Crypto donations boost speed and global reach during crisis

Donations made in cryptocurrencies are proving to be a quick and far-reaching means of providing financial aid in times of crisis, according to several industry players.

This has proven to be the case after devastating earthquakes struck parts of Turkey and Syria in February. Blockchain analytics firm Chainalysis estimates that around $5.9 million in 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 Interior Ministry’s 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 in Turkey and Syria.

Chainalysis research director 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 that accept donations, as well as scams that have attempted to divert donations from unwitting supporters.

Grauer believes that the transaction speed and global nature of cryptocurrency transactions is proving to be an important means of providing quick financial support in times of crisis:

“Cryptocurrency is cross-border, instant and fluid, making it an ideal technology for raising funds and getting them where they are needed the fastest.”

Grauer also highlights the ability to accurately monitor blockchain data as another strong argument for the utility of cryptocurrencies to facilitate donations and support after disasters and major emergencies:

“The transparency of blockchains is a unique advantage for cryptocurrency, providing opportunities for aid organizations to track donations and for law enforcement agencies to identify and track illegitimate schemes attempting to capitalize on times of crisis.”

Antonia Roupell, Web3 Operations Manager at Save the Children, tells Cointelegraph that the organization first accepted Bitcoin as a donation method in response to Typhoon Haiyan that devastated the Philippines in 2013. As of 2020, the charity has collected $7.4 million in cryptocurrency donations .

Related: Ukraine has given $70 million in crypto donations since the start of the Russia conflict

This has continued during the organisation’s earthquake relief work in Turkey and Syria. Roupell highlights a number of advantages of crypto-based donations compared 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 gain access to a new and growing supporter base.”

Blockchain functionality also drives recurring giving, according to Roupell. In 2021, Save the Children received a number of Ethereum donations from NFT sales, some of which encoded future donations through the smart contract functionality of specific NFTs.

Roupell also highlights US tax benefits for donating cryptocurrency to charity, which has led to an increase in donations at the end of the fiscal year. She also notes that crypto donations are on average significantly higher than fiat donations.

While highlighting positives, Roupell said a downside was the anonymity of the majority of cryptocurrency donors, which precludes the ability to thank benefactors for their contributions.

Roupell believes there is great value in facilitating and supporting blockchain-based solutions for aid efforts around the world, and that humanitarian organizations will have an increasingly important role to play in integrating and scaling access at grassroots level:

“Cryptocurrency is a great donation vehicle, but the underlying technology, peer-to-peer electronic cash, is truly revolutionary for financial inclusion.”

The charity supports a range of cryptocurrencies accepted by crypto donation platform The Giving Block, while Roupell said the organization ‘does not endorse, promote or judge’ any specific tokens. It also accepts global fiat currencies and shares, with a priority to raise urgent funds to support global humanitarian responses.