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Benefiting the world with blockchain

Its transparent, immutable qualities align with a nonprofit business model.

Technicians monitoring cryptocurrency mining rigs; companies should be using blockchain technology for good.

BLOCKCHAIN technology's potential to disrupt the financial, social and political realms is undisputed. However, blockchain and cryptocurrency businesses can easily fail without a strong business model, which aims to innovate these areas. Rather than seeking to profit off the backs of trusting investors, companies should be using this incredible technology for good. Yet there have been countless cases of startups exploiting the token economics model to simply cash in on market hysteria.

We should instead be using the technology to reduce global economic inequality, granting people first-time access to the financial system which has largely ignored or exploited them. A recent Oxfam report revealed that 82 per cent of the world's wealth created last year went to the top one per cent of the global population. Winnie Byanyima, executive director of Oxfam, said: "A new future is possible by redesigning our economy . . . to shepherd in a technological revolution that works for all."

Blockchain technology is the digitisation of records. It acts like a global spreadsheet that stores a permanent history of all information shared to it, such as transactions between people, personal data or business contracts. Anyone can access and contribute to it, but never tamper with it. It is also decentralised, meaning that no one central group or organisation owns or controls it - anyone in the world can help maintain it and ensure its longevity.

Blockchain technology's inherently transparent, immutable and trustless qualities align perfectly with a nonprofit business model. Our blockchain community should champion these attributes, and help to build a new world economy founded on egalitarian values. Blockchain startups can easily establish themselves as a not-for-profit or public company to gain trust and credibility within the very precarious world of initial coin offerings, or ICO (a crowdfunding campaign or blockchain version of an initial public offering, or IPO) and questionable tokens (or cryptocurrencies).

Here are three reasons why merging blockchain technology with a nonprofit business model can fulfil our duty to users, investors and regulators worldwide, while also helping to create a far more equal world.

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Communities are the heart and soul of blockchain technology projects. Without the continuous support of your users, investors, and the wider blockchain community, there is little else that keeps your business afloat. The nonprofit model is an attempt to bring blockchain's community values to the real world.

A Token Report analysis of 226 ICOs held in 2017 showed that less than 10 per cent of all these projects' tokens actually demonstrated a useful function. Most of them failed as there was no use for their token other than a promise of financial reward. Startups promoting tokens which only offer a financial incentive will eventually fail, as they become victim to a highly volatile and unregulated market. That is why companies should ensure that their tokens offer a utility and serve a genuine function.

Companies creating tokens which serve the community and offer utility will transform people's lives, as well as a range of industries such as logistics, energy and real estate. Utility tokens can give users access to a product or service such as energy, cloud storage or fractionalised property ownership. If a token or asset benefits a community, this will ultimately help businesses flourish and be sustainable over the long term.

In the real estate industry for example, we can use the nonprofit-blockchain hybrid business model to tokenise property and share it among a community. We can give people access to real estate by providing them with token representations that hold real-world value. This will democratise real estate ownership and dilute the concentration of property ownership worldwide.

To illustrate how this works, let us use an example of a rice farmer who wants to grow and then sell rice to his local community. They would have to risk personal capital upfront by buying seeds; time and labour spent planting crops - and hope for both a successful yield and interested buyers. Buyers themselves would purchase a sack of rice for a price determined by fluctuating supply and demand.

This traditional model can be restructured to eliminate both risk and waste. We can now bring together a community who all want rice and can pool their resources together to buy the seeds and invest in the crops. Everyone has contributed, and so everyone will receive an equal or dedicated share of rice in return.

We can do the same thing with real estate - find a community that would like to invest in and utilise properties, and pool their resources together to achieve this in a sustainable and affordable way. We can all shape this new economy based on egalitarianism, unlocking access to assets that have traditionally been out of reach and held by the elite.


The very concept of blockchain technology is built on the philosophy of transparency. However, as the blockchain space has evolved, the community is becoming increasingly sceptical of companies launching ICOs, compelling them to justify their tokens and calling for regular audits.

A nonprofit business model aligns perfectly with blockchain's inherent transparency. Companies can forge relationships with users that are built on trust and accountability. Any business conducted is completely traceable, transparent and binding using blockchain, as all raised funds can be tracked from the minute that it leaves an investor's wallet, to wherever it is spent or stored. Every transaction is linked to a unique ID, and this can be viewed by anyone in the world, following the money as it moves along the blockchain.

Additionally, blockchain's decentralised architecture means that there is no need for a central authority or third party to verify or maintain records of any business being conducted. Companies can operate as Decentralised Autonomous Organisations (DAO), where all financial transactions are run by sophisticated computer programs rather than people, and recorded and maintained on a blockchain. Furthermore, this model gives all stakeholders an equal vote in the running of the business.

However, as DAOs currently only exist in a digital sense, legal systems do not recognise that assets can be owned by a DAO. By using a not-for-profit model, and establishing a company as a "public company limited by guarantee" for example, companies can be the proxy between the DAO and the asset. This does not make the business a charity by default; it will still operate and be taxed as a regular company. There are no shareholders, and any profits cannot be distributed out. If the company is liquidated, assets can be transferred or donated to another similar nonprofit organisation.


The nonprofit sector has typically existed to serve social good, funded by charitable donations which then hopefully help a cause that they are committed to. Now, the nonprofit business model can be applied to blockchain projects to instill trust in both investors and regulators, demonstrating that the business functions similarly in serving a social good, but is not a charity.

Running a blockchain business as a nonprofit will help these companies act within clear regulatory compliant and ethical frameworks. The distinction is important, especially when considering tax, the company structure and day-to-day operations. Companies need business strategies that are ethically driven to protect themselves and honour their commitment to investors and wider communities. Such was the case with Kodak's notable KodakCoin ICO launch, which was delayed in order to verify the accreditation of each potential investor.

The World Inequality Report, published in December last year by the World Inequality Lab at the Paris School of Economics, shows that governments and business leaders can also significantly reduce economic inequality, especially in this new technological era. In the United Kingdom alone, a court ruled that drivers working for tech giant Uber be legally recognised as employees, rather than self-employed, and therefore entitled to the minimum wage, holiday pay and paid rest breaks.

Blockchain needs people who want to change the world for the better, and the nonprofit model lends itself to such aspirations. Blockchain companies should be dedicated to figuring out what society truly needs and how the current system fails us. This is the gap that we need to address, and this is where the nonprofit business model and blockchain collide to bring much needed change to the world.

  • The writer is co-founder and CEO of Crowdvilla, a blockchain-based startup that aims to democratise property ownership worldwide.

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