Remember the early days of the internet? In the 1990s, most of us could not have predicted how that new technology would pervade nearly every aspect of our lives. In many ways, blockchain technology is a similar phenomenon.
Most of us first heard about blockchain as the backbone of the cryptocurrency Bitcoin. While Bitcoin still is the largest implementation of the technology, blockchain is about more than currency, and we continue to see new and exciting applications.
Although it's still early days, the technology is already impacting nonprofits in a variety of ways. For example:
So, does it make sense to consider how blockchain technology could impact your nonprofit? To answer that question, you must first understand what makes the technology so powerful, and what it will allow you to do.
A blockchain is a decentralized, digital ledger for tracking all transactions that occur within a particular ecosystem. Unlike a ledger that is maintained by a single organization and exists only in one place, it is distributed across every participant in the ecosystem. Transactions are recorded chronologically, and the data is stored on potentially hundreds or thousands of nodes (computers), which are simultaneously updated. All the nodes keep a copy of the ledger and validate with one another that they are recording the same information.
The ledger can be open to the entire public or just to a limited group. But since the information is stored on multiple nodes, it's much more secure. It becomes extremely difficult to reverse a transaction or illicitly change the record, short of hacking into all the nodes and changing the information on every single one.
Due to its digital, distributed nature, blockchain has a number of positive characteristics that could be beneficial to donors, nonprofits and those they serve:
Blockchain is likely to have a growing impact on all types of for-profit and nonprofit organizations, so it's not too early to have it on your radar. Assess where it might enhance your mission and support your development and program delivery goals, and think about how factors such as anonymity and decentralization might be liabilities. This will help your organization take advantage of whatever the future holds for this exciting new technology.