Charity and Cryptocurrency: How Cryptocurrencies Can Replace Fiat Donations

The Coin Times
5 min readFeb 20, 2022


Charity and Cryptocurrency: How Cryptocurrencies Can Replace Fiat Donations

Before the era of cryptocurrencies, fiat has always been the instrument of choice for charitable donations to different foundations and organizations.

With the introduction of cryptocurrencies, one must wonder if cryptocurrencies might become the new fiat for these generous donations.

We are well aware of how beneficial crypto has been to us. This is proven daily as investors continue to delve into the crypto market to either begin a new investment or add to their already existing crypto holdings.

This has shown us that cryptocurrency offers more control, higher returns, and even better flexibility and security than the fiat we have become accustomed to all these years.

Cryptocurrencies come with a lot of features that have brought a lot of benefits, to the extent of making some millionaires all over the globe.

For this reason alone, there is cause to believe that there is more than digital money can offer apart from buying and selling.

Charity donations, for one, are a typical example of what cryptocurrency can be used for. We are now in a technological age where cryptocurrencies, despite their bad-rep in some countries, have become a means for financial transactions.

As such, it should make no difference that crypto be used universally as a means of donating, especially since charities are a fundamental aspect of money management and investors are willing to help the less privileged across the world.

These, perhaps, are some of the views held by 45% of the existing crypto investors who have gone on to donate over $1000 worth of cryptocurrencies to charity organizations in 2020. Surprisingly, only 33% of non-crypto investors have given that much

What this means is that not only is cryptocurrency superior to fiat and stocks, but it has also made crypto investors richer than non-crypto investors, such that crypto investors can afford to give out higher donations when compared to their non-crypto counterparts.

In a world ravaged by so much poverty, now may actually be just the time for cryptocurrency to be centred not only on wealth creation but also on philanthropy, improving the world for the best and reducing certain afflictions such as world hunger.

We can start this by encouraging more decentralization and flexibility so that crypto donors feel in control of their funds and how these funds are allocated and used after they are donated.

Having the right technology for crypto donations

Making crypto donations, apart from being a reality, is dependent on the use and availability of certain technologies.

In a world where transactions are undertaken at breath-taking speeds, the right technological tools would need to be applied here to enable crypto donations to be seamless, flexible, and very fast.

One such technological tool that can be used here is none other than blockchain technology. The blockchain serves as the foundation for cryptocurrency, and with it, cryptocurrency can be programmed to become the perfect choice for donations.

One important factor to consider, however, is that cryptocurrencies would have to be able to generate yields or returns so that investors can receive earnings on their investments.

Thankfully, with the existence of Aave and Curve (DeFi), yields are offered on cryptocurrencies ranging from 5 to 20%, although this could also be higher for some others, like Solana.

These are processes that are known to investors and decentralized finance firms who are working towards maximizing the potential of cryptocurrency to the fullest while still protecting the interests of those in the crypto market.

Firms such as Sandlock are also providing ways by which people can accept crypto and add it to their investment portfolios.

They are also aiming to secure the funds of these users by partnering with insurance companies, a move that will make crypto a worthwhile investment.

Understanding the need of investors to achieve wealth through crypto while also helping to solve global afflictions such as world hunger is a step forward in the utilization and growth of cryptocurrencies.

The issue of taxes on crypto donations

It is one thing for cryptocurrencies to be accepted for donations; it is another to realize that cryptocurrency donations are usually taxed by the revenue service team depending on one’s region.

For example, in the United States, the IRS views crypto donations as taxable and you even have to pay a capital gains tax of between 0% and 20% for crypto held by you for over a year.

This issue at first may discourage investors from wanting to donate said cryptocurrencies, but the issue remains that there are ways to circumvent these taxes, and one of them is whitelisting.

Whitelisting is a feature that typically comes with some cryptocurrencies and is usually used to allocate crypto to special addresses.

Investors who make use of this whitelisting feature will realize that they are capable of reducing their tax payments when donating crypto to specific addresses.

Another method which investors can use to circumvent taxes is through the use of third-party platforms. This makes things easy for both the donor and the charity organization.

In cases where these charitable organizations do not accept crypto as donations, the third-party platforms come in. They can help convert the crypto to fiat and give it to the organization, or they could simply buy relevant items and donate them to the organization in proxy of the original donor.

These methods are quite feasible and it is left to the investors to decide which to use when donating crypto.

Today, several charity organizations have discovered the potential cryptocurrencies hold and now accept cryptocurrencies, although the number they support is still severely limited.

This means that there is still a lot of work to be done as so many charity organizations out there need to be provided with these unique opportunities.

Everyone has a role to play in this, starting from cryptocurrency becoming more flexible, to non-crypto investors being encouraged even more to donate crypto, and lastly, to these charity organizations that do not know the opportunity that lies in cryptocurrencies being provided with a means to know so.



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