. ConsenSys puts up $50 million to hunt for blockchain solutions to global challenges, Impact Alpha, September 2017
  8. Blockchain Offers Nonprofits a Software Solution for Accountability, Nonprofit Quarterly, August 2017
  9. Social-good innovators bet on blockchains to solve big problems, Venture Beat, August 2017
  10. A Brief History of UNICEF Innovation’s Work with Blockchain, 2017
  11. UNICEF Ventures: Exploring Smart Contracts, August 2017.
  12. New Initiative Aims to Deliver on Promise of Blockchain for Identity, Devex.com, Catherine Cheney, August 2017.
  13. Using the Blockchain to Clean Up the Niger Delta, [email protected], University of Pennsylvania, August 2017.
  14. Blockchain: Unpacking the Distributive Potential of Blockchain Technologies for Human Development, August 2017
  15. Can Initial Coin Offerings Give New Life to Social Good Companies?, Fast Company, September 2017
  16. Transforming the Social Sector: Bitcoin and Blockchain for Good, Huffington Post, September 2017
  17. Can Basic Income Plus the Blockchain Build a New Economic System?, Fast Company, October 2017
  18. Initial Coin Offerings can also Issue Social Change, LinkedIn, October 2017
  19. Blockchain, Cryptocurrencies and the United Nation’s SDG’s as Solutions for the Future of Humanity, ICO Crowd, October 2017
  20. Denmark Considers Blockchain a New Weapon in the Fight for Human Rights, ZDNet, December 2017
  21. Blockchain Identity for Developing Countries, Medium, December 2017
  22. This New Blockchain Protocol Wants to Create Accountability for Social Impact, Fast Company, January, 2018
  23. Digital Currencies and Blockchain in the Social Sector, Stanford Social Innovation Review, January 2018
  24. Has Global Development Reached ‘Peak Blockchain Hype?,’ Devex, January 2018
  25. Embracing Complexity: Preliminary Findings from the Blockchain for Humanity Summit, Medium, February 2018
  26. Will Blockchain Disrupt Government Corruption?, Stanford Social Innovation Review, March 2018
  27. A Practitioners Guide to Blockchain for Development (Webinar), Devex, March 2018
  28. Blockchain for Social Impact: Moving Beyond the Hype, Stanford Center for Social Innovation, April 2018
  29. Inside the Jordan Refugee Camp that Runs on Blockchain, MIT Technology Review, April 2018
  30. Deals lag hype in ‘blockchain for good’ investments, Impact Alpha, April 2018
  31. Blockchain: A Tool for Social Good?, World Affairs Council (Video), April 2018
  32. Reassessing Expectations for Blockchain and Development, Center for Global Development essay, May 2018
  33. Blockchain as a Force for Good: How this technology could transform the sharing economy, Shareable, May 2018
  34. Save the World? Blockchain’s Big Dreams Come Back to Earth In DC, June 2018
  35. What Nonprofits Need to Know About Digital Currencies, Idealware webinar, June 2018
  36. Beyond the Hype: Keeping a Critical Eye on Blockchain for Social Impact, iMPACT Magazine, July 2018 (p.25)
  37. Un-chained: Experiments and Learnings in Crypto at UNICEF, innovations Journal, July 2018
  38. How Blockchain is Helping Technology to Get It’s Soul Back, Medium, July 2018
  39. Philanthropy, International Aid, and Blockchain Technology, Charities Aid Foundation Podcasts, July 2018
  40. Blockchain: Finally, Technology That Can be Used to Solve Real World Problems, Coin Insider, September 2018
  41. These 5 Women are Using Blockchain to Empower Communities, Huffington Post, September 2018
  42. Ahead of Traditional Banking: How Africa Employs Blockchain for Financial Inclusion, CoinTelegraph, October 2018
  43. This is Where Cryptocurrencies Are Actually Making a Difference in the World, Marketplace, October 2018
  44. Blockchain Technologies for Social Change, GovLab Field Report, November 2018
  45. Crypto for Good: Three Ways Nonprofits Can Embrace Blockchain, December 2018
  46. Blockchain For Social Impact? Be Careful What You Wish For, Forbes, January 2019
  47. The Social Sector is Embracing Blockchain. Should it?, Forbes, January 2019
  48. The Blueprint for Blockchain and Social Innovation, New America, January 2019
  49. 73 Blockchain Social Good Organizations That Are Actually Doing Something, February 2019
  50. Newsweek Launches Blockchain Impact Awards, Highlighting Need for Digital Currencies and Crypto in Place of Fiat, the Daily HODL, February 2019
  51. Can Universal Income Through Cryptocurrency Save our Economic Future?, Medium, March 2019
  52. Blockchain Technology: What Is It and How Is It Relevant for Nonprofits?, May 2019

