Cryptocurrency donations increase speed and global reach during crisis

According to many players in the industry, donations made in cryptocurrencies are proving to be a quick and far-reaching way to provide financial assistance in times of crisis.

This was proven after the devastating earthquakes that hit parts of Turkey and Syria in February. Blockchain analytics firm Chainalysis estimates that approximately $5.9 million in donations have been donated to support relief efforts in the region in the month since the disaster struck.

The Turkish Ministry of Interior’s Humanitarian Aid Campaign, Turkish Red Crescent, Save the Children and Project Hope have received cryptocurrency-based donations. Additionally, multiple cryptocurrency exchanges, including Binance, Tether, Bitfinex, OKX, and KuCoin, have donated more than $9 million to support victims in the region.

Cointelegraph contacted Chainalysis to unpack the methodology used to track cryptocurrency-based donations to support rescue efforts in Turkey and Syria.

Chainalysis research director Kim Grauer said the company 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 designed to divert donations from unsuspecting backers.

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

“Cryptocurrencies are cross-border, instantaneous and liquid, which makes them the perfect technology to raise funds and deliver them to where they are needed most quickly.”

Grauer also highlights the ability to closely monitor blockchain data as another strong case for the utility of cryptocurrencies in facilitating donations and support after disasters and major emergencies:

“Blockchain transparency is a unique benefit for cryptocurrency, helping organizations track donations and help law enforcement identify and track illicit schemes trying to exploit in 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 raised $7.4 million in cryptocurrency donations.

Related: Ukraine has made $70 million in cryptocurrency donations since the start of the conflict in Russia

This continued during the organization’s earthquake recovery efforts in Turkey and Syria. Roupell highlights a number of benefits of cryptocurrency-based donations over fiat-based donations.

“The vast majority of our crypto donors are first-time donors to Save the Children, so cryptocurrency has enabled us to access a new and growing base of supporters.”

According to Roupell, the functionality of Blockchain also enables repeated giving. In 2021, Save the Children received a number of Ethereum donations from NFT sales, some of which encoded future donations through the NFT’s specific smart contract feature.

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

Highlighting the positives, Roupell said the downside was the anonymity of most cryptocurrency donors, precluding the ability to thank donors for their contributions.

Roupell believes there is great value in facilitating and supporting relief efforts around the world, and humanitarian organizations will play an increasingly important role in integrating and scaling access at the local level:

“Cryptocurrencies are a great tool for donating, but the underlying technology, peer-to-peer electronic cash, is truly revolutionary for economic integration.”

The charity supports a variety of cryptocurrencies that are accepted by cryptocurrency donation platform The Giving Block, while Roupell said the organization “does not endorse, promote or evaluate” any specific tokens. It also accepts global fiat currencies and equities, and prioritizes raising urgent funds to support global humanitarian efforts.