Donations made in cryptocurrencies are proving to be a fast and far-reaching means of providing financial aid during times of crisis, according to multiple industry players.
This has proven to be the case after devastating earthquakes hit parts of Turkey and Syria in February. Blockchain analytics firm Chainalysis estimates that around $5.9 million of donations have been made to support relief efforts in the region in the month since the natural disaster took place.
The likes of Turkey’s Ministry of Interior Earthquake Humanitarian Aid campaign, Turkish Red Crescent, Save the Children and Project Hope have received cryptocurrency-based donations. In addition, a number of cryptocurrency exchanges, including Binance, Tether, Bitfinex, OKX, and KuCoin, donated more than $9 million to support victims in the area.
Cointelegraph reached out to Chainalysis to unpack the methodology used to monitor crypto-based donations supporting disaster relief efforts in Turkey and Syria.
Chainalysis director of research Kim Grauer said the firm uses a combination of human intelligence gathered by its experts and proprietary heuristics to identify and monitor flows to cryptocurrency services. This includes organizations accepting donations as well as scams that have looked to divert donations from unwitting supporters.
Grauer believes that the speed of transactions and global nature of cryptocurrency transactions are proving to be an important means of providing quick monetary support during times of crisis:
“Cryptocurrency is cross-border, instantaneous, and liquid, making it an ideal technology for raising funds and getting them to where they are needed most quickly.”
Grauer also highlights the ability to accurately monitor blockchain data as another strong argument for the utility of cryptocurrencies in facilitating donations and support after disasters and major emergencies:
“The transparency of blockchains is a unique benefit to cryptocurrency, providing opportunities to aid organizations to track donations and for law enforcement agencies to identify and trace illegitimate schemes attempting to capitalize in times of crisis.”
Antonia Roupell, Web3 operations lead at Save the Children, tells Cointelegraph that the organization first accepted Bitcoin as a method of donation in response to Typhoon Haiyan that ravaged the Philippines in 2013. From 2020 onwards, the charity has raised $7.4 million in cryptocurrency donations.
This has continued during the organization’s earthquake relief work in Turkey and Syria. Roupell highlights a number of benefits of crypto-based donations in comparison to fiat-based donations.
“The vast majority of our crypto donors are first-time donors to Save the Children so crypto has enabled us to access a new and growing supporter base.”
Blockchain functionality also powers recurring giving, according to Roupell. In 2021, Save the Children received a number of Ethereum donations from NFT sales, some of which coded future donations through the smart contract functionality of specific NFTs.
Roupell also highlights tax benefits in the United States for donating cryptocurrency to charity, which has led to an increase in donations at the end of the financial year. She also notes that crypto donations are, on average, significantly higher than fiat ones.
While highlighting positives, Roupell said a downside was the anonymity of the majority of cryptocurrency donors, which rules out the ability to thank benefactors for their contributions.
Roupell believes there is great value in blockchain-based solutions facilitation and support aid efforts around the world and that humanitarian organizations will have an increasingly key role to play in integrating and scaling access at grassroots levels:
“Cryptocurrency is a great donation vehicle, but the underlying technology, peer-to-peer electronic cash, is truly revolutionary for economic inclusion.”
The charity supports a variety of cryptocurrencies that are accepted by the crypto donation platform The Giving Block, while Roupell said the organization does ‘not endorse, promote or pass judgment’ on any specific tokens. It also accepts global fiat currencies and stocks, with a priority to raise urgent funds to support global humanitarian responses.