Can blockchain make charity more transparent? There are still obstacles to breaking the information asymmetry

In China, many people want to do charity, but the openness and transparency of many charity organizations are always difficult to match the trust and support of such a huge scale. The "Guo Meimei incident" in the previous year made a group of people stay away from charity. The new "Charity Law" officially implemented on September 1 this year clearly requires charity organizations to publicly disclose their accounts and publish fundraising information on designated platforms.

At the same time, the Internet company Ant Financial began to pilot the transparency of the "public welfare account book" from a technical perspective. Although it is still imperfect, relying on the Internet blockchain technology that is popular in the market, the public welfare account book will truly be open, transparent and clear.

The good news is that Ant Financial is not the only one paying attention to and trying to introduce this technology into public welfare projects. Although there are still many difficulties ahead, as more and more people begin to pay attention to the value that this technology can bring, it provides a possibility for accelerating the transparency of public welfare.

IT Times reporter Zhang Weiwei and Wu Yuxin

Public welfare ledger made of blockchain: transparent and unchangeable <br/>For donors, the most important thing is whether their donations have been delivered to the recipients. However, as far as the current system is concerned, there are many links involved and the degree of disclosure of information in the middle is low. Many people cannot clearly understand the whereabouts of their donations, so it is difficult to establish real trust in current charity.

Just recently, an experimental charity fundraising project appeared on Ant Financial's Alipay Love Donation Platform: when a donor donates money to 10 poor hearing-impaired children, he can see his donations become a package in the "Love Delivery Record". Starting from the donor, each "mailing" node will be stamped with a "postmark", and each "postmark" can be publicly queried by the donor, including bank and logistics information. For the first time, users can watch how their donations are transferred from the Alipay platform to the project executor's account, and finally into the designated account of the beneficiary. Compared with the previous Internet public welfare disclosure process, each link of the flow of donations has been refined, and at the same time, the information left by this system will be permanently valid.

This is also the first time in China that the "blockchain" technology has been publicly applied to public welfare. "Blockchain is a digital account book with the characteristics of being tamper-proof. Its openness and transparency have natural coupling points with public welfare." Zhao Zunkui, a senior architect of Ant Financial, explained to reporters that the blockchain application they are currently piloting is to allow users' donations to enter the system, and the entire life cycle can be automatically recorded on the blockchain, forming a complete ecological closed loop. Based on the consensus principle of all nodes, at each node, information is synchronized and multiple parties keep accounts. Even Ant Financial cannot change the data.

Zhao Zunkui told reporters that some public welfare projects have more complicated scenarios, involving more partners than donation projects, and have higher requirements for blockchain technology and consensus mechanisms. For example, some international poverty alleviation projects transport supplies to Africa, and the participants may include e-commerce platforms, logistics companies, etc. in addition to public welfare organizations. "Imagine that in the future, there will be more public welfare scenarios for blockchain applications, more partners on the chain, and higher requirements for our technical architecture."

This project for hearing-impaired children has now been completed. Judging from the retained donation page, the names of all donors and beneficiaries (desensitized information), amounts, donation times, and transfer times of all donors and beneficiaries who donated to the project have been recorded one by one. Donors can see from public account information that the project implementer plans to raise 198,400 yuan, and 48,812 donors have donated a total of 198,417.39 yuan. This donation was eventually distributed to 10 beneficiaries at a standard of 19,840 yuan per person.

Coincidentally, another Internet company, Qingsongchou, also announced that it will launch a pilot of "blockchain" technology next month. Qingsongchou is a crowdfunding platform that uses a social model to raise funds for serious illness relief. On August 22, the Ministry of Civil Affairs' official website announced the results of the first batch of 13 charitable organizations' Internet fundraising information platforms. Qingsongchou was also among them. Prior to this, Qingsongchou had been questioned for its lack of transparency in handling donors' donations. The most common question was whether there was a private fund pool?

On September 13, a reporter from IT Times learned from Yu Liang, co-founder of Qingsongchou, that they will also introduce blockchain technology in the pilot charity project in cooperation with the foundation starting next month to strengthen the openness and transparency of the public welfare account book from a technical perspective. "In the pilot project, the account book will no longer be recorded by Qingsongchou alone, but will be verified and saved by multiple parties. Donors can see all donors of the project, the donation amount, and the amount and time of the recipients' use of funds in their personal center." In Yu Liang's view, the current blockchain mainly solves the problem of openness and transparency when funds enter, and prevents the platform from misappropriating funds. If the initiator is a foundation, blockchain technology can help the foundation to make the most effective public disclosure of the use of funds to all donors.

Challenge: There are many obstacles to breaking information asymmetry

“Using blockchain for charity should promote the establishment of trust and direct payment between donors and recipients, rather than the traditional practice of foundations cooperating on projects and managing funds and then reporting expenses to donors.” Regarding the application of blockchain in the charity sector, Bai Chengyu, director of the Microcredit Management Office of the International Economic and Technical Exchange Center of the Ministry of Commerce and secretary-general of the China Microcredit Alliance, said that blockchain is definitely not a concept for hype. Charity is a unilateral gift, not a transaction. How to keep a charity account book still needs further innovation.

