What is a stablecoin? Unlike many other crypto assets, stablecoins are not popular for their high-growth investment potential. Instead, stablecoins are viewed as an integral part of the crypto ecosystem, providing stability in a high-growth sector.
Over the past two years, stablecoins have also become the most-donated cryptocurrency on The Giving Block’s platform, with the stablecoin USDC beating out Ethereum and Bitcoin for the top spot in 2022 and 2023.
So what do nonprofits need to know about stablecoins? Let’s dive in and explore their growing role in finance, charity, and humanitarian aid.
Key Takeaways
- The stablecoin is a type of cryptocurrency with an equivalent value of another asset, such as the US dollar.
- Many traditional and crypto finance experts view stablecoins as a critical tool for the future of payments.
- During periods of market volatility, many crypto investors allocate more of their portfolio into stablecoins.
- In both 2022 and 2023, we processed a higher donation volume of the USDC stablecoin than any other cryptocurrency.
1. What is a Stablecoin?
A stablecoin is a type of cryptocurrency that is pegged to the value of another asset of monetary value, such as the U.S. dollar. Using the U.S. dollar as an example, a stablecoin issuer is typically required to hold the U.S. dollar equivalent for each stablecoin in circulation, often in a combination of cash or U.S. Treasury bonds.
Popular stablecoins such as USDC, USDT, BUSD, and Dai can be purchased from most leading cryptocurrency exchanges.
The Main Benefits of Stablecoins
A safe haven for crypto investors during volatile market conditions.
Valued for their utility in crypto financial transactions.
Hybrid of fiat currencies’ value and blockchain usage.
In other words, stablecoins provide access to the blockchain ecosystem paired with some of the reliability of a government-issued currency (aka “fiat”).
Why Are Stablecoins Popular in Charitable Giving?
In recent years, a growing number of cryptocurrency donors have donated stablecoins to nonprofit organizations.
Below are a few insights about the growing intersection of stablecoins and the charitable sector:
1. Crypto donors have given millions of dollars worth of stablecoins like USDC, UDST, BUSD and DAI to charities.
This is only a fraction of the overall value of stablecoins, estimated to be $153 Billion at the time of writing.
2. In 2022 and 2023, the stablecoin USDC was the #1 donated cryptocurrency to nonprofits using The Giving Block’s crypto donation form.
USDC was more popular than Bitcoin, Ethereum and Solana.
3. Stablecoins appear to be a popular asset to give during bearish market conditions, due to investors allocating to the less-volatile stablecoins.
As we have seen, bear markets don’t stop crypto donors from giving, but their preferred assets may change depending on current market conditions.
4. A $9.4 Million stablecoin donation to the University of Maryland to fund medical research to prevent future pandemics.
This historic donation was made by Ethereum co-founder Vitalik Buterin’s Balvi Filantropic foundation.
5. Another stablecoin donation worth $160,000 was shared among several nonprofits supporting blockchain education.
The charitable donation was made possible using proceeds from crypto media outlet CoinDesk’s MetaGala in 2022.
6. Circle, the crypto company that issues USDC, made a donation valued at $250,000 in supported nonprofits providing humanitarian aid to the people of Ukraine.
At the time of the donation, Circle’s Dante A. Disparte commented that “[t]echnology and Web3 are demonstrating the art of the possible in terms of real-time mobilization of aid and relief.”
Beyond Philanthropy: Stablecoins and Humanitarian Aid
Several exciting crypto-based aid programs have been piloted by nonprofits. These organizations have used stablecoins to distribute cash disbursements in conflict zones and disaster areas.
For example, the United Nations recently sent stablecoins to Ukrainian refugees who were displaced by conflict. The UN’s model could have “massive implications for how government actors and NGOs alike act as a safety net for society’s most vulnerable,” experts told Blockworks.
Crypto enthusiasts have long praised crypto’s humanitarian benefits. Now, it’s exciting to see charities putting these ideas into action.
But your organization doesn’t have to be on the cutting edge of aid disbursement to benefit from stablecoin charitable giving, it just needs a secure way to accept crypto donations.
Start Accepting Stablecoin Donations for Your Cause
Thousands of charitable organizations accept stablecoin and other cryptocurrency donations to diversify revenue, reach new audiences, and expand their major giving programs.
Wondering how to get an easy-to-use crypto donation form on your website so that crypto donors can find and support your cause?
Take the first step and learn more about The Giving Block’s cryptocurrency fundraising solutions for nonprofits.
