- March 1, 2020
- Posted by: icoblock
- Category: Uncategorized
December 1, 2017: “Bitcoin breaks $10k” rolls through your newsfeed. You mined bitcoin back in 2010–2011 but forgot about it, opting to focus on your career. As you read the news article, you finally comprehend the surreal notion that you are now a multimillionaire.
It sounds like a fantasy but it has happened (maybe even to a few of you reading this).
And what do you do with this spontaneous fortune? You could buy nearly anything you want. Or, if you’re Pine, the pseudonymous philanthropist behind the Pineapple Fund, you would give it away.
Pine donated 5,057 bitcoin to over 60 causes and charities — or roughly $55 to $85 million during the donation period of December 2017 (a time when the price of bitcoin began its surge to $20,000, doubling its $10,000 price milestone in two weeks).
This stupendous act of solitary charity has become emblematic of one of the more salient side effects of bitcoin’s dramatic rise in value over the years: Some early adopters are left with shitloads of money, and they have no idea what to do with it, so they donate it to charitable causes.
That’s the story behind Bitcoin Beach, which saw an anonymous whale donate a hoard of BTC to fund local bitcoin economies in the villages of coastal El Salvador. In 2011, it was also the impulse behind Bitcoin100, a coordinated effort through Bitcointalk that saw thousands of dollars worth of bitcoin donated to nearly 100 charities — perhaps the first-ever instance of Bitcoiner philanthropy.
Answering the Call
But, beyond these mega donations from large groups, Bitcoiners en masse have repeatedly answered the call for relief when disasters strike around the world. And few Bitcoin-focused organizations have had more of a hand in this than BitGive.
Since 2013, the nonprofit has pooled funds from the Bitcoin community (including a $1 million donation from the Pineapple Fund) to support relief work in North America, South America, Africa and Asia.
Some of this money has gone to relief organization Team Rubicon as it supported Alabama in 2014 following a devastating tornado outbreak that tore through the Southeastern United States, for example.
BitGive funds were also there to help clear the rubble after a series of earthquakes shattered Nepal in 2015, leaving some 30,000 people injured, displaced or killed.
Two years earlier and 2,600 miles east of Nepal, the Philippines was battered and drowned by Typhoon Haiyan, one of the most powerful cyclones ever recorded. In this case, the recipient of funds from BitGive was the Save the Children Foundation, which, coincidentally, has accepted bitcoin donations since 2013.
The Giving Block, an LLC that provides a solution for charities and nonprofits to accept bitcoin, features the Save the Children Foundation on its website, along with other organizations that Bitcoiners can donate to.
Its co-founder, Pat Duffy, told us that some of its donors have pitched in for efforts that benefit the needy in the Philippines and have contributed to to the Rainforest Foundation, a response to the holocaust of forest fires that have been devouring the Amazon over the past year.
In 2019, Coinbase facilitated bitcoin and other cryptocurrency donations to aid relief for the hurricane-wracked Bahamas.
Other bitcoin-based charity initiatives have been more localized, like Bitcoin Venezuela, which has provided food, medical aid and other necessities to impoverished Venezuelans who live in a drastically degrading economic environment.
There have also been a wealth of one-off bitcoin drives spun up in response to specific catastrophic events.
IranRescueBit, for instance, launched in 2019 in response to bouts of flooding that inundated two-thirds of Iran. Two weeks of unrelenting flash flooding damaged 269 cities and 5,148 villages, displacing nearly 300,000 Iranians, killing 78 and injuring 1,000 more. Alongside the precious cost of human life, the floods inflicted some $2.5 billion in damages.
The deluge couldn’t have come at a worst time. U.S. sanctions choked the country’s economic lifelines, including disaster relief. With bitcoin and other cryptocurrencies, IranRescueBit could circumvent these sanctions, raising $4,804.
One initiative to raise BTC funds for Notre-Dame after it partially burned down in 2019 netted 0.288 bitcoin, though it’s unclear what became of it as most of this bitcoin is still in the donation wallet (plus, this $2,800 at today’s prices are infinitesimal compared to the hundreds of millions of dollars pledged to rebuild the centuries-old cathedral).
Organized Charity vs. Decentralized Donations
In its early history, bitcoin-based philanthropy seems to do better when a central, often large organization can cull contributions from a wide network of donors or when a single, monolithic donor decides to shed some of their wealth as Pine did.
Connie Gallippi, the founder and executive director of BitGive, believes that Bitcoin and its blockchain can introduce a greater degree of transparency to the charity sector, potentially making these charity organizations even more effective. Duffy of The Giving Block espoused a similar belief in bitcoin’s power to effect radical change for philanthropic economies, pointing out that nonprofit groups will be central to increased adoption.
“It will be nonprofits that bring Bitcoin mainstream,” he told Bitcoin Magazine in a December 2019 interview. “Their incentives all align with Bitcoin’s unique properties. Transparency/traceability, cross border payments, micropayments/donations, stabilizing communities under unstable regimes issuing unstable fiat. Nonprofits are about to send Bitcoin adoption parabolic.”
Passionately optimistic as he is, Duffy also expressed that it’s not as simple as sending bitcoin to a charity. There’s plenty of internal accounting to be done and, since these charities need actual dollars and cents, there is currency conversion, among other factors, to consider.
“You can’t just open a wallet and expect donations to come in,” he said in an interview for this article. “You need marketing tools, you need a donor-friendly interface, you need tax receipts generating for the donors, you need an auto conversion option so you don’t eat a 15 percent market dip, you need people to talk to when you’re confused or someone reaches out trying to get you to accept some random altcoin.”
At the end of the day, most of these bitcoin donations end up as dollars in the bank accounts of each charity. Hyperbitcoinization hasn’t happened yet, and until it does, this is the likely end result for the vast majority of bitcoin donations — like donating stocks, securities or other commodities to charitable organizations, bitcoin must be converted to cash for its use.
Even through relatively successful decentralized disaster response efforts like IranRescueBit or Bitcoin Venezuela, these funds still need to be converted to cash to provide relief. But this is not to detract from bitcoin’s utility in these cases — for Iranian and Venezuelan relief, specifically, a censorship-resistant money was necessary to pierce through sanctions to reach those in need.
Indeed, bitcoin is a more resilient and quicker way to donate money to charity efforts like these disaster relief campaigns. And the public ledger can be a more transparent method for donating funds — so long as we know where the funds go next. If a charity cashes out into fiat, then this is much harder to verify. But if they pass the buck in bitcoin — to a supplier to buy water or food, for example — then we can prove this on the blockchain if the recipient verifies their address.
So, for us to unlock the full benefits of bitcoin-powered donations — not just speed and censorship-resistance but complete transparency — we’ll need entrenched and highly liquid circular economies, in which charities can pay directly for goods in the bitcoin donated to them.
Until that time, though, the Bitcoin community can hold its head high at the tens of millions of dollars’ worth of BTC its donated throughout the years to various humanitarian causes. As bitcoin produced a new class of spontaneously wealthy techsters, many of these beneficiaries have become benefactors, turning their cryptographic jackpots into philanthropic honeypots.