Charity Crypto: Revolutionizing Money Or Another Marketing Ploy?
It has not been a great month for the crypto market (May 2021).
High volatility continues to undermine Bitcoins use-case as a long term store of value. Meanwhile, the astronomical rise and fall of meme-based coins like Doge (along with its many “shitcoin” copycats) have highlighted the troubling game being played by speculative retail investors – and the celebrity influencers who egg them on.
But the long term trends still look good for crypto.
More people than ever before are buying and trading non-fiat currencies. According to a report issued by the exchange Crypto.com, the number of global crypto users reached 106 million in January 2021.
The number of coins is spiking too. It is estimated that there are around 4,500 coins currently in circulation. And that doesn’t account for all the failed launches. Thousands of coins have been created and crashed in the last few months alone.
The range of choice is staggering.
Indeed, coins are facing an uphill struggle to gain attention. In this money market, coins are competing for users in the same way that businesses seek out customers. This pressure has generated plenty of scams, but there are a few interesting ideas too.
One of the differentiators turning heads in the world of low-cap cryptocurrency is the “charity coin”.
The basic concept is simple. All cryptocurrencies have transaction fees to discourage unnecessary trading and bots. Charity coins divert a certain amount of this transaction fee to charitable causes.
In a world where money competes for users, charity coins are a great argument in favour of your coin.
At virtually no additional cost, the coin-holder can generate passive income for a charitable cause of their choosing. In other words, they can do good while “doing” very little.
The concept has been deployed successfully in other fields. The browser extension Ecosia works on the same principle. Ecosia is a search engine that donates its ad revenue to tree-planting efforts. To date, the company has planted over 126 million.
If users are willing to embrace charitable search engines, why not a charity coin?
“Do it for the Meme”
Charity coins have surged in popularity in recent months, particularly in the strange world of low cap cryptocurrency. Elon Musk (predictably) has even issued a weird tweet about it. “Hodl the rainforests!!” the Tesla founder posted on 9 March (“hodl” is a slang term for holding crypto).
Hodl the rainforests!
This unconventional marketing strategy has borne fruit. On 26 April, ELONGATE briefly exceeded a total volume of $15 million, though it has since dropped substantially.
Given that half of ELONGATE’s 10% transaction fee is diverted to charity the positive ramifications of its rise could be huge.
For all this excitement, however, there are still plenty of reasons to be wary of charity coins. While their core concept may be interesting, the open-source nature of their code means that any developer can easily create their own charity coin clone.
And they don’t always do so for the right reasons.
Hamish (not his real name) is a low-cap trader who made nearly one hundred thousand dollars from meme-coin trading.
As he explained it, “a charity use case” is useful because it gives new coins enough creditability to generate hype. This raises the price. “Just make sure you sell before the developers do”, he added.
The open-source nature of their code means that any developer can easily create their own charity coin clone.
Hamish was pretty cynical about the charity coins craze: “Every new coin has some kind of charity use case – most of its bullshit”.
In the future, charity coins might change the way we see the money. One day passive donations might do enormous good. For now, be wary of hype.
Header Image: Elon Musk at GTC 2015 via NVIDIA Corporation (Flickr)