3rd December 2018
Last Wednesday, Prism hosted a panel discussion on the potential advantages of cryptocurrency within philanthropy. Prism would like to thank everyone who was able to join us. For those that were unable to make it we have created a summary of the nights discussions for you to read!
The discussion on the night was chaired by Joanne Winston (Managing Director JP Morgan and Prism The Gift Fund Trustee) and the panel was made up of Helen Disney (Co-Founder Dots Ventures and CEO and Founder of Unblocked), Anna Kogan Nasser (Crypto Trader at Blockchain, CEO and Founder of charity Forgotten Animals), Joe Huston (Chief Financial Officer, Givedirectly), and Gideon Lyons (Co-Founder Prism The Gift Fund).
Several topics were discussed on the night, however the key themes that emerged centred around the transparency that blockchain offers to donors and the possibility for charities to benefit from having access to a new donor base through accepting cryptocurrency.
What are the distinctions between crypto and Blockchain?
Helen started off by explaining the use of Blockchain technology. Blockchain is a technology that can act like a smart contract (see ‘Alice’) that increases accountability in any space.
In philanthropy it has the power to create greater transparency and give control to donors on how their donations are being used. Blockchain technology can be used to set up ’drip-feed’ funding. This is where goals are set by the charity or donor (which are logged in the blockchain) and funds are released dependant on the successful completion of each goal.
Helen suggested that now, one of the biggest barriers to philanthropic giving is a lack of trust around how funds are being used. However, blockchain technology offers a solution to combat this.
The ability to set goal based smart contracts which are run via blockchain enables trust to be built between donors and charities. The donors also have an increased involvement in the projects of the charity, as they are notified when a goal has been completed and funds sent.
In what way is cryptocurrency & blockchain promising, and for the sake of balance – unpromising?
As already mentioned, one of the key benefits of blockchain is in regard to the transparency it provides. For example, using smart contracts and only paying out funds when a goal is achieved helps to create trust between donors and charities. Further to this, being a common ledger, blockchain can also provide a better, real-time and more efficient way of reporting – in effect replacing the need and admin required around annual reporting.
Anna highlighted how a lot of problems come from lack of human discipline and more people are becoming more trusting of immutable code. For example, currency inflation can be as a result of human error in the form of printing more money. With Bitcoin, no one can print more than £21million at any point which stops harmful inflation of the currency.
Looping back onto blockchain, it’s gift of transparency means that there is a focus on facts and outcomes – the outcomes are either in the blockchain or they aren’t. There is, in this sense, less room for human manipulation, and funds can be set up to get paid out dependant on the facts.
Joe highlighted how Cryptocurrency also broadens the pool of people who can give. It brings new wealth and with it, new types of donors who bring with them their own ideas and goals towards philanthropy. The demographic of cryptocurrency wealth is the millennial generation, who are well known for their dedication to social impact.
Some of the hurdles to overcome in the use of cryptocurrency within philanthropy revolve around the exchanging of cryptocurrency into fiat, which can be extremely costly. In addition, there is also a lack of education around cryptocurrency and it tends to be something that people have little understanding of.
Gideon highlighted that this is a barrier that can be overcome, and Prism has begun taking the first steps to accepting cryptocurrencies by approaching HMRC to understand how crypto can be used in philanthropy in similar ways to fiat currencies – this means for example asking questions about gift aiding crypto donations. In speaking to HMRC and asking these questions, Prism hopes that it can help pave the way for cryptocurrency to be utilised within the philanthropic sector more broadly.
Are cryptocurrency & blockchain disrupting the charity sector and traditional ways of operating within the sector?
Anna believed the above statement to be very true and argued that it will be somewhat a ‘survival of the fittest’ when cryptocurrencies start to be used widely within the charity sector.
Anna also suggested that this is not a bad thing. The transparency will weed out the charities that are not delivering on their goals and give more attention and funding to the ones that do. Clear results will therefore encourage more donors.
Thoughts on the future?
Joe believes we are currently in the experimentation stage. Companies are starting to explore how they can use the technology which is leading to more developments. He says it is like asking ‘how will the internet effect things’? This is something we can’t comprehend just yet, as it is still being explored.
Helen echoed this by saying that like the internet, cryptocurrency is not something that companies necessarily know about, but it is something they want to be part of. For example, like how people use their websites to effectively replace / mirror their print brochure.
Gideon suggested that banks need to get onboard. He argued that currently if you go to a bank and say you are expecting a crypto to fiat transfer, you are likely to be treated like you’re doing something of a somewhat criminal nature. There needs to be a change in this culture for people to be more open to crypto-philanthropy.
Finally, Helen agreed with Gideon. She pointed out that Bermuda and Malta have been quick to launch themselves as blockchain friendly ecosystems and that the UK needs to do the same or they will miss out.
The panel discussions demonstrated the huge philanthropic potential of cryptocurrency, be this through increasing donor confidence with its use of blockchain technology, or the potential it brings by enabling a whole new donor base to donate. The aim of Prism the Gift Fund is to increase the flow of funds into the charitable sector and this means exploring options such as the use of cryptocurrency in philanthropy.
Full event photo gallery: Click here to view
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