I wrote this article 4 years ago, but at that time, was not able to execute much of it. https://github.com/cpzhao/bitcoin_charity/blob/master/Bitcoin_Charity.md
Will give it another shot through Binance’s new Blockchain Charity Foundation (BCF).
In summary, lack of transparency has been a problem for charities today. Some estimate up to 80% of donations do not reach the intended beneficiaries. With the ability to track every single transaction, blockchain technology seems tailor-made to solve this problem. At the same time, charity provides an opportunity to increase crypto adoption. Beneficiaries need to learn to use crypto (wallets) to accept donations, and learn that blockchain is used for good. This article outlines an approach we would like to implement.
Players and Layers
We envision a 3 or 4 layer donation tracking system, with: Donors, BCF Charity Programs, Charity Partners (optional), and Ultimate Beneficiaries.
First, donors can choose different charity programs to donate to. They can also choose to be public or anonymous. Each BCF program will have its unique receiving address(es). BCF may choose to donate directly to the Ultimate Beneficiaries, or work with other Charity Partners who then distributes the funds to the Ultimate Beneficiaries. Either way, the funds will be tracked in a transparent manner. While this sounds simple, a few key issues need to be addressed.
Last Mile Issue
In order to track the funds all the way, the Ultimate Beneficiary will need to have crypto wallets themselves. Either BCF or our Charity Partner will need to educate the users on how to use a crypto wallet, and potentially how to convert crypto to fiat. Binance Academy is more than happy to fund the creation of videos for education. In the simplest form, this will likely require the Ultimate Beneficiary to have a smartphone or computer, and internet access. (This may be tough for certain regions of the world, where donations are needed the most.)
ID & Privacy
To combat fraud, a certain level of ID verification will be required. We could use existing KYC solutions used by exchanges (expensive and cumbersome), plus a network of Certified Volunteers who can check on the beneficiaries periodically, possibly randomly assigned by the platform. A certain level of disclosure of ID information (first name) to the public will be needed to ensure transparency.
At the same time, privacy of the ultimate beneficiaries needs to be protected to a certain extent. This will require a multilevel permissioning system. A group of Certified Volunteers can be randomly assigned by the system to do verifications of the beneficiaries. This can be done in person or remotely using video calls if necessary. These certified volunteers will have access to full ID information on the beneficiaries.
Multi Coins Support
Given that we expected to receive donations from multiple projects/coins teams, each of whom will likely prefer donations in their own coin, and have their coin used by the ultimate beneficiaries, the tracking platform needs to be able to track transactions on multiple blockchains. And the education programs need to cover multiple wallets.
Tracking Platform
While all transactions will be done on-chain. We need a system that can track the transactions and present them in an easy to understand manner, for the general public. A website is the simplest form. This website needs to track transactions on different blockchains, and potentially handle user registration and verification, and KYC and AML, etc. This in my view is the key tool to achieve large-scale adoption. Binance is more than happy to fund the development of this platform, we welcome others to provide their support as well.
No New Coins/ICO
We are against creating a new blockchain and/or issuing a new coin just for charity. Doing so will severely limit the ability or interest of existing coins to participate. And the token economics for a charity token is controversial, as far as we can conceive.
With that, we would like to invite developers to participate in helping with the design and development of the tracking platform, in addition to Binance’s own efforts, and donors to donate generously.
We will announce a list of participating partners shortly. Participating partners will get our support on many fronts, including cross-marketing and promotions.
-CZ