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Blockchain technology has brought many innovations with it over the years. There was a time when people would only think of it in the context of what it could do as a cryptocurrency ledger. That time has long passed, however, and it’s now well-known that there are many applications in a host of different industries.
For example, it could make for a more secure transfer of funds in 777bet casino, and other gaming applications. Of course, such entities must have a strong marketing strategy if they want to increase business activity, which would allow them to truly take advantage of the power of blockchain.
What about charitable applications? Considering the way the ledger works, perhaps it could eliminate some of the typical concerns with these donations of goodwill.
Defining the Concern
The aim is to drive transformation in the nonprofit sector. For obvious reasons, donors are now demanding greater accountability and transparency. Of course, the very nature of blockchain means that it offers a very innovative solution to the problem.
If used well, it can reshape the landscape of the way distribution works, meaning efficiency, positive impact, trust, and transfer methodologies would all be improved.
All of this comes from the sheer levels of traceability and straightforwardness that are synonymous with blockchain. Historically, charitable giving has been tainted by a dark cloud that is sometimes present. Accountability and trust are consistently being eroded. This leaves donors to wonder if their kind contributions are even making it to the intended recipients.
Even if the transfer happens as expected, how can they guarantee that the funds are being used effectively? Conventionally, centralized record-keeping methods would be used, which are always susceptible to human error.
Sadly, the result of all of this has been a sense of skepticism and fatigue from those who could be making a huge difference in the lives of others. No one wants the impact of charitable efforts to become limited for such a reason.
Improving Transparency Levels with Blockchain
With blockchain in the mix, it becomes possible to modify the framework that would typically be used for donations. Donors now have a way to mitigate the various trust issues that are faced through the following solutions:
- Real-time traceability – Blockchain allows donors to be able to track the movement path of their contributions in real-time. Therefore, there can be greater peace of mind surrounding when and how funds are used, as it now becomes possible to observe the process.
- Smart contracts – These self-executing contracts bring the power of automation into the mix. Perhaps there may be a desire to define some kind of pre-existing conditions that need to be met. Only when the requirements are satisfied will the funds be released. Therefore, an additional layer of accountability is added to the mix.
- Immutable records – The design of the ledger is such that any recorded transaction is immune to deletion or alteration. Such a design translates to greater transparency, as well as a permanent record that is always available for review.
- Intermediary reduction – As is the case with a game of Chinese whisper, the more entities that a donation must pass through, the higher the likelihood of challenges arising. These could even be in the form of administrative costs, which reduce the percentage of funds that make it to the intended recipients. Blockchain uses a peer-to-peer system that introduces directness.
What Does a Good Implementation Strategy Look Like?
Now, you have an idea of how the introduction of blockchain can make a difference. The next question is what would an implementation plan for such a result look like? Several key components are going to be required, which include:
- Transparent aid allocation – As indicated before, it’s possible for blockchain platforms to give insight into real-time resource allocation. Therefore, stakeholders are free to view how funds are being distributed across different regions or projects.
- Tokenized giving – Considering the way the introduction of new tokens works, charities can create their own. This process can be implemented to represent defined project goals or donations. Again, tracking becomes an easy matter, and donors will now be able to hold a tangible item that is synonymous with their contributions.
- Impact measurement – Thanks to the challenges that have been mentioned with the traditional way of doing things, donors would typically be left in a position of not knowing if they made a great impact or none at all. A blockchain implementation includes the recordings of transactions and outcomes. Therefore, charities become able to capitalize on concrete impact reporting, which improves trust and engagement.
- Decentralized aid distribution – Should any kind of crisis occur, the underlying blockchain algorithm will make it possible for direct and quick aid distribution when necessary. Traditional systems have a series of bottlenecks, which this smarter methodology would be able to bypass entirely.
Concerns to Keep in Mind
As you can expect, these kinds of implementations are not without their concerns. While the potential must be acknowledged, it is good to reflect on the complete picture. Here are some of the challenges that the use of blockchain may introduce:
- Regulatory concerns – Blockchain and cryptocurrencies do not have a strong legal framework. What exists is continuously being improved upon, which can introduce compliance concerns that charities may not necessarily be able to resolve.
- Scalability – Considering that there is expected to be a consistently increasing level of trust, it’s not farfetched to assume that transaction volumes will rise. When this happens, some blockchain networks may likely have some scalability issues. Addressing them will not always be an easy feat.
- Education and adoption – Beneficiaries and donors will need to understand blockchain technology effectively for this to work. After all, the success of the process depends on their ability to fully leverage the introduced benefits. Some kind of teaching process would need to be put in place for this reason.
- Technical limitations – Nonprofits often lack the technical expertise to deal with systematic issues that may arise. Considering the underlying complexity of the way a blockchain implementation would work, it’s not farfetched to assume that there may be a knowledge gap issue.
What Will the Future Hold?
The use of blockchain can revolutionize the way charitable giving works, as donor comfort and spending efficiency can both be improved exponentially. However, it is important to consider and address the concerns associated with such a system for the best possible outcome.