Four years ago, a domestic public welfare worker developed a website called "Micro Charity" to disclose the entire process of public welfare project implementation. At that time, the amount of "donation income" and "donation expenditure" on this website could be accurate to two decimal places. This was praised by netizens at the time as the first public welfare and charity account book in history. The person in charge of the website once admitted that they tried to create a system for disclosing the project implementation process to solve how the money comes, how it is spent, and what the effect of the money is.

"Now it seems that this is the prototype of the blockchain model, but compared with the blockchain technology we want to promote, the most fundamental difference is whether the managers of the charity organization should keep accounts uniformly? Or let each link in the process automatically keep accounts to form a shared account book?" In the eyes of industry insiders, this is definitely not just a conceptual change. At present, the blockchain + charity we see is just opening a certain link with the platform's own capabilities, such as the accounting ability of the bank side, or the accounting ability of the charity foundation, but compared with the whole society's joint accounting, it has just taken the first step.

Ant Financial, which was the first to implement blockchain technology, also admitted that they could not give a specific time for how to promote the application of blockchain technology in charity and even in the broader financial field. In Zhao Zunkui's view, the difficulty of blockchain application lies in how to connect various nodes, such as insurance, payment, and claims. "If there is one item missing in the link, the link is incomplete and uncontrollable."

Therefore, there are still a large number of Internet charity platforms that are in a wait-and-see stage regarding the actual application of blockchain technology. Tencent Charity, which was also included in the first batch of Internet fundraising information platforms for charitable organizations, recently completed the Tencent 99 Charity Day project, which "raised 600 million donations in 3 days." Although the number of participants has reached 6.77 million, in an interview with the "IT Times" reporter, Tencent still stated that it has not yet included blockchain in Tencent Charity's specific projects. In fact, Tencent's research on blockchain has been launched very early, but it is still in the bottom-level experimental stage. "Tencent's financial scenarios such as WeChat Pay, QQ Wallet, and Wealth Management, the underlying account system has begun to try the private blockchain method, but it is mainly used to protect the security of user funds."

In July this year, Bai Chengyu publicly expressed his hope to include blockchain in the pilot program of China's savings mutual aid societies. However, in this interview with the reporter of IT Times, Bai Chengyu also admitted that the various ideas about blockchain cannot be implemented in a short time. Although from the framework point of view, the savings mutual aid society is essentially a contract mechanism in which members share, manage and share a book. It has existed internationally for more than 100 years, and it has also proved that shared books are effective relationships. Now we only need to use blockchain technology to make the contract intelligent and turn it into a de-administrative management system. But from the current reality, it still takes time to implement. In Bai Chengyu's view, China's savings mutual aid business has just started the pilot program, and the scale of development has not yet reached the order of magnitude. The inability of decentralized organizations to reach a consensus is a practical difficulty.

According to a person in the blockchain field, blockchain technology itself is to solve the problem of information asymmetry, but in many fields in China, including public welfare organizations themselves, their profit model comes from this information asymmetry, so there is great resistance in the implementation process. Another resistance comes from the pressure of technology. In the process of promoting the digital process, the cost of industry updates and upgrades is high, and many organizations lack the motivation to promote it. "The development of blockchain needs an opportunity." said the person.

The future: dishonesty will be very expensive

Ideally, in the future, "digital assets" on the public blockchain will be a new identity to prove your integrity. Especially for a charity or a branch of public welfare, if you refuse to join the blockchain, then your motivation for behavior itself is very questionable. In the view of Yang Fan, co-founder of Bubi (Beijing) Network Technology Co., Ltd., the development and popularization of blockchain technology will definitely be a trend in the future, although this process may take 10, 20 years, or even longer.

On a complete public welfare blockchain, there should be at least roles other than basic public welfare organizations, including hospitals, schools, courts, public security, insurance, banks, and payment. They should upload various digital certificates in their hands, including identity certificates, medical records, trial decisions, account information, etc., which will help promote the increasingly open and transparent public welfare undertakings, help donors grasp the information in the donation process as much as possible, and achieve true information symmetry.

Only when more and more roles join in can the shared accounts on the blockchain be safe and effective, "because the nodes on the entire blockchain are jointly maintained by each node on the blockchain. Once there is fraud in any link, even if this node can destroy its own server, it cannot change all the data records of any other node." Therefore, in Yang Fan's view, the system built by the blockchain is an ecological system that is constantly purifying itself.

Due to technical reasons, it is impossible to ensure that the digital information uploaded by each node is authentic and reliable, but as the data shared to these information nodes continues to increase, the authenticity of the information will continue to increase. Once corrected and debunked, this information will be permanently retained, so each node must "endorse" its own future.

"Once these records are uploaded to the blockchain, these behaviors that damage personal credit records will accompany a person throughout his or her life, and the cost itself is very high," said Yang Fan.