​Crypto-Philanthropy

  1. Giving Thought: Bitcoin and Blockchain, Charities Aid Foundation – various reports and videos
  2. Bitcoin and Charities panel (Youtube video), Texas Bitcoin Conference, 2014
  3. Banking on Bitcoin: Nonprofit Success Stories Start to Emerge, Chronicle of Philanthropy, July 2014
  4. Does Bitcoin Make Sense for Your Organization? (video), Chronicle of Philanthropy, July 2014
  5. Charitable Gifts of Bitcoin: Tax, Appraisal, Legal, and Processing Considerations, Planned Giving Design Center, November 2014
  6. How Blockchains Could Revolutionize International Aid, Fast Company, June 2017
  7. Bitcoin and Blockchain Provides Transparency for Donations, Tech Impact, August 2017
  8. Tokens of Goodwill: Crypto-tokens, ICOs, and Blockchain Philanthropy, Rhodri Davies, September 2017
  9. Cryptocurrency for Charitable Giving, Medium, January 2018
  10. Crypto-philanthropy: How Bitcoin and Blockchain are Disrupting the World of Giving, Medium, February 2018
  11. Crypto is Now the Fastest Growing Donation for Fidelity Charity Arm, Coinbase, February 2018
  12. Blockchain Explained: Risks and Opportunities For Philanthropy, Global Giving, February 2018
  13. Brother, Can You Spare a Bitcoin, Tech’s Good, April 2018
  14. Eight Ways Charities Are Cashing in on Cryptocurrencies, ExeBlock report, April 2018
  15. Blockchain – A Threat to Existing Philanthropy?, Alliance Magazine, April 2018
  16. What Should Charities Know Before Accepting Bitcoin Donations, CoinCentral, May 2018
  17. What are the Potential Benefits and Impacts of Bitcoin Donations on Charities?, CoinCentral, May 2018
  18. Crypto donations Come With Accounting Challenges for Nonprofits, Bloomberg, June 2018
  19. What Nonprofits Need to Know about Cryptocurrencies, Idealist webinar, June 2018
  20. Coinbase CEO launches Crypto Charity Fund, Aims to Raise $1 Billion, Fortune, June 2018
  21. Charity Begins on the Blockchain, ThirtyK, July 2018
  22. Blockchain is Coming for the Charity-Industrial Complex, Bloomberg, July 2018
  23. Fundraising in the Age of Blockchain, Cudo Donate Report, September 2018
  24. How Technology Can be a Transformative Force in the Charity Sector, Value Walk, September 2018
  25. Blockchain Charity Foundation to Commits to $100 Million Target by End of Year, Crypto Disrupt, September 2018
  26. Charities Take Digital Money Now – and The Risks that Go with It, The Conversation, October 2018
  27. Charity: Binance to Donate all Listing Fees to Boost Blockchain for Greater Good, Crowdfund Insider, October 2018
  28. Lupus Foundation of America Now Accepts Cryptocurrency Donations, October 2018
  29. Colleges Are Baffled by Bitcoin Donations, Bloomberg Businessweek, October 2018
  30. Social Alpha Foundation Takes Crypto Riches And Drives Them To Social Impact, Forbes, October 2018
  31. It’s #GivingTuesday. Charities Accepting Crypto Donations on the Rise, Forbes, November 2018
  32. Brave New World: How Cryptocurrencies and Blockchain are Changing Philanthropy, Inside Philanthropy, November 2018
  33. $1 Million Airdrop as part of #GivingTuesday, The Blockchain Land, November 2018
  34. Making Bank: How Can Charities Get A Piece of the Action?, Chronicle of Philanthropy, December 2018
  35. Tron Selected by ALS Association to Track Donations on the Blockchain for #VoiceYourLove Campaign, Bitcoin Exchange Guide, February 2019
  36. Crypto for Good: 3 Ways Nonprofits can Embrace Blockchain, CIO Review, February 2019
  37. The Decentralized Charity Ecosystem, Medium, February, 2019
  38. The Complete Guide on How to Accept Cryptocurrency Donations for Charities and Individuals, Unblock, February 2019
  39. How Crypto Philanthropists are Helping Themselves and the Cryptouniverse, Cryptonews, April 2019
  40. Giving Unchained: Local Company is a Bitcoin Nonprofit Supporting Charities, May 2019
  41. Nonprofits Turn To Cryptocurrencies to Help Venezuelans in Need, NBC News, May 2019
  42. China’s New Model of Blockchain-driven Philanthropy, Stanford Social Innovation Review, May 2019

