Blockchain For Social Good

Table of Contents

  1. How Nonprofits, NGOs, & Charities Are Addressing Global Challenges With Blockchain
  2. Not Just Pro-Blockchain — Optimistic Hubris
  3. Blockchain For Enhancing Social Good
  4. How NGOs, Nonprofits, & Charities Are Already Using Blockchain
  5. Blockchain, Nonprofits, & Trust
  6. Conclusion: The Future Is Good & It Is On-Chain

How Nonprofits, NGOs, & Charities Are Addressing Global Challenges With Blockchain

Blockchain is a distributed ledger technology that was originally designed to provide a secure and transparent way to record and verify transactions in a decentralised manner. While a lot has been said about blockchain’s "crypto" use-case recently, blockchain seems to be largely misunderstood, mischaracterised, and under-appreciated for its real-world applications and potential for social good.

Some may criticise blockchain as a giant scam and others might say it’s a solution in search of a problem. We’ve all heard about popular cryptocurrencies like Bitcoin and Ethereum. Some ambitious traders are even claiming to be riding these coins to the moon. Other recent water-cooler talk may’ve even extended to include animal themed meme coins and million-dollar monkey NFTs.

Much has also been reported about the epic downfall of popular crypto exchange FTX, with many users getting burnt by rug-pulls (scams), and the collapse of ecosystems like the Terra blockchain debacle casting a long shadow. These early days have been riddled with controversy, but ultimately the boom and bust cycles are necessary for shaking out the scammers, bringing innovation, and, eventually, establishing more robust systems.

Powerful ideological projects like Bitcoin and Ethereum are virtual currencies that utilise blockchain to facilitate transactions. While these cryptocurrencies are probably the most famous uses of blockchain to date, the introduction of smart contracts and the next generation of blockchain services will be enabling a lot more than simple exchanges of virtual money. Exactly this is something we’re going to examine further.

Blockchain & Business Innovation

Blockchain is helping revolutionise business processes as well as introduce entirely new business models, and ways of creating value. Enterprise and public institutions across the board are getting in on the action. Blockchain has seemingly already found an array of problems that it can help solve. From e-invoicing and automated accounting, to supply chain management and the provenance of physical goods, to on-chain education records, blockchain's public ledger and smart contract capabilities are propelling it far beyond its crypto use case. With its secure and transparent nature, we'll explore how it can be used to help tackle some of the most important societal issues.

Not Just Pro-Blockchain — Optimistic Hubris

Support for blockchain by everyday people and organisations

While blockchain advocacy has found ample support from profit-seeking Silicon Valley investors and edge-seeking innovators, this optimistic belief is also shared by influential organisations responsible for shaping the global future. International institutions such as the United Nations, World Economic Forum, and the European Innovation Council have all advocated for the implementation of blockchain in achieving their stated goals.

A glance at The United Nations Sustainable Development Goals (SDGs) helps shed light on the many ways blockchain can help social enterprises to address global challenges. The SDGs not only outline society's greatest challenges — from poverty and hunger, to climate change and gender equality — they lay a framework for decision-makers to understand the many ways blockchain can help address these diverse challenges.

As Tatsiana Hulko from the United Nations Development Programme says:

"From helping those with limited access to bank accounts to tracking tuna – the applications are broad"
(source: Realizing blockchain's potential for social impact)

Blockchain's core attributes of transparency, trust, and security resonate with the SDGs' objectives to create a more equitable, sustainable, and inclusive world. Blockchain promotes transparency in financial transactions, supply chains, and governance — ensuring that resources are allocated efficiently and with accountability.

Trust and security in blockchain transactions support SDGs aimed at poverty reduction, healthcare access, education, and sustainable consumption. These shared values highlight the potential for blockchain as a valuable tool in empowering NGOs and nonprofits in advancing global sustainability and societal wellbeing.

Europe offers €5 million prize for 'Blockchains for Social Good'

The European Innovation Council introduced a €5 million prize for 'Blockchains for Social Good' as an incentive and endorsement for pioneering blockchain initiatives aimed at tackling social and environmental issues throughout Europe. This project underscores the high-level acknowledgment of blockchain's capacity to drive meaningful societal progress.

The EIC's Commissioner for Research, Science and Innovation Carlos Moedas recognises the importance of blockchain for social good:

"EIC Horizon Prizes will reward the best outside-the-box ideas that can solve a major problem facing society. Blockchain technology is already transforming the world of finance, and I look forward to seeing revolutionary decentralised solutions to innovation challenges in many domains."

But Isn’t "Bitcoin Fueling The Climate Crisis"?

