Ever since the start of the Ethereum blockchain, the question has been asked what is the ultimate application for blockchain tech?
Before Ethereum we had Bitcoin and a handful of other minor digital currencies and at that time the blockchain was useful for one thing and one thing only, as an immutable ledger. A show of transactions that could not be changed or tampered with, and that fact, along with some clever mathematics and computing power, allowed Bitcoin to exist and that was just fine and dandy.
But then came along what many termed Blockchain 2.0. Suddenly instead of the blockchain to record numbers and transactions, it could do all that and you could add a smart contract. An agreement that would be triggered once a certain set of criteria were met.
Unfortunately for a lot of people in those early days, the first major test of smart contract tech was through the now fated DAO.
The DAO was meant to act like a crowdfunding platform, whereby people could submit projects and through the staking of coins and voting, money would be allocated to the appropriate projects.
The problem came when somebody hacked the DAO and stole 21 million Ether (the currency of the Ethereum blockchain). As well as the lost funds, the DAO and Ethereum lost the confidence of its users and for a while it looked like the ensuing argument was going to tear the Ethereum community apart. However one hard fork and a few months later and everything resumed to normal, but without the infamous DAO.
A Charitable Case
The death of the DAO killed a fledgling enthusiasm for blockchain-funded projects, not entirely, but it felt like momentum was lost. That's not to say that there weren't a few standout successes, but it felt like the huge fraud kept the idea from going mainstream.
So what about charity? Surely charity represents a good opportunity for blockchain tech? Well let's look at the case for a block charity right now.
One of the biggest factors putting people off donating to any given charity, is the thought that their money will go mainly to administration fees rather than the project that it is meant for in the first place.
Huge burgeoning charities such as the Red Cross have thousands of people working for them across the world, and indeed have been slated in the past for not putting enough of the money they receive into their charitable projects.
For instance in January of 2020, they came under fire for going back on a promise to give 100% of the money donated to the victims of the Australian bushfires back to the people who had lost their homes and businesses. They later had to admit that 10% of donations went to "office costs".
In the fiscal year of 2019 the Red Cross reported spending 88% (about $2.7 billion) of its $3 billion budget on “program services.” Which include staff wages, with it's CEO Gail McGovern earning $694,000 for the year ending 2019.
Having worked in a charity myself, I can attest to the need for paying people. Of course charities rely heavily on volunteers, however they do need full time staff for a number of reasons. Unless you can find a bunch of altruistic millionaires who don't need to be paid, then it is pretty impossible to get around the problem of having staff who need to pay rents and mortgages and buy clothes and food to live.
So perhaps a blockchain charity that is able to drastically cut the amount of people needed to run a charity is the solution on that front.
The idea of tender was originally created to alleviate the problem of corruption by way of cronyism, whereby a certain provider of goods and/or services is favoured over another simply because they have the right connections.
In practice however, there are many ways to subvert the tender process so that only the favoured companies are chosen. For instance, a government or charity can make tender rules that set out criteria that only the big companies, or even certain big companies can meet.
Some times these tender rules are sensible. For instance you may not be able to tender for a United Nations tent contract if you do not have certain manufacturing capabilities. Like being able to deliver a certain amount of tents in a particular amount of time. On the other hand we may see a rule that says companies with a turnover of less than several tens of millions per year cannot apply to tender, thus in one fell sweep, ruling out all the small companies in that industry.
With a blockchain charity tendering would be a lot more transparent and could have potentially more people involved in the decision making process.
Another potential pain point in the charitable process is how efficiently and effectively a project is realised from concept to final delivery.
In 2015 a scandal was uncovered, again involving the Red Cross, whereby it was discovered that out of half a billion dollars ($500,000,000) only six new houses had been built after the Haiti earthquake.
The Red Cross stated that the charity could not handle all of the building projects so gave a lot of the money to other groups to carry out the works. Of course each of them took an administrative cut, and till this day it is a mystery as to where all the money went.
A blockchain charity would only release funds directly to contractors, therefore the money gets spent in direct correlation with project delivery.
So how would a blockchain charity operate? What would it look like in reality?
First of all there would have to be some kind of web portal, basically a website you can visit in order to interact with the charity, be that as a donor, fundraiser, or service provider.
If you are a donor it is simple, you can transfer funds via crypto currency directly to the charity's main wallet.
As a service provider you would use it to put in tenders for active projects. So perhaps you would provide steel to a building project in Kenya. If chosen you would then proceed to deliver the materials to whichever company that had won the shipping tender.
On the other side your material would be picked up by a mixture of volunteers and paid labour, funded by the block, and eventually the project gets delivered.
