The cryptocurrency industry has recently criticised a bill that was recently proposed in the Illinois Senate due to its “unworkable” intentions to compel blockchain miners and validators to perform “impossible things.” One example of this would be undoing transactions if a state court ordered them to do so.
The Senate Bill was surreptitiously submitted into the Illinois senate on February 9 by Illinois Senator Robert Peters. However, it does not seem that the community was aware of it until February 19, when Florida-based attorney Drew Hinkes mentioned it in a tweet.
The bill, which would give the courts the authority to alter or rescind a blockchain transaction that was carried out through the use of a smart contract, would be given the title “Digital Property Protection and Law Enforcement Act,” and it would give the courts this authority in response to a valid request from the attorney general or a state’s attorney that is made in accordance with the laws of Illinois.
Any “blockchain network that executes a blockchain transaction originating in the State” would be subject to the act if it were to become law.
When it comes to blockchain technology and cryptocurrencies, Hinkes referred to the proposed legislation as “the most impractical state law” he has ever seen.
“This is a shocking about-face for a state that was previously supportive of innovation. Instead, he tweeted that the state had enacted “probably the most impractical state legislation relating to cryptocurrency and blockchain I have ever seen.”
According to the provisions of the law, miners and validators on the blockchain might be subject to fines ranging from $5,000 to $10,000 for each day that they disobey the instructions of the court.
Hinkes said that it would be “difficult” for miners and validators to comply with the measure suggested by Senator Peters, despite the fact that he acknowledged the need of passing legislation that would increase consumer protection.
Hinkes was also surprised to learn that miners and validators who worked on a blockchain network that “has not adopted reasonably available processes” to comply with the court orders would have “no defense” open to them.
The law also seems to dictate that “any person utilizing a smart contract to supply goods and services” must include code in the smart contract that may be used to comply with court orders. This code can be used to ensure that the terms of the smart contract are followed.
“Any person utilizing a smart contract to supply goods or services in this State should incorporate smart contract code capable of implementing court orders respecting the smart contract,” is the full text of the law.
Other members of the bitcoin community have replied with derision of the measure in a manner similar to what was previously said.
On February 19, the crypto analyst “foobar” remarked to the 120,800 people who follow him on Twitter that court-ordered transactions would need to be changed “without having the private key” of the participants, which he found to be “hilarious.”
Since October 11, the proportion of Ethereum blocks that are compliant with orders made by the United States Office of Foreign Asset Control (OFAC) has decreased to its current level of 47%, which is the lowest level since that date.
The most recent achievement in the fight against censorship comes about two and a half months and one day after the proportion of OFAC-compliant blocks reached its all-time high of 79% on November 21.
OFAC-compliant blocks are ones that do not include any transactions that involve parties who have been blacklisted by the Office of Foreign Assets Control within the United States Treasury Department.
Those individuals who are opposed to censorship inside the Ethereum ecosystem may see a decrease in the number of compliant blocks as a victory.
According to a statement released by the blockchain consulting company Labrys, the originator of MEV Watch, the decline may be linked to more validators choosing to utilize MEV-boost relays that do not filter transactions in compliance with OFAC standards.
The majority of the shift in market share has been taken up by the BloXroute Max Profit relay, the Ultrasound Money relay, and the Agnostic Boost relay in particular.
MEV-boost relays play the role of trustworthy middlemen between block producers and block builders, which paves the way for Ethereum validators to delegate the construction of their blocks to third-party block builders.
The Chief Executive Officer of Labrys, Lachlan Feeney, issued a statement on February 14 in which he expressed his satisfaction with the manner in which the Ethereum community has reacted to the censorship problem ever since it first appeared during the Merge event.
He pointed out that the recent decline of censorship-compliant blocks was especially noteworthy since it was accomplished without the involvement of a user-activated soft fork (UASF). He made the observation that “many individuals” of the Ethereum community had requested the soft fork prior to the Merge in order to resist censorship.