You may have seen headline-grabbing statements like "Bitcoin Uses More Electricity Than Many Countries," which may sound alarming. You may have even seen social change leader Greenpeace campaigning to change the Bitcoin (BTC) protocol to address this problem. These headlines may have eco-conscious climate advocates sceptical at the promise of blockchain, but the truth of the situation is a little more nuanced. Let's dig in.

While it's true the original Bitcoin (BTC) does use a relatively large amount of energy, it is not indicative of an inherent flaw in the nature of blockchain. Bitcoin (BTC) currently consumes around 110 Terawatt Hours per year — 0.55% of global electricity production, or roughly equivalent to the annual energy draw of a country like Malaysia. This certainly does sound like a lot of energy, but in the words of The Harvard Business Review: "How much energy should a monetary system consume?"

Is Bitcoin fueling the climate crisis?

Bitcoin (BTC) is the OG implementation of blockchain as a digital money system, but it is not a fair example that characterises the energy use of all blockchain protocols or implementations. For example, Bitcoin SV (BSV), another version of Bitcoin (that also uses Bitcoin's Proof of Work consensus mechanism), has been recognised as the most energy-efficient blockchain due to its unique transaction processing capability.

Common "wisdom" (as shared by the likes of Greenpeace) would have you believe it is Bitcoin's so-called Proof of Work (PoW) "consensus mechanism" that is the problem, and that alternatives like "Proof of Stake" (PoS) could solve the problem. Popular blockchain platform Ethereum has since switched and proven its new PoS consensus mechanism is 99% more energy efficient than its former PoW approach, but it is not a one-size-fits-all situation. The Bitcoin SV example reveals a more complex narrative.

BSV ecosystem partner mintBlue recently set a world record: Using the BSV blockchain, they processed over 50 million transactions in 24 hours, accounting for 91% of all transactions across all major blockchains that day — whilst only representing a fraction of BSV's daily capacity of 1.4 billion transactions.

For context, Bitcoin's implementation as a digital money system (that’s the half trillion dollar "BTC" we all know) averages 400,000 transactions per day, whilst using up to 260x more energy than BSV. Not only did mintBlue's efforts show the scalability potential of the Bitcoin SV (BSV) blockchain, but it established the record whilst also having the lowest carbon footprint of all major blockchains.

Even the UN recognises blockchain's potential to help fight climate change. This is just one of the use cases with positive societal implications — something we will explore in the coming section. Blockchain's role in the climate crisis may be unfairly characterised by BTCs relatively high energy use, and we now know that the conversation around blockchain efficiency and sustainability is more nuanced. While much of the public criticism has been not without good concern, it shouldn’t undermine the potential of blockchain.

Blockchain For Enhancing Social Good

Beyond digital currencies like BTC, blockchain's secure, efficient, and transparent nature can be harnessed to address some of society's most pressing challenges. By efficiently providing trust and transparency, blockchain can promote new systems and applications that foster inclusivity and accountability.

NGOs, Nonprofits, & Charities Have A Lot On Their Plate

Social organisations are often tasked with addressing humanity's difficult and complex issues. These organisations take on a raft of responsibilities, being held accountable for important outcomes whilst operating under immense public scrutiny. These organisations exist in the collaborative space between governments, public institutes, private businesses, and the individuals whom these organisation represent.

Some of the key challenges these organisations are tasked with include:

  • Ensuring the voice of the people is heard and their rights are respected (often representing the most vulnerable and marginalised populations)
  • Ensuring fair and equitable access to basic resources like healthcare and education
  • Efficiently distributing resources (often in distressing and complex situations)
  • Ensuring the sustainable use and supply of important resources such as safe drinking water and food
  • Raising public awareness about, advocating for, and shaping public narratives on important topics
  • Monitoring and reporting on important situations and outcomes

These responsibilities are true of not just NGOs, but social organisations like charities and nonprofits alike. These organisations are faced with the constant need to raise funds, operating with the ever-present need for trust and effective operations. Luckily, blockchain promises to address these challenges and we have forward-thinking organisations leaning in.

As the United Nations' Grete Faremo states:

"The international community has yet to fully explore blockchain technology. Quite simply the potential is immense – more transparency and greater efficiency could deliver real benefits to billions of people." (source: itchronicles)

How NGOs, Nonprofits, & Charities Are Already Using Blockchain

Digital IDs & Social Equality

Mariana Dahan, formerly of the World Bank, launched the World Identity Network (WIN) to explore blockchain's potential to provide secure and safe forms of identification for the 2 billion people worldwide who lack such documentation.

