To those promoting social justice, the terms crypto, blockchain, digital wallets, digital currencies, minting and listing NFTs may seem like something from a different, made-up, world. Whilst these phrases appear far from the realities of humanitarian emergencies like famine or sexual violence in conflict, they are rapidly becoming fully integrated with what is perceived as reality.
Here's why.
Mobile access leapfrogging and the evolution of the internet
Most conflicts occur in the global south. This is also where the need for social protection is the highest. Looking at sub-Saharan Africa, about 38% of the over 1 billion people on the continent live on less than 60 USD a month. At the same time, almost every other person in the region (that's almost 500 million people) is subscribed to mobile services. Including those with access to a phone, this figure is closer to 7 in 10 people. Over 40% of the population is under 15 years old, so the figure of those on mobile subscriptions is in its infancy. More people have mobile phones than electricity in the region. Populations have leapfrogged from negligible access to basic technologies like running water in their village or landlines installed, to suddenly being able to follow social media influencer trends from the other side of the globe in real-time. The same can be said for some areas transiting from no electricity source at all to green energy like solar power. These are significant advances in technology for regions that have, up until recently, been very much left behind.
International institutions have sought to close this technological gap partly by recognising the need to facilitate internet access. In 2016, the UN Human Rights Council adopted a resolution that calls upon all States to promote digital literacy and to facilitate access to information on the Internet. At the time of drafting, the world had already seen the first phase of the internet, Web1, which mainly consisted of users interacting with the internet through reading it. The UN resolution conceived of the right to the internet at the height of Web2. Web2, the current phase, is defined as the second phase of the internet, where users are encouraged to post their information and interact with what they read by liking and commenting on blogs, and of course, a few global social media platforms. (These platforms own the data you share, an important feature of Web2, and has led to various consumer data protection legislation.) Whilst some states have more resources to be able to provide internet access than others, accessing the internet was still acknowledged as crucial for all. So far, so good.
Enter… Web3. Moving on from getting information from the internet to interacting with that information and your information being owned by a few platforms, Web3 is about users owning the internet. With the help of public and transparent databases to verify information (blockchains), Web3 promises an internet that is decentralised, democratic and peer to peer. Instead of using social media platforms for free and having their data sold, users can perform actions in Web3 that contribute to upholding the very system they are using. These actions are performed in exchange for cryptocurrency, in the same way you currently provide your data in exchange for using social media services. In Web3, you don’t sell your data, you perform actions, and in return you receive cryptocurrency or other digital assets — like non-fungible tokens.
Web3 is essentially a digital world of transactional ownership, which can be bought in exchange for completing tasks that contribute to running that world, or in exchange for fiat money (traditional currencies like USD or GBP) that you use to purchase cryptocurrency. What do you then own? You might own an actual currency, like Bitcoin. But you may also own a different type of digital asset — an asset that you can’t necessarily exchange for another of its type, namely a non-fungible token. This is a token where your ownership is recorded on that public database, and no one can question that you own that token, because there is only one token identity of its kind. An NFT can be embodied by anything, and until now, we’ve seen representations in the form of digital art, music, videos and tickets.
The introduction of NFTs and their marketplaces
Whilst the technology behind non-fungible tokens (NFTs) has existed for some time, the hype around NFTs came to a peak in 2021. Digital assets represented by some form of media sold for hundreds of thousands of dollars apiece. Why would anyone use real money to buy a digital photo which they could simply take a screenshot of and download to their laptop, you ask? Well — the token, the T in NFT, can be used in a digital portfolio, showing the verified ownership of that token, and who sold it. The owner can publicly show their ownership of that item, on social media or other platforms, or list it for sale later.
NFTs are available on what are called NFT marketplaces. There are several, the biggest one being OpenSea. OpenSea has publicly said that 80% of the representations of its tokens using its popular free minting tool are scams, placing a large onus on users to research the accounts selling the NFTs, ensuring these are genuine and bona fide. Other platforms require those who post NFTs to go through a process verifying their identities, to prevent fraudulent NFTs from being ‘minted’ (created in that public database). Whilst the technology itself is secure, traceable and transparent, it is by its very nature decentralised, and very new. There are users creating fake duplicates of NFT projects and some level of buyer scrutiny will always be necessary. This is the case for Web2 services as well.
Whilst the largest group of buyers are still those looking to buy an NFT as an investment, a great deal of revenue from big NFT projects in 2021 was donated to charitable causes. This gave the founders at NFT marketplace Maxity an idea. What if there was a marketplace for NFTs dedicated only to charity? And, what if the NFTs on that marketplace only came from non-for-profit organisations that had been verified?
The new way of giving
You may be thinking — sure, but no charity is going to enter an unregulated space using technology that is easily subject to malpractice. Certainly, the not-for-profit sector has not been renowned for its swift adoption of new and innovative technologies. Still, worldwide national lockdowns forced a much quicker implementation of available technology to continue to deliver services that communities relied on, that otherwise would not have been feasible. Whilst global production slowed down during the pandemic, the easing of restrictions has inevitably led to all sectors returning to work with a stronger skill set in using technology, including the charity sector. In many sectors, printing physical documents is a thing of the past, even in countries with power cuts and spotty internet.
The NFT market was in what is called a 'bull' market in 2021 and has over the last few months entered a 'bear market' phase. This means that sales have drastically reduced. Given how inflated the prices of NFTs had become, this was bound to happen. The current bear market allows more mainstream users to enter, purchasing, selling and trading NFTs for say $100 each, instead of $10,000. That is what the Maxity founders want: to provide a platform for NFTs to be bought, sold and traded by the mainstream user, with the proceeds going directly to the charity that listed the tokens for sale (minus a 2% platform fee, which all marketplaces charge). As more users enter Web3 and the world of NFTs, Maxity offers those interested in supporting a cause a whole new way of giving.
The Charities Aid Foundation stated that 1 in 3 adults donated in 2020. There's been a shift of donors from the global north to the global south in recent years, with Indonesia topping the charts. In spite of, or perhaps because of, the pandemic, donations have increased and the appetite for mobile giving has never been higher. Web3 and NFTs, then, give non-for-profit organisations a never-seen-before platform to foster global communities of donors, virtually. Particularly grassroots organisations now can access and grow funding that would never have been available to them in the past. In return, donors get a digital token of appreciation for their donation, that they can collect and use as they navigate social media, showing their participation in a community –indeed also eventually in the Metaverse (but we'll leave thatworld for another time). They can also list it for sale later on, leading to further funding for the not-for-profit. Sounds like a win-win, right?
It is, and this new technology has the potential to have a significant impact; particularly for organisations operating in unstable economies, and see savings eroded by inflation or economic policies challenged by corruption. It also provides an opportunity to promote local artist talent, empowering artists who otherwise would remain unnoticed. If applied conscientiously, the technology behind NFTs could be the largest innovation the sector has ever seen. Instead of funding going primarily to big, established organisations because of the strict requirements on due diligence set by large donors, grassroots organisations now have a potentially completely different donor base.
Tapping into the new way of giving requires that organisations have an interest in technology, innovative ways of fundraising, and in fostering that community of donors. It requires thought behind the design and marketing of the NFTs that are minted and listed. Very simply, it also requires an internet connection. Whilst this is just the beginning, there is no question that this is the future. Done well, quickly, and efficiently, this is a game changer for the non-for-profit sector raising funds, including humanitarian causes.
Written by Natasha Ryan (Head of Partnerships, Maxity.io)