Bitcoin Will Transform Charitable Institutions

Nico Hemsley Justice Is Served
Nico Hemsley
Justice Is Served
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The aphorism “absolute power corrupts absolutely” rings true in any financial system, including within charitable organizations. There is hardly a shortage of altruistic individuals, but in many cases, generous donations are embezzled by leaders within nonprofit organizations. Some charities lie about where their money goes and secretly pay themselves consulting fees or arrange unnecessary fundraising contracts with close contacts. A CNN report found that the 50 worst charities in America devote less than 4 percent of donations to direct cash aid. Additionally, many disguise the meager amount of money that reaches those in need by inflating the value of goods they donate to the people they claim to help.

These facts make it hard to trust charities, but should not discourage altruism. Rather, they should motivate a change in how charitable organizations handle their finances. Individual corruption is largely a product of flaws in the system as a whole; switching to a new bitcoin system will help charitable donations reach their intended recipients.

A decentralized form of currency, like bitcoin, will restructure the financial system and is already revolutionizing the way charitable organizations operate. Bitcoin has two properties with the potential to decentralize financial power and increase accountability: the first is by allowing clients to be in full control of their money instead of collecting and using it like banks; this eliminates the need for centralized control of money or regulatory institutions that have failed us in the past. Additionally, bitcoin uses a public ledger for financial transactions, so any potential donor can look up every transaction the organization has made as long as the organization has made their bitcoin address public. Individuals can quickly and easily support causes they trust and believe in by sending bitcoins, without complex arrangements with organizations or bank involvement.

Additionally, bitcoin is safe currency. Users can make backups of bitcoin and encrypt those copies, which can’t be done with real money. It is also possible for an organization to segregate bitcoins and require multiple people’s encryption keys for the account, which protects against greedy insiders and outside threats.

Bitcoin is already facilitating tangible good in the world. For example, in Pensacola, Florida, the city council dealt with its homeless problem by banning sleeping outdoors, banning washing or shaving in public bathrooms and bussing the homeless to other cities — displacing the problem rather than facing it. In response to the situation, a man named Jason King started a bitcoin-funded organization that provided meals to the homeless. It was such a success that the projected expanded to build homes and actually began paying the homeless to help with the project. The organization made a direct impact on the lives of homeless people and is known to be trustworthy because of its financial transparency.

By increasing transparency and accountability within organizations and offering a simple means of altruism, bitcoin has the potential to make the world a little bit better for everybody, especially for the disadvantaged.