With the dawn of blockchain and proliferation of use of cryptocurrencies a lot of charities and foundations started to experiment with crypto donations: the Red Cross, Wikimedia Foundation, Save the Children, and many others accepted Bitcoin or Ethereum for some period of their activity in a bid to make the process of giving for the best causes easier and more accessible internationally. The monetary outcomes of these endeavors were huge - for instance, Fidelity Charitable - the American nonprofit managing the country's largest donor-advised fund claimed to have raised $69 million in crypto donations in 2017.
As the technology was developing and people came to a deeper realization of utility advantages of DLT technology per se, it became clearer to charity industry actors that there were still a couple of burning issues lying ready to be addressed by blockchain implementation. The most obvious one is transparency of the expenses spent on exact charitable activities executed by an organization. Most people who have never donated a penny for charity tend to share the common explanation for that - they can't be sure whether their money is actually spent as intended and appropriately. Public blockchain such as Bitcoin and Ethereum easily tackle this issue by keeping their transactions ledger publicly available to everyone. As Raphael Mazet, the CEO of Alice has rightly said: "As donations can be made conditional to impact, and because everything is recorded immutably and transparently, anyone can verify what charities have achieved".
Donations in crypto are the most obvious and easy way to implement cryptocurrencies in charity industry, however, with time, the advanced charitable organizations decided to take this process a step further - to get the whole underlying blockchain technology to use. This is how a number of charity-related token offerings came into being.
These projects are mostly wrapped around raising money for the charity organizations while also attempting at some forms of utilization of the tokens sold in the frameworks of those ICOs:
- mining the coin (sometimes, with people's consumer electronic devices, not even mining rigs) that is later transferred to the organization's wallet;
- buying ad space on the organization's website with the coin; developing a turn-key software base for Ethereum DApps with charitable causes;
- establishing so-called "Proof-of-Charity" mining protocol that allows the sold tokens to be converted into loyalty program bonuses, points, miles, and coupons;
- exchanging the coin for partner commercial companies' commodities or services;
- easily embeddable widget for charity organizations that allows them to set up donation acceptance gateway with crypto smoothly on their own websites;
- blockchain-explorer tracking tool that provides donators with correct information on where their donations are spent and even whether they are spent effectively or not.
However, most of the aims listed above can only possibly be achieved with a lot of successfully arranged pre-conditions: mainly, a large number of partners or clients, and diligent behavior of information suppliers and charity executors. After analyzing the past experience of charity-related blockchain projects, HumanCoin team has noticed that the bulk of the innovation tools presented by those project are actually useless and not required by blockchain and even charity community. The problems those tools are solving are mostly far-fetched, but the solutions for them are hard-reached, as they require a lot of resources and IT development time.
HumanCoin is focused on two major aims to be delivered to potential donors/investors: first, proving that the money donated is spent accordingly by connecting web-part of expenses proofs with blockchain; second, securing the market value for the token in order for it to be monetarily attractive for blockchain investors. Below is the explanation of how exactly it is going to be brought to life.