Blockchain, the technology behind the virtual currency Bitcoin, is creating a new model for charities in China.
Around the end of 2016 Zhongtopia, an online mutual aid networks platform, used blockchain technology to create Xinchain, a database which can track the transactions of charitable donations.
According to Zhongtopia’s CEO Qiaoke, as a shared public ledger Xinchain is able to turn giving donations into a traceable, tamper-proof process. “With Xinchain, we hope to enable the public to see the real situation of the charity sector, while at the same time allowing charities to gain trust from the public”, says Qiaoke.
Following Xinchain’s initial success, Ant Financial, the affiliate of the Alibaba Group Holding Ltd., started using blockchain technology comprehensively on its Alipay donations platform, entitled Ant Love.
China’s Red Cross Foundation and the One Foundation have been among the first philanthropic organizations in China to apply for blockchain programs on Alipay.
“Compared with previous philanthropic platforms, these ones are indeed something new,” says Shen Yu, deputy secretary-general of One Foundation. “The largest difference is that blockchain stipulates that the whole process of donations has to take place on Alipay. Blockchain extracts all transaction details automatically, thus ensuring a clear and transparent cash flow.”
Chinese philanthropy has been thriving these years, but the sector has been plagued by scandals and mismanagement. The necessity to improve charities’ transparency has increasingly become the consensus within the industry.
It is believed by some that blockchain technology could be a solution to the current opaqueness of the industry, and improve the accountability of philanthropic organizations. “Blockchain may appeal to charities with similar programs. On the other hand, it can also be a challenge for organizations, especially in terms of data transparency and standardization”, explains a representative of the One Foundation.