On April 6, 2009, a 6.0 magnitude earthquake ruptured Italy’s Abruzzo region. The fissure’s devastation was concentrated in Abruzzo’s capital, L’Aquila, where it affected 45 towns, injured over 1,500 people, killed 308 and displaced some 65,000 people. It was the deadliest earthquake to hit Italy since 1980.
As is typical following a harrowing disaster, the country’s community banded together and raised millions of euros in the aftermath to suture the financial and physical wounds left in the earthquake’s wake. And unfortunately, these acts of altruism were shaken up by a force arguably as powerful as the earthquake that elicited them: greed.
“We noticed this problem in Italy, after the earthquake in 2009 in L’Aquila,” Helperbit COO Davide Menegaldo told Bitcoin Magazine. “Some years later, some news came out, highlighting that the money raised with SMS donations (about €5 million) were addressed to banks that gave cheap loans to affected people, but [asked] back the money in the form of mortgage repayments, instead of individuals in need or affected municipalities.”
Unfortunately, this problem wasn’t an isolated incident. On a global scale, charitable fraud is a lucrative business, and charitable efforts lose tens of billions of dollars each year, by some estimates, to opportunists who treat other peoples’ altruism as personal boons.
How Helperbit Can Help
Can I trust my charity? How did they really spend the money?
These aren’t questions donors should have to ask themselves, Menegaldo thought, following the text message donation scam.
“This scandal put the entire humanitarian aid machine in a bad light,” he said. “We didn’t want to tolerate this approach anymore, but luckily we were aware about a technology that could have reshaped many sectors, including the donation system: Bitcoin and its blockchain.”
Thus, in 2014, Helperbit was born. By 2016, the project would go live after receiving investment from Coinsilium as part of its Blockchain Acceleration fund. The project’s mission is simple, Menegaldo said: to tackle the “lack of transparency in the charity sector and the inefficiencies linked with the donation procedure.”
As the panacea for these problems, Bitcoin’s applications are multipurpose. There’s the obvious one, that the blockchain’s public ledger provides a clear look through the philanthropic lens to ensure that a charity isn’t misusing funds (of course, these charities typically have to liquidate their bitcoin into fiat to use it, at which point Menegaldo prescribes “traditional proof of expenses” to verify fund use).
Bitcoin also disintermediates the cross-border payments processes that can make international donations cumbersome to donors. Citing the Nepalese government’s seizure of foreign aid donations, Menegaldo noted that Bitcoin’s censorship-resistance makes it opportune for funding efforts in jurisdictions wanting for civil liberties (like Venezuela).
Understandably, growth and awareness for the project have been confined to those within the Bitcoin community who “have the knowledge to appreciate our mission and the technology,” Menegaldo said.
So far, this community has contributed 28.5 bitcoin (roughly $270,000) across seven completed and 17 in-progress fundraisers. The project features a live feed of donations and projects on the front page of its website. Here, you’ll find campaigns for feeding villagers in Papua New Guinea, fundraisers for solar initiatives and emergency response teams and even a project that wants to embark on an arctic expedition. Each effort has its individual donation page with information on the project, and verified users have their own pages that keep a ticker on the amount of money donated and display merit badges based on their activity (you can also donate anonymously).
“The topics are wide, from earthquake relief to poverty, from child disabilities to education,” Menegaldo said, adding that, since the project is based in Italy, most of the organizations fundraising on the platform are Italian. “[Another] earthquake in 2016 was the occasion to launch our first case study and thanks to that campaign, the organization Legambiente, a very famous NGO here in Italy, received 10 BTC.”
Only verified NGOs and charitable organizations can use the platform, he continued, and, in the case of a natural disaster, “individual users that have been previously verified can receive direct donations if affected by an earthquake or a flood.” This quality control measure is in place to ensure that only serious, well-meaning initiatives receive exposure on the site.
When conducting a fundraiser, all funds are held in either 2-of-3 or 3-of-4 multisignature wallets; Helperbit holds one of these keys, while the rest are managed by users associated with the projects.
A Work in Progress
Helperbit’s community “is growing day by day,” albeit “slowly, compared to financial services like exchanges,” Menegaldo said. He chalks this gradual progress up to Helperbit’s altruistic mission. Unlike some other cryptocurrency companies, like exchanges, it doesn’t cater to opportunism or profit-seeking and may not immediately appeal to the general public’s baser instincts.
“Helperbit is not providing profits or immediate benefits: the awareness about natural disaster risks is usually not so high, we think that we don’t need this service until those events happen near our area,” he explained.
Bitcoin’s proclivity for price jumps, though, could also “create many ‘Pineapple’ scenarios, with people owning more money than they were able to imagine,” leading them to spend it on charitable causes (Menegaldo here is alluding to the Pineapple Fund, a 5,057 bitcoin charitable fund bootstrapped by a single anonymous individual).
“At the same time,” Menegaldo qualified, playing devil’s advocate with himself, “bitcoiners are ‘hodling,’ so the number of donors is small. So our target users nowadays are a tiny fraction of the bitcoin community, but many indicators (such as the increase of the people interested in bitcoin) make us confident that our platform will become a hub for mutual p2p aid.”
Recent trends in the industry have showcased the Bitcoin community’s bent toward philanthropy and are forecasting a bright future for Bitcoin’s disruptive potential in the donations sector. This trend dates back at least five years to the founding of BitGive, the first Bitcoin charitable fund that has raised thousands to date for projects the world over.
Carrying the charitable torch forward, the self-hosted payment processing portal, BTCPay Server, launched a crowdfunding campaign for Tor browser, reaching its soft-cap of $10,000 in a day and clocking $17,000 in donations to date. This latest installment of BTCPay Server for donations comes months after the software was used to help industry favorite Hodlonaut cover his legal fees in the shadow of a legal battle with Craig S. Wright.
What BTCPay Server is becoming for isolated crowdfunding, Helperbit is becoming for traditional NGO fundraisers. But for Helperbit’s vision of the future of donations to become a reality, more awareness and greater adoption, among other factors, are needed. Seeing as 90 percent of Helperbit’s donations are made in bitcoin (there’s also a debit/credit card option), Menegaldo believes it’s shining a light on a better form of altruism, even at the dawn of this new technology.
“We are still at the early stage of this technology that has already demonstrated its potential, but it is not fully understood and accepted by the average citizen,” he said. “The future is going to be decentralized and disintermediated in many sectors, from energy to consumer services … Bitcoin is the natural evolution of [financial] behavior, also from the donors’ point of view.”
The post Fundraising Unfettered: How Bitcoin Gives Donors a Transparent Alternative appeared first on Bitcoin Magazine.