Cryptocurrency is the newest trend circulating the internet and finance fields. What is it? And more importantly, how can it be used for good via charitable contributions? The goal of this article is to explain cryptocurrency as well as the 3 most popular cryptocurrencies today. Then examine how cryptocurrencies can be utilized to benefit charitable organizations.
What Is It?
If you take the two components used to form the word cryptocurrency, you get a general understanding. “Crypto” is something that is secured by encryption and currency is a system of money. Quite literally, it is digital money, that is encrypted with algorithms to ensure safety.
Why Do We Need It?
Cryptocurrency is a completely digital system of money that does not rely on a central authority. The U.S. dollar is controlled by the Federal Reserve System. The Federal Reserve System issues coin and paper money supplied by the U.S. Treasury. The Federal Reserve is in charge of monitoring the value of said money. Without this central authority, cryptocurrencies can operate without governmental interference.
Where Is It?
Blockchain is a word that is heard a lot when discussing cryptocurrency. That’s because blockchain is the life source of crypto. It is a network of different blocks that contain verified sets of transactions. This individual verification is what makes crypto secure, as it entirely eliminates forgeries.
Popular Cryptocurrencies
There are hundreds of different cryptocurrencies out today. The three biggest ones are: Bitcoin, Ethereum and Tether.
Bitcoin
Bitcoin came to life in 2008, by the mysterious Satoshi Nakamoto. This was an alias, and the true developer is still unknown. It has reigned supreme as a cryptocurrency, and is also used as a synonym for cryptocurrency in a broad sense.
Ethereum
Founded by a team of programmers in Canada in 2015, Ethereum is the number two cryptocurrency in the world. Originally a crowd funded project, it modified the original concept while adding new twists, like NFT’s.
Tether
Tether was originally designed to be valued at $1 USD, and it holds that in reserves for coins that are issued.
Charity
Now that we’ve discussed some of the background of cryptocurrency, let’s look ahead to see how this unique system can be used to benefit charities. Cryptocurrency donations differ from regular donations, and there are 3 main reasons that make it so appealing: anonymity, speed & cost and finally, the reshaping of donor demographics.
Anonymity
People sometimes feel pressure to donate to various causes. It’s similar to the cashier at the supermarket asking if you would like $1 of your $200 purchase to go to charity. People can feel publicly shamed and they may also feel ashamed of themselves. Crypto already serves as an anonymous platform, so now donors are allowed the right of donating to whatever organization they choose, in any amount that they choose, with the option to not disclose this information to anyone.
Speed & Cost
The power of social media is strong, and only growing stronger. Major world issues can be broadcast simultaneously around the globe in real-time. This means that donor seeking institutions can get their message out faster, and to a wider audience. Additionally, since crypto is decentralized, transactions can be processed quicker as there is less legal red-tape with the exchange of money across borders. Moreover, transaction costs are lower, compared to traditional financial institutions and banks.
Donor Demographics
As crypto is a newer technology, it is increasingly popular with the youth of today. They are learning how to navigate, use and improve this technology. Because it is predominantly the youth that are exploring this medium, many donors who choose to use crypto are younger. This is a shift in the traditional view of donors. Analyzing data from it’s website, The United Way, has determined that the average user of their site is between the ages of 45 and 65 years old. The majority of these users are female. Interestingly, The United Way’s crypto donation page sees traffic from users between the ages of 25 and 35 years old, who are prevalently male. This is a stark contrast.
Conclusion
Cryptocurrency is an increasingly popular form of payment. It is ushering in many changes in many fields, not only the financial industry. The three most popular cryptocurrencies at the moment are: Bitcoin, Ethereum and Tether. One industry in which cryptocurrency is making a splash is within charitable organizations, because of the anonymity allowed, the ease of transaction speeds and fees as well as opening the floodgates of philanthropy to a younger generation.