While many people think of blockchain technology and cryptocurrencies as a way to revolutionise Finance, there are a number of ways it can improve people’s lives.
One of those ways is directly through the power of blockchain donations and decentralised non profit organisations. These entities are using the technology to better other’s lives in a very tangible way.
One of the projects that is doing just this is Carebit, the first independent charity on the blockchain.
In this Carebit review, we will dig into the project, the technology, use cases and roadmap in order to give you the most important information about its future prospects. Let’s dig right in.
What is CareBit?
CareBit is a digital charity that is built on top of its very own blockchain. It is supposedly also one of the first charities to have its own blockchain.
Why is this important? Transparency.
When you send funds to a charity, you usually have very little clarity on where the funds are being used and whether they are being used as intended. This sometimes creates a lack of trust between the donors that have submitted funds and the charity.
Given that the blockchain is a fully transparent and immutable ledger, there is complete transparency as to all transactions that take place on it. When a charity makes a contribution, the transaction can be seen and verified on the blockchain.
Carebit will be creating two funds which will administer the donations. The first will be the emergency funds that will be used to respond to disaster situations as they happen. This will also be done in partnership with other existing charities.
Carebit also has its own utility token that is used on the blockchain. CARE tokens will be held by those who contributed funds and they will earn the holder a return from running a masternode (more on this below).
Currently, CareBit is a Proof-of-Work cryptocurrency. This means that transactions are verified and blocks discovered through mining. This is how other popular cryptocurrencies such as Bitcoin and Litecoin obtain consensus.
According to the Carebit protocol, by block 400 the algorithm will switch from a PoW model to a Proof-of-Stake (PoS) based consensus algorithm. This is where members of the community who “stake” their coins will be allowed to verify the transactions. Below is the block rewards that the miners will get when they are firstly operating through POW and then through POS. The maximum amount of CARE tokens that will be available on the market is set to 200m.
Once CareBit moves from PoW mining to PoS, the validating nodes on the network will be called the “masternodes”.
So what are masternodes?
These are essentially nodes in the network that require a certain minimum of coins to operate. These masternodes will then be the validators which will confirm all of the transactions on the network. We have covered the mechanics of masternodes beforehand.
In the Carebit ecosystem, these masternodes are required to stake 30,000 CARE tokens. These will be held as “collateral” in the protocol and will earn the holder of the masternodes the mining rewards which can be viewed as a regular stream of income.
In order for the carebit ecosystem to move forward, important development decisions need to be made.
Therefore, to make sure that these decisions are being made in an equitable manner, a governance structure is needed. The Carebit governance structure together with the voting rights applicable to each member are defined here below.
Image via Carbit FAQs
In the above, the “community” are those members who are part of the masternode ecosystem. In order for you as a masternode operator to get the member voting right you need to own a minimum of 5 masternodes. This will therefore require you to stake 150,000 CARE.
Hence, not only will masternode operators have the opportunity to earn an extra income from the staking of their coins with the masternodes but they will also have a stake in the future development of the project.
Carebit will control two donation wallets that will be in CARE and BTC. There will also be a donation wallet that will manage all of the expenses of administering the non-profit.
In the initial stages of the project, donations will be made to the recipients through Bitcoin. The hope is that over time, as the value of CARE tokens increase, Carebit can eventually start using these to make their donations.
Those who have donated to Carebit will be able to see where their donations have gone. This creates that level of transparency in the ecosystem that we talked about above.
Carebit will also control the amount of funds that are being released to the recipients so that they avoid any impacts on the market price of CARE tokens. The team will use their expertise to try and find the right balance between donations and retained funds.
How Will Charities be Chosen?
So we know that Carebit will help those who are in need, but how will this be decided?
Carebit will work with existing charities intimately to determine which projects will receive allocations of the funds. They have already contacted some charities and confirmed that they will accept donations in Bitcoin. The charities are CAF and BitGive.
The hope of BitCare is that in time, they will get the charities to also accept CARE tokens. This could create an ecosystem where charities could either sell the CARE tokens on an exchange and use the funds to help those in need or they could hold the tokens in a masternode and earn a stream of income for their recipients.
How Will Payments Be Made
Image via Carebit.org
While cryptocurrencies are a really revolutionary asset, they will still need to be converted into Fiat currency to be used in the programs of the charities. This is where cryptocurrency card projects such as TenX and Monaco (MCO) come into play.
It is the hope of Carebit to partner with projects like this so that the cards can help smooth the spending of the charities. It would also be really helpful for those in the community who would like to contribute BTC or CARE tokens with the Fiat currency in their bank accounts.
Carebit has taken the stance that they will never make donations in Fiat to the charities as they claim this will defeat the purpose of the entire ecosystem. They will require the individual / organisation to have a receiving CARE address before they can claim any funds from the Carebit funds. In addition the spending of the funds by those charities will be monitored by Carebit team on the ground.
As we have shown, blockchain technology and cryptocurrency can be used not only to decentralise the financial system but also to help those in need.
The transparency that is provided by the blockchain as well as the security afforded by cryptography means that donations can easily be tracked from end to end. Carebit is forming great partnerships with charities and also spreading adoption of cryptocurrencies to the non-profit community.
Through the use of the CARE tokens, they are also creating an ecosystem where a unique “donation” token is used. The masternode status of the network means that those who stake their coins can also receive an ongoing income for it.
There are indeed challenges that come from using cryptocurrencies for donations. Prices are really volatile and hence projections will be difficult to make. Moreover, if there is not enough adoption for the CARE tokens then they will not attain value and hence their utility.
One can only hope that the CareBit team is aware of this and is taking the correct steps to monitor supply and obtain the necessary exchange listings.
Featured Image via Fotolia