Blockchain is the technology used to track and protect cryptocurrency transactions like those that occur with Bitcoin. It is a new technology, foreign to most, but the technology has been rightfully gaining a lot of attention in other sectors, thanks to the same transparency and accountability traits that make it so appealing to financial transactions.
When it comes to social good, that can mean more transparent data management for nonprofits and charities, meaningless skepticism when it comes to giving those organizations time and, more specifically, money. Here is how it works!
Blockchain technology can add levels of security, transparency, and take out middlemen historically involved in online transactions, thus meaning less fees for consumers, giving businesses the option of lowering their total costs to consumers without losing a penny on their end.
The inner workings of blockchain technology are intricate, to say the least, and simply can’t be defined at a granular level in an article of this size. In the simplest terms, it allows online transactions to be verifiable from many angles, decentralized away from regular banking, extremely difficult to manipulate from a hacker perspective, and every penny being accounted for with transparency.
In addition, blockchain transactions can be “programmed” with things like refunds and commissions that automatically take place after a given stipulation, taking out time and costs that formerly would have had to be manually done to get consumers their refunds/commissions.
The same technology can be used beyond transactions, for instance, being able to track shipping and supply chain workings, but generally, financial transactions are why Blockchain for Social Good was created, and the corporate finance world can and will benefit from using the technology.
Blockchain for Social Good
Charitable organizations and other non-profits may not be “about the money,” but they sure do have a lot of it. In 2018, for instance, more than $420 billion was donated to charitable organizations by people and corporations. That is a hefty and inspiring number, especially when weighed against a more media-centric fundraising campaign like that of the 2016 presidential election which saw its candidates raise $1.5 billion.
As the great Notorious B.I.G. once said, “more money, more problems,” and that, unfortunately, rings true for nonprofits and charities as well. In 2018, for example, security threats stole almost $1 million from Save the Children, and this is certainly not the only instance of cybersecurity breaches in the charity sector.
That’s where blockchain technology comes in. With each donation (or penny spent, on the other hand) a block of data is formed and multiplied hundreds and thousands of times over and available for the public to see. If one of these “blocks” is altered, it is easy to locate to determine if the alteration was justified, or malicious, and if the latter, the person who accessed the block is not able to complete whatever sort of malicious activity they were attempting to do.
Another issue major nonprofits face is skepticism about where their money would be getting spent. The list of questionable spending by nonprofits is not a short one, but it’s also a murky one given the current centralized nature of bank transactions. With blockchain, everyday Joe and Jane have the ability to see where these organizations are spending their money, and if Joe and Jane are satisfied, they are much more likely to give.
Getting everyone on board for a massive overhaul of how nonprofits conduct their financial workings is no easy task, but as blockchain proves itself in other sectors, more ears open to the “why?” pertaining to blockchain technology. In an area where transparency is paramount, like nonprofits and their spending, the security and transparency of blockchain technology make it a very viable means of counteracting some of the negativity that nonprofits face in the current climate.