Applications of blockchain technology are being seen for every possible business idea. But blockchain can be less suitable than many might believe in most business areas. The essence of a distributed computing system takes up far more resources and is far less efficient than its centralized counterpart.
One area that Changpeng Zhao, CEO of Binance, feels decentralized technology can make a big beneficial impact is philanthropy. In a GitHub article published in 2014, Zhao notes several pressing problems with charity businesses. These include excessive administration costs, corruption, inadequate and inefficient use of funds, and lack of transparency. There is also no way to clarify that the funds are going to the end beneficiary.
Zhao sees several ways that decentralized technology can be used to overcome this.
It can make the process more transparent. Transactions will be recorded on a public ledger, and inadequate use of funds or excessive spending will be easily recognized. Also, it imposes a standard for organizations to comply with. If a charitable organization estimates that costs will be approximately 8% of funds raised but exceeds this, questions will be raised.
In 2014, Zhao had little resources and capability to execute much of these ideas. Today, Binance is the largest exchange by trading volume, and Zhao is looking to make an impact with this success. Zhao has published an article on Medium detailing the architecture of the Binance Charity Foundation (BCF).
The BCF will implement a multilayered blockchain technology system that will track every transaction and provide a transparent overview of the organization. This transparent overview is proposed to be presented via a website, which will be understandable to the general public.
Donors will be able to donate to a charity of their choosing, either publicly or anonymously. Donors will be able to choose from multiple different coins that operate on multiple different blockchains. The BCF can then either work with charity partners or distribute the funds directly to end beneficiaries. End beneficiaries will be educated on how to operate a cryptocurrency wallet to receive the funds. This education is proposed to be funded by the Binance Academy. End beneficiaries will also have their anonymity protected through a permissioning system that only certified volunteers will have access to.
— Binance (@binance) October 9, 2018
No to ICOs…
It seems like, over the past two years, every project wants to do an initial coin offering (ICO). Changpeng Zhao is in a unique position to understand about ICO tokens given that Binance is in the business of listing tokens.
It is refreshing to see that Zhao is seeing no need for an ICO or a separate blockchain with this project. Zhao acknowledges the conflict of interest and the limitations it will impose on people wishing to donate in other cryptocurrencies or fiat currency.