Human & Blockchain #4: Blockchain Philanthropy Hurdles

Efficiency, integrativeness and transparency – these 3 words explain how blockchain can turn over the current ecosystem of aids as roaring waves. Not only individuals who put faith in technology, but also some global nonprofits like Red Cross and Save the Children International gradually dabble in launching blockchain-powered donation solutions. However, embracing a new technology into traditional fields will give rise to some inevitable hurdles, let alone distributed ledgers.

BlockImpact has compiled two major snags the nonprofits and blockchain engineers will bump into when it comes to integrating distributed ledgers into charitable donations – efficiency and accessibility. Thereupon, we will outline our anticipations of the future of philanthropy as a closing remark.

We need higher efficiency

No doubt, the integration of blockchain into philanthropic ecosystem has made a great step for individuals to effectively deliver their donations to their receivers with smart contracts. It seems very convenient, right? Nonetheless, we shouldn’t forget the new technology’s fundamental flaw – scalability that can seriously curtail the efficiency of charitable donations.

Since 2017, blockchain and its first application – cryptocurrencies are increasingly becoming mainstream and alluring much awareness. With every transaction, the blockchain increases one more block with more data to its transaction records, since it contains the history of the blocks before it. When the network gets bigger and bigger, the imperative limitation of blockchains is scalability. Put it into simple words – it will be harder and harder for blockchains to expand and support skyrocketing numbers of transactions.

Since all real-time transactions need to be verified in the blockchain network, the number of blocks involved can make the whole process more time-consuming. For example, Bitcoin takes several minutes to verify or create one block. When the number of users and transactions swell, we need a longer time for verification, particularly crazy at peak times. Likewise, to process a growing number of transfers, we require more nodes to authenticate them with higher fees, which can be a great uncertainty on efficiency. There are some proposals drafted to address this significant issue, such as second layer solutions, lightning networks, new consensus algorithms and so forth. Once successfully making a breakthrough here, we can guarantee there will be a synergy between distributed ledgers and charitable donations in the future in terms of efficiency.

We need better accessibility

Blockchain is an open-source tool, and everyone can get access to it. However, adopting a brand-new technology to a long-honored field from scratch is never easy. It will indubitably take a lengthy period to get everything ready, from basic understanding to execution.

One key hurdle to adoption is that the technology itself is not easy to understand and explain. Some have compared it with the attempt to explain what the Internet was in the early 90s when there were only a few websites and tools to help ordinary users better understand what’s going on. For blockchain, it sounds more abstract. Despite that there is a multitude of sources explaining the concept of distributed ledger, like blogs, Medium and Youtube channels, it is never enough to cover educations among people in the philanthropic organizations, especially the management level. Meanwhile, amid this tech-frenzy world nowadays, distributed ledger is only part of the revolution at the moment. Therefore, this is a long way to boost the accessibility of knowledge education for those in charities. Nonprofits and philanthropic institutions do not generally concentrate on analyzing emerging technologies, but executions on humanitarian aims instead. Thus, besides their basic knowledge, organizations should proactively establish technical partnerships to leverage pre-existing technology and advisories, such as Blockchain Philanthropy Foundation.

Technically, what makes things worse is also a deficiency of high level of accessibility among developers. Distributed ledger is currently still in its infancy with a number of fundamental bottlenecks, such as scalability and security. Though blockchain may be an ideal and open-source technical infrastructure hereafter, it’s still not easy for developers to build anything they want with creativity and coding skills with smart contract languages (i.e. SolidityLity, etc.) to generate a convincing decentralized application at the moment. Meanwhile, to make everything easy to understand, more researches on user experience and interface need to be conducted in the coming years, Just give us some time!

Our future blueprint

An all-inclusive ecosystem

Instead of simple and transparent charity tracking platforms, what we should do for contributing to the philanthropic field is to architect an all-inclusive ecosystem fully empowered by distributed ledgers. At present, we usually see traditional nonprofits actively take steps towards introducing the technology into their established systems. Still, an ecosystem of services through a user-friendly interface offering full transparency and traceability of donations can connect the nonprofit community.

Let’s talk about AidChainAidChain is a platform to incentivize the charities to pay their service providers with blockchain currencies with the view to leveling up donations trackability. AidCoin is the ERC20 token to be utilized to donate transparently through the Ethereum blockchain in AIDChain’s ecosystem. Besides, AIDPay is a payment gateway that enables the nonprofits to sign in the AidChain platform to make crypto donations with the help of AidCoins. Most importantly, the aforementioned projects are led by an experienced charity fundraising company backed by venture capitals – CharityStar. Thanks to CharityStar’s extensive and professional network, they keep forging strategic partnerships between charities, celebrities and high-profile corporations to make the whole ecosystem on the ground.

Additionally, more and more self-initiated charitable projects are founded to achieve different social missions with their own cryptocurrencies. To facilitate the collaboration and synergy among foundations and projects, a new and sustainable philanthropic model such as setting up a charity token exchange to interchange the tokens can be considered.

Stay creative

Our world is shaped better with creativity. Maybe hereafter something abstract like investing tokenized social impact bonds would be a trend! Three articles in four weeks have covered the possibility, obstacles and future of philanthropy in a decentralized world, which is vastly thrilling for most of us. But, we need time to prove.


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BlockImpact is a blog delineating what social impacts are eligibly brought by our latest tech-savvy world.