It seems that nearly every week a new report appears about the potential for blockchain to transform the charity sector. The latest, Nothing to Lose (But Your Chains), by Asheem Singh, claims to give a more balanced view. We desperately need a measured approach to over-hyped technologies such as blockchain, but I don’t think this report provides it.
Blockchain is the technology that underpins cryptocurrencies such as Bitcoin. It provides a public, immutable ledger of financial transactions that purportedly removes the need for middlemen such as banks. It can power "smart contracts", which automatically release funds when certain pre-agreed conditions are met. Blockchain’s supporters claim it can solve myriad problems for the charity sector, such as improving donor trust and reducing the risk of corruption when sending funds to developing countries.
I’ve written before about why I think blockchain isn’t the right solution for charities, and Singh’s report acknowledges that the technology is "no silver bullet". However, in my view the report also demonstrates symptoms of a concerning fetishisation of technology.
Like everything else, technology is produced by fallible humans. Singh presents the DAO as a potential model for charities to follow: this was a decentralised investment fund that featured code written on the blockchain, supposedly functioning as a kind of automated machine. Singh mentions in passing that the DAO was hacked; what he doesn’t mention is that the "hacker" simply used the way the code was written to find a helpful, and lucrative, loophole. Not such a "smart contract" after all.
Singh goes into no detail about how to avoid this type of "hack". Technology is just as vulnerable to the risks of human error as any other discipline, and is likely to be related to problems of organisational culture and management. By claiming to be balanced while also skimming over risks like this and the extreme volatility of cryptocurrencies, the report does the charity sector a disservice.
I agree with Singh that there’s a need for charities to take control of the conversation about charity and tech, because those selling blockchain appear to be dominating it at the moment. But Singh’s report undermines this argument when it recommends forming a blockchain taskforce, all members of which should have a technical background. A basic level of intelligence, curiosity and health scepticism is perfectly sufficient to understand the potential impact of a new technology. Claiming that special expertise is required disempowers charities.
It’s not clear to me why blockchain – with all the new risks and challenges it would bring – is the best solution to the charity sector’s problems. Donor trust can be improved through nurturing relationships. Accountability can be managed through high-quality reporting. These aren’t easy things to get right, but flinging a new technology at these complex challenges won’t help.
Finally, I think we should question why blockchain is being pushed so hard onto the charity sector. Who stands to make a profit? Do the ideologies behind blockchain and cryptocurrency match the values of our charities? I’ve argued that they don’t.
I’ll retain my scepticism until I see hard evidence that blockchain has helped charities in a meaningful, measurable way that would have been impossible through any less risky option. I agree that we must get involved in exploring the potential of new technologies, but we need to prevent those with their own agendas from pushing us in the wrong direction.
Hayley Gullen is a trusts and major gifts fundraiser. She writes at www.scepticalfundraiser.com