Cryptophilanthropy Booms, Outpaces Digital Asset Market — CoinDesk

In 2022, crypto news coverage sometimes felt like a 1970s TV movie, complete with cliffhangers, cartoonish villains, and escapist melodrama. “Could a supervillain kill crypto’s meteoric rise? Tune in next week to find out…”

For those on the outside looking in, the industry was confused. After months of falling prices, as the market felt like it was getting its sea legs back, Sam Bankman-Fried swooped in with the FTX debacle for a final kick to the knees.

Pat Duffy is co-founder of The Giving Blocka Shift4 company. He and his co-founder were also highlighted on Forbes 30 under 30 list in 2022 in the area of ​​Social Impact for their work on The Giving Block.

Uncertainty like this is nothing new to crypto. We all know the cycle. Every couple of years, crypto is declared dead as prices drop. Traditional players stop paying attention and a quiet growth phase starts as more investors and more developers enter the ecosystem.

We are in such a phase now. But there is one area of ​​the crypto ecosystem that continues to grow strongly, despite the ups and downs of asset prices: philanthropy.

Last year, more nonprofits joined The Giving Block, the crypto-philanthropy platform I co-founded with Alex Wilson in 2018, than ever before. More, in fact, than the record we set during the bull cycle of 2021. Through rain, sleet, and SBF, nonprofits continue to march upward to raise crypto.

Motivated by the powerful tax incentive to choose crypto over cash, donors continued to reward the nonprofits that marketed their crypto alternatives to their supporters. For the second year in a row, more Google searches contained “donate crypto” than “donate stocks” as a growing number of crypto users become savvy to asset-sharing strategies. Chalk it up to the digitally native user base, or the fact that crypto remains a top-performing asset of the decade. Whatever it is, more people are going online to give crypto than stocks.

Today, the nonprofit sector is one of the leading industries in crypto adoption; half of the Forbes Top 100 charities now raise money via crypto and non-fungible tokens (NFTs). With thousands of nonprofits now involved in Web3, cryptophilanthropy not only weathered last year’s storm, but thrived in it.

Based on the Crypto Philanthropy Adoption Index (CPAI), which compares the total in crypto donated via The Giving Block compared to the average price of bitcoin (BTC) over time, we can measure whether changes in crypto giving are outperforming or underperforming the crypto market as a whole. Since we started tracking it in 2020, crypto philanthropy has outperformed crypto markets every year. In 2022, for example, crypto donors collectively gave $172 per dollar of bitcoin market capitalization, a 41% increase compared to 2021. By blending historical donation data from our platform with years of bitcoin price data, we are also able to predict the growth of cryptophilanthropy the next decade.

Most experts expect the crypto market cap to rise over time (although it has roughly halved over the past 12 months). Given this expectation, it is reasonable to assume that cryptophilanthropy will also grow. By taking the past three years of CPAI data, we were able to develop the first forecast of how cryptophilanthropy will grow with the market.

Based on the last five years of bitcoin price data, charitable crypto giving is expected to drive $10 billion to nonprofits by November 2032, just on our platform alone. Today, that would mean cryptocurrency would make up roughly 2% of all American charitable giving.

Below are other trends in cryptophilanthropy that we are watching.

As we face another year of market uncertainty, we will continue to see stablecoins gain market share in donation volume, demonstrating the growing adoption of stable value cryptocurrencies as payment methods. In 2022, USD Coin (USDC) was the most donated crypto, clocking in at 44% of our donation volume. This was followed by ether (ETH) as the second most donated cryptocurrency with 24% of donation volume and bitcoin in third place with 17% of donation volume.

In 2022, we continued to see NFT philanthropy and Decentralized Autonomous Organization (DAO) philanthropy grow, proving that you don’t have to just donate bitcoin to make a difference. We predict that we will continue to see the Web3 community come together in difficult times as they did during the humanitarian crisis in Ukraine in 2022 and the earthquake that devastated parts of Turkey and Syria earlier this year.

Nearly half of Forbes’ list of “America’s 100 Top Charities of 2022” accept cryptocurrency donations, up from just 12 of them in 2019. Of these 49 crypto donor-friendly charities, 38 of them use The Giving Block as their crypto fundraising system, including four of the list’s top five largest charities (Feeding America, United Way Worldwide, St. Jude Children’s Research Hospital and Direct Relief).

Motivated by the powerful tax incentive to choose crypto over cash (in short, like stock donations, direct donations of appreciated crypto are not subject to capital gains tax and can also be deducted from the donor’s overall gross income), donors continued to reward nonprofits that marketed their crypto options to their supporters . Chalk it up to the digitally native user base, or the fact that crypto remains a top-performing asset of the decade. Whatever it is, more people are going online to give crypto than stocks.

As long as millions of people in the US are still incentivized to give crypto over cash, crypto will continue to be a force for good in the nonprofit industry. This trend is good for the planet, but the crypto industry can see huge opportunities to take advantage of it as well.

Non-profit organizations are hungry for partnerships from companies, projects and influencers in this industry. These are the relationships that put their brand in front of one of the most valuable donor demographics – crypto donors.

The world needs reasons to see the positive impact crypto is having. As we recover and dust ourselves off from the FTX collapse, regulators are making decisions that will determine what the growth of crypto looks like. We have a chance in 2023 to bring the biggest crypto voices together with the biggest voices in the charity sector. If much happens this year, nonprofits will be more ready to solve the world’s most pressing problems, and the world will be more ready for crypto.