What has blockchain got to do with NFPs?
Blockchain is going to make it easier for organisations to emerge and offer services where trust is important in their interactions, and where existing services are not delivering on this trust expectation. The NGO and charitable sector are particularly exposed here.
We are already seeing blockchain startups try and compete in these ‘high trust’ industries by leveraging the transparency and auditability feature of blockchain. Blockchain works best where the aim is to remove powerful intermediaries, or where trust is important to an interaction. For most of modern history our institutions (governments, banks, etc) have existed mostly because we had no other way of incorporating ‘trust’ into the interaction. For example, how do we maintain property records? We trust the property records because we trust the government to not alter the records. Similarly, with donating money to a charitable organization, we give money because we trust that organization to distribute the money to the cause they represent, more effectively then if we were to do the research and send the money ourselves.
Blockchain presents an opportunity to transact without large intermediaries, and offer new services where trust is paramount. Substituting ‘institutional’ trust, with trust-in-software and the resulting transparency, auditability, and accountability. This is what people mean when they talk about the ‘trustless’ result of blockchain. It’s not that we don’t need trust, it’s just that we shift as much trust as possible away from humans, and into software.
So any interaction that can be expressed as code is open to being reimagined using blockchain. Anything from educational certificates, property deeds and titles of ownership, marriage licenses, financial accounts, insurance claims, medical procedures, to votes, the possibilities are truly limitless. Further, blockchains open up the global economy to everyone from small rural communities to large communities.
Organisations who are fullfiling their brand promise and still trusted by their stakeholders have nothing to worry about. But those who aren’t, are becoming more vulnerable to being substituted by smaller niche players, who are using blockchain technology in lieu of an established trusted brand.
We are starting to see blockchain startups try and compete in these ‘high trust’ industries by leveraging the transparency and auditability component of blockchain. This is very powerful for services such as direct donations, as it enables donors to witness where their money is being directed, as well as new forms of community governance.
