Blockchain: Making Charitable Institutions & Welfare Transparent and Trustable Again

Last Updated: 2019-06-18 03:12:39 (GMT)

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Charitable Institutions Plagued by Distrust

Unclear use of charity funds and the swindling of donations have exhausted much of the public’s trust in charities. The 50 worst charities in America give less than 4% of their donations raised to the cause in which they stand for. One of these is called the Kids Wish Network, and it raises money to help dying children and their families. Yet 97% of this money does not go to the advertised purpose. Many people are unaware of this misallocation, but more and more are speaking out against this terrible practice. At present, there is no applied solution, and the swindling continues. The public donates out of the kindness in their hearts, yet it is often difficult to know the whereabouts and uses of the donation. Many people are beginning to have concerns about dealing with charitable organizations, negatively affecting a positive move for society.

The traditional operations of charitable groups often employ manual processes and provide limited information, raising the cost of charitable auditing. There are also many problems in regards to money management and information recording.

With very little regulation in regards to publishing information over the Internet, it is extremely difficult to confirm the authenticity of what people see. At the same time, with all kinds of businesses on the Internet, there will always be cases of misuse of charitable funds for personal gain. However, these malicious acts can be exposed with the use of blockchain because of its inherent transparency. This is key to establishing trust between charitable organizations and citizens.

Blockchain: Empowering Charities

Emerging blockchain technology contains a distributed ledger, and its data structure can ensure the accuracy of participation data. With blockchain technology, all records can be uploaded, and they are tamperproof and traceable.

For example, if you transfer $100 to the Red Cross, the bank will keep this record. The ledger will be in the hands of the bank. Other parties cannot access the information of this specific situation. In theory, banks can modify the balance in your account at will.

In the world of blockchain, there are two ways to solve this problem. First, there are hundreds of people who own the same ledger, and even if one attempts to falsify his or her own books, it will not work. Second, the data in the blockchain itself is accompanied by electronic signatures obtained by mathematical calculations, and it can be guaranteed that no one can disguise themselves as the Red Cross as the result. This ensures that the bookkeeping process is open and transparent. So how do blockchains solve the problem of misuse in charity and welfare organizations?

Information Traceability and Disclosure

Charitable projects are required to go through many different processes to register and receive donations or funds, but the degree of information disclosure is generally low throughout the process. After blockchain technology is applied to this field, all information will be open and transparent, and the organization’s dynamics will be clearly understood.

When an organization or user conducts certain activities, its information will be recorded on the public ledger after encryption, and then accurately and quickly synchronized to the entire network. Relevant people can query and trace information through the transaction serial number.

Take volunteer organizations for example. A blockchain will record the user’s service duration in the chain, and then the user will be awarded the corresponding benefits based on the actual data. Users who participate in volunteering do not have to worry about resource agencies arbitrarily modifying user data, because all records are open and transparent. As a result, rewards that volunteers receive are also fairer and more valuable.

Information Recording and Security

Many people will worry about an invasion of privacy after information becomes transparent. In the early days when blockchain was still immature, this problem did exist. A complete solution has since been implemented which divides the data into public data and encrypted data. The public data does not contain private information and accepts universal supervision. The critical private data is encrypted. Only the users themselves or organizations with assigned rights can view this data. It guarantees that private user data will not be leaked while retaining the traceability aspect of the blockchain for public information.

Efficient Credit Systems

Along with the blockchain tamperproof feature, a new credit certification mechanism has been created through a unified security database. This effectively improves the overall management level of charitable organizations.

For example, hospitals, public security and other agencies can quickly verify the identity of users and check any associated history. Any fraud or dishonesty can be recorded or viewed. Any malicious behavior is recorded on the chain which will affect a person’s credit information.

Another example is blood donation. In the past, paper certificates were difficult to preserve. When it comes to cross-province verification, it is not easy to confirm the authenticity of the documents. Even if the national network is connected, considering that different systems are used in different provinces, stability and security cannot be guaranteed. If disconnected, it will affect the validity of national data. Due to territorial management reasons, when the user really needs blood, data from other provinces cannot be used directly, and many certificates need to be issued. After the user’s blood donation data is on-chain, users only need to present the e-certification, and the government department can quickly verify the data, greatly improving the efficiency of the entire governmental system. Using the same database in different regions, local systems will be able to maintain system stability.