This takes advantage of the Japanese business philosophy of 'just in time', whereby an organisation cuts storage costs by getting all of the materials needed to complete a project at exactly the time they are needed. This also means that the money sits on the chain and doesn't get moved around from account to account losing a percentage of value with every move.
Employees & Trustees
Whilst blockchain technology is revolutionary and incredibly useful in this scenario, you will still need a board of trustees and a number of employees to run the charity smoothly.
The trustees of charities are usually (but not always) made up of a group of wealthy individuals who decide where donations should be spent. They do this for no money and are also sometimes responsible for hiring both high and sometimes lower level staff.
In the case for the block charity the trustees are made up of the donors, whereby each person who donates to the charity has a vote on which projects should be chosen and how much money is allocated to them once they are selected.
This would work similar to the staking on social media platforms such as Hive, Voice and Steemit, whereby the more you have staked in the charity, the more weight your vote carries. Which does make sense, if you donate $10,000 to a charity, then it only seems right that your vote should carry more weight of someone who has given $1.
As far as full time employees are concerned, they would be kept to a minimum and in some cases eradicated all together. For example you wouldn't need as many fundraisers.
In regular charities there are different levels of fundraising staff. A large charity may employ fundraisers to go out on the street with boxes and try and collect money from the public, a lot of the time these people are volunteers, however a charity cannot totally rely on people giving up their free time for no pay, so have to employ full time fundraisers.
Then there are the corporate fundraisers, which is the area I have experience in. These tend to be exclusively full time staff who are employed to contact organisations and raise money either by direct donations, event planning, or corporate staff volunteering.
Perhaps this is the hardest of areas to try and predict. There is no doubt that street fundraisers would be superfluous to a blockchain charity, however you do need people to know about your organisation in order for it to carry out its various charitable projects. So perhaps a lot of the funds used for fundraisers will instead go to online marketing.
Gaming The System
Of course where money is involved there will always be individuals whom want to take advantage of the system and extract money out of it for their own benefit. Therefore it is prudent to try and think about how some of these problems may manifest themselves before they actually do. Whilst accepting that there will inevitably be things you miss.
The first and most obvious thing I can think of is the problem of individuals and organisations creating false projects. If allowed to go unchecked then this is the sort of thing that would destroy confidence in the charity.
Therefore a robust verification system must be in place, whereby independent individuals and/or organisations verify whether a project is what it says it is. This is a tough one and will require plenty of thought, because whilst it's easy to verify a national disaster, it's not so simple to check on whether a single well has been, or indeed, needs to be built.
Project scamming will probably take two forms, individuals and organisations making up projects that don't exist, or colluding with local contractors to inflate the prices of said project. Although this would be somewhat alleviated by the tender process, it would not be completely eradicated.
Next there's the possibility that an organisation invests a large amount of crypto thus giving them the biggest voting weight, and then using said weight to vote up projects that it believes it can win tender for. This probably wouldn't work if one company acted alone, however it may have more of an effect if a secret monopoly was created whereby they agreed to split the profits.
This is probably easier to deal with as companies have to be very transparent with their charitable donations. Thus a rule preventing an organisation from submitting a tender to a project that they have donated to would probably deal with that particular problem. Although this doesn't stop an 'I'll scratch your back if you scratch mine' scenario developing between two or more companies, whereby they agree to vote on each other's tenders.
This one will probably be the hardest to police in a decentralised blockchain charity, in that a project may lie about how many employees and contractors were used to realise a project. By simply creating a bunch of accounts for individuals who have not contributed to the program, however you have made it seem as if they are all necessary to completion.
Perhaps the only way to stop this would be to have project managers that do not have any vested interests in the relevant project. This in itself raises the question of; where do you find these people? And; what is their status? Are they volunteers? Or perhaps full time employees? Maybe part-time employees on standby?
Charities aren't going anywhere for a while, perhaps in one distant future of the human race, a mixture of technology and neural evolution will take us to a point whereby we don't even use money anymore and all of our needs are taken care of. Until that time has come, charities will continue to play an important role in society.
If we can create a decentralised blockchain charity that is 100% efficient with its charitable distributions, then that charity would probably become the benchmark for how they should be run in general.
I personally am excited, I think that charity is the perfect test case for something like this because you have taken out the need for profit, something which has killed many a good idea in the past.
So I'll stick my neck out here and say; "I've seen the future of decentralised block charities, and it works!"
WHAT DO YOU THINK? WILL A CHARITY BE THE FIRST TRULY GLOBAL MAINSTREAM PLATFORM? OR ARE THERE TOO MANY WAYS TO GAME THE SYSTEM? OR MAYBE YOU THINK I'VE MISSED A GLARINGLY OBVIOUS FLAW?
AS EVER, LET ME KNOW BELOW!