Ensuring Sustainability & Supply Chain Transparency

WWF and BCG Digital Ventures are launching a digital platform called OpenSC that uses blockchain to track food and products. The platform helps people and businesses to avoid illegal, environmentally damaging, or unethical goods. The platform enables anyone to scan product QR codes with a smartphone camera, which then shows where a specific product came from, when and how it was produced, and how it journeyed along the supply chain.

Marco Lambertini, WWF International Director General, had this to say:

"Unsustainable production of food and goods is a major driver of environmental damage and some of the worst supply chains remain rife with human rights issues. For the first time ever, OpenSC gives consumers the power to track their purchases from source to store, enabling them to buy and importantly, demand sustainable and ethical, fair products from companies. OpenSC is a game-changer, massively increasing transparency and accountability."

Addressing Inequality with Digital Asset Transfers

UN Women is partnering with the Norwegian government to explore how blockchain can be used for women in developing countries like Rwanda to transfer digital assets without relying on potentially abusive intermediaries. This type of project can help empower marginalised groups of people and combat oppressive regimes. (source: venturebeat)

Donation Authentication & Transparent Fund Distribution

Nature preservation organisation Sumthing has partnered with blockchain-as-a-service company mintBlue to provide transparency and accountability in nature restoration projects by leveraging the Bitcoin SV blockchain for transparent order processing and fulfilment. They've created a public platform where people can collaboratively work to share and contribute to nature restoration projects. Bitcoin SV's public blockchain guarantees a trustworthy and immutable record of the whole process, making it easier for initiatives to reach their impact goals as well as proving their contributions as authentic. (source: coingeek)

Donor transparency and fund tracking is a vital component of establishing trust, as Jack Vinijtrongjit, CEO of venture capital firm and AAG says:

"Statistically, a lot of money goes to waste when it comes to charity. For example, in some cases, only fifty cents out of a dollar ends up at the destination. Very few can achieve efficiency in the 83% range, like Oxfam." (via Cointelegraph)

Providing Food Access & Enabling Efficient Resource Distribution

In Jordan's Azraq refugee camp, 10,000 refugees are involved in a World Food Program project that uses retina scans and a blockchain-based ledger to track food distributions, thereby boosting efficiency, preventing fraud, and ensuring everyone gets fed. (source: venturebeat)

Nonprofit Governance & Decision Making

Effective governance within nonprofit organisations is vital for transparent decision-making and accountability. Blockchain proposes a novel governance opportunity in the form of a "DAO."  DAO stands for decentralised autonomous organisation, a blockchain-native organisation with inherent ownership and decision-making alignment between stakeholders.

KlimaDAO is one of the first mission-driven organisations utilising blockchain in its governance and ownership structure. KlimaDAO was started to solve the problem of carbon credit market efficiencies — and, while controversial, it is an example of how organisations can align with stakeholders, allowing token holders to contribute by voting on key decisions. Ultimately this novel governance and decision-making structure may lead to more democratic and efficient resource allocation in both private enterprises and for nonprofit initiatives.

Blockchain, Nonprofits, & Trust

Blockchain enhances trust

We already understand the importance and diverse challenges faced by nonprofit organisations. We also have a good idea of how blockchain can be harnessed to address many of their challenges. In the end, trust is the most important factor for nonprofit organisations (and any organisation, really).

A reputation lacking honesty, integrity, and transparency can be a fatal diagnosis for the viability of social enterprises. Unfortunately for many organisations, the current systems in place often don't promote such values.

As Fast Company points out, nonprofits face some serious trust issues:

"About a third of Americans don’t trust charitable groups to spend their funds well, and more than 60% of people globally don’t have faith that groups can accomplish their missions."

Yikes. The survival and success of a nonprofit organisation are reliant on the trust of its stakeholders, and trust is low right now. Fortunately, we have a transparent and tamper-proof ledger that can help ensure that donations are tracked and allocated as promised.

The Future Is Good & It Is On-Chain

The planet is more connected than ever, with international trade, global challenges, planet-wide distribution networks, and interconnected systems that scale far and wide. The challenges we face as a society are more complex and greater than ever before, but blockchain's potential in helping create a more transparent and inclusive world is an exciting one.

While it's not without its criticisms, the inherent values of trust and accountability proposed by blockchain will help ensure transparency and accountability in their implementations. These virtues reduce the very real potential for abuse by bad actors, resonating with the objectives of a more equitable, sustainable, and compassionate world.

As we witness blockchain’s ever-expanding role in addressing some of society's most pressing challenges, we can't help but feel hopeful.