Cryptocurrency and Blockchain Groups and Collaboratives

  1. Blockchain Alliance for Good
  2. Blockchain for Social Impact Coalition
  3. ID2020 Alliance
  4. Blockchain Trust Accelerator
  5. Blockchain for Impact 
  6. Blockchain Philanthropy Foundation
  7. Hyperledger Social Impact Special Interest Group

Sample Cryptocurrency and Blockchain Projects

  1. Positiveblockchain: Database of nearly 500 blockchain and crypto for good projects worldwide
  2. Blockchain Impact Ledger: Listing of Minimal Viable Products (MVPs) in the Blockchain for Impact space
  3. Bithope: Crowdfunding platform using Bitcoin
  4. RootProject: Cryptocurrency project to support anti-poverty efforts
  5. Clean Water Coin: fundraising coin to support Charity:Water
  6. Seratio Platform: Social sector coins to address UN Sustainable Development Goals (SDGs)
  7. Sovereign: Borderless peer-to-peer democracy
  8. Sean’s Outpost: Outreach to the homeless
  9. Bitcoin not Bombs: Offers publicity campaigns designed to facilitate an organization’s adoption of Bitcoin as a donation platform
  10. Impak Coin: Impact investing coins
  11. Circles: Universal Basic Income ecosystem creator
  12. World Identity Network: Universal identification system
  13. Innovation Norway and UN Women Project: Safe transfer of digital assets for women in developing world
  14. Disberse: Fund management platform for aid monitoring and delivery
  15. Pinkcoin: Network and tokenized donation platform 
  16. Alice.si: Platform for donations, impact investing, and impact and grants management
  17. Granthero: Foundation for individual grant development and disbursement
  18. Voat: Mobile app for secure and authenticated voting
  19. Plastic Bank: Tokenized system for incentivizing plastic recycling
  20. Hypergive: Food donations to the hungry 
  21. Waba network: Local economic hubs. Their MonedaPar allows for mutual credit sharing
  22. Handshake: Enforcement for fair and legal labor contracts for migrant workers
  23. Earth Dollar: Asset-backed cryptocurrency to address the UN Sustainable Development Goals (SDGs)
  24. WeTrust: Trusted Lending Circles and other financial applications for individuals and entrepreneurs

Hackathons/Contests/Seed Funding
​   1. Blockchain for Good Hackathon, Ireland, October 2017
   2. Blockchain for Social Impact, Consensys, October 2017
   3. Blockchains for Social Good, European Commission contest (ongoing)
   4. UNICEF Funding for Blockchain startups (applications due 2/28/18)
   5. Decentralized Impact Incubator, April 9th to May 21st, 2018
   6. “Challenge Accepted” blockchain for good developer challenge, May 15 – July 14th, 2018
   7. Binance Social Impact Fund, June 2018
   8. Lebanon Blockchain Training and Hackathon, Consensys (applications due 9/30/2018)
   9. Blockchain Agora Competition, Paris. (applications due 11/15/18)

*If you have additional resources to suggest, please send them to paulATmanonamission.biz 

Leave a Reply