Cryptocurrency and NFT backers are betting on a good market

NEW YORK, NEW YORK – JUNE 29: Sir Tim Berners-Lee auctioned the World Wide Web source code, which was made available to the world free of charge, as an NFT at Sotheby’s on June 29, 2021 in New York. The auction raised $ 5.4 million, which Berners-Lee said will be donated to charity.

Noam Galay | Getty Images Entertainment | Getty Images

Charity is undergoing a technological revolution this Charity Tuesday. Known for driving the arts and entertainment industry forward, NFTs are also innovating in philanthropy, and some of the crypto community’s most ardent and early backers are joining them.

Gemini, a cryptocurrency company founded by bitcoin billionaires Cameron and Tyler Winklevoss, introduced in February a ‘Bring Back With Cryptocurrency’ feature, which gives Gemini wallet holders the ability to donate to over 300 nonprofits through a platform dubbed The Giving Block three years ago. The Giving Block provides a technology stack to connect the crypto community with the philanthropic community, which means that Gemini wallet holders, FTX users, and all of The Giving Block’s other partners can donate any of dozens of cryptocurrencies directly to the non-profit organization. of their choice.

Giving Block has become one of the pillars of cryptocurrency philanthropy, partnering with dozens of platforms and exchanges, as well as hundreds of charities. And as trendy as they are, the logistical and tax implications of cryptocurrency donations aren’t all that different from stock donations.

Donating cryptocurrency isn’t new; United Way was one of the first and largest non-profit organizations to start accepting Bitcoin donations in 2014. Edwin Goutier, vice president of innovation at United Way, told CNBC that back then, “we saw a growing thriving community of people who were passionate about it, as well as a growing wealth base.”

Donation to NFT

Venture capitalist and longtime crypto optimist Bill Tai saw the charitable potential at NFT early on. He was the first Zoom investor and one of the earliest sponsors of Twitter and Tweetdeck, but he also supported DapperLabs, the company behind NBA TopShot and CryptoKitties. In 2018, he commissioned what would eventually become the first NFT for charity: Honu Kitty, a half cat, half turtle, that brought in $ 25,000 in conservation. Now, three years later, Tai has created Metagood, an NFT marketplace that allows donations for every drop in NFT. Metagood investors include Owen Wilson; Richard Branson’s children Holly and Sam Branson; Charlie Lee, inventor of Litecoin; and Woody Harrelson.

Metagood is one of many NFT social projects launched this year. In the summer, Binance launched the NFT for Good collection aimed at charity for children. OpenSea has organized charity events and DoinGud, an NFT marketplace that solicits donations for every sale, launches to the public on Tuesday.

A charitable opportunity in crypto and NFT does not arise without a corresponding opportunity for new platforms to make money. While many in crypto emphasize that the community is a standout feature of the industry, the increased use of cryptocurrency means a larger market in general. “Every time you have an interesting community, you have the opportunity to create trade and currency,” Tai said.

How charities view blockchain

The NFT donation call for charities and donors is not so much about the newness of the blockchain as about its long-term impact. The royalties that have attracted people like Steve Aoki, Kings of Leon, and Gary Vaynerchuk to the NFT ecosystem are also attracting nonprofits that see the secondary and tertiary NFT markets as opportunities for unlimited donation.

DoinGud, built on the Polygon blockchain, allows artists to determine how much of a token’s proceeds goes to charity, as well as what charity will benefit from the sale. At the moment, the platform allows you to place at least 5% in the primary market, and donations from sales in the secondary market are determined in the individual smart contract of each NFT. The default is a 2.5% donation in the secondary market, according to co-founder and curator Kyle Gordon.

As the NFT, as traditional art and collectible assets, accumulates value over time, Goutier says the potential for this new donation model is partly due to the non-profit agreeing to work with DoinGud. “We will have the opportunity to get some of the sales in the secondary market,” he said.

As the initial NFT rises in value, so does the donation, and the nonprofit chosen by the creator benefits from every transaction forever. The benefits are monetary, of course, but also cultural. With each transaction, the nonprofit increases its relevance. “This is a sustainable donation model,” Goutier said.

For artists, NFT profits tend to be diminished by proverbial gas and transaction fees, and donating a portion of the proceeds may seem impracticable for new creators. To combat this, DoinGud instead imposed gas and mint fees on collectors, offering creators a chance to keep 95% of their sales revenue.

However, like all cryptocurrencies, it is still early days. While United Way has been accepting cryptocurrency donations for seven years, cryptocurrencies still represent an extremely small amount of the $ 4.8 billion collected annually – less than 1%, Goutier estimates. NFTs may well help increase that number, but non-profits are now looking at other implications of their corporate wallets. “Do we keep cryptocurrency on our balance sheet?” – said Gutier.

The Giving Block has launched its own version of Giving Monday: NFTuesday, scheduled for December 7th, in conjunction with a Sotheby’s auction for Sostento, a non-profit organization for healthcare professionals. The two are touting the upcoming event as “the largest NFT charity auction ever.”

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