“I am incredibly proud of the Ethereum community for the progress we have made with this issue,” said Feeney, adding: “When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress addressing the issue.” “When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress
However, as Feeney emphasized, “there is still a great deal more work to be done.”
On August 8, OFAC sanctioned wallet addresses that transact using the Ethereum-based privacy mixing technology Tornado Cash. These wallet addresses are associated with Ether (ETH) and USD Coin (USDC).
On September 16, during the first 24 hours of Ethereum’s new proof-of-stake consensus mechanism, just 9% of blocks were filtered by OFAC.
Nevertheless, this number shot up dramatically over the subsequent two months, reaching its highest point of 79% on November 21.
After then, the proportion of OFAC-compliant blocks stayed anywhere between 68 and 75% until the 29th of January, when it dropped to 66%. Since then, in spite of a few brief increases, it has been consistently going down.
On February 7, wallets associated with the defunct Alameda Research company started sending and receiving FTX Tokens, totaling millions of dollars’ value (FTT). The activity in the Alameda wallets after the bankruptcy filing by FTX has been a major source of worry for the cryptocurrency community, with many members of this community calling into doubt the legitimacy of law enforcement authorities and the means by which these wallets are being accessed.
Brokenfish.eth, which is the address of an Alameda wallet, was used to receive over $2 million worth of FTT tokens from the BentoBox smart contract that was hosted on SushiSwap. The relevant smart contract operates as the ecosystem-wide vault for the whole Sushi decentralized payment system. Sam Bankman-Fried, who served as the previous chief executive officer of FTX, has a relationship with SushiSwap that goes back to the year 2020, when he succeeded Chef Nomi as the protocol’s top developer.
Within the range of $1.86 and $1.87, the “Alameda Research 4” wallet purchased more than one million FTT, which is equivalent to around $2.3 million. A loan position was also formed on Abracadabra using the wallet, and the loan is presently secured by 73,000 FTT and $31,000.
Many others saw the connection between the transfer of cash and the current bankruptcy proceedings and concluded that the court-appointed CEO of FTX, John Ray III, had authorized the transfer of funds. Ray III has not been coy about the fact that he wants to take control of the assets of the exchange as well as those of its subsidiaries in order to pay off the exchange’s obligations. The findings of FTX’s investigations led to the discovery of approximately $5.5 billion in liquid assets, of which more than $3 billion was owing to its top 50 creditors as of the 17th of January, when the company made the announcement.
This was not the first time in February that monies were transferred between wallets connected to the Alameda blockchain. The blockchain security company PeckShield issued a warning on February 2 indicating that “Alameda Consolidation” had acquired crypto funds worth a total of $13 million from three separate wallets.
The first one is a cryptocurrency exchange that goes by the name Bitfinex. It is estimated that 1,545 Ether (ETH) and around 6 million Tether (USDT) were transmitted, for a total of approximately $8.5 million. The remaining anonymous people sent roughly six million United States Dollars Coins (USDC) to the location associated with the Alameda Consolidation.
The European cryptocurrency investment firm CoinShares published its “Digital Asset Fund Flows Report” on January 30. The report revealed that investments in digital assets experienced a surge in inflows last week, reaching $117 million, the highest amount since July 2022. CoinShares is a European investment firm that specialises in cryptocurrencies.
According to a research by CoinShares, the total assets under management for the sector increased to $28 billion, representing a 43% gain from its lows in November 2022. The rise in the volume of investment products exchanged during the week was obvious, totaling $1.3 billion, which represents a 17% increase in comparison to the average for the first 10 months of the year. During this time, weekly trading volumes on the market for digital assets have increased by an average of 11%.
After Germany, Canada, the United States of America, and Switzerland, which each got $30 million, $26 million, and $23 million correspondingly, the country that had the biggest inflows over the last week was Germany, which accounted for 40% of the total ($46 million). The majority of the inflows, totaling $116 million, were invested in Bitcoin (BTC) products, whilst just $4.4 million was invested in short-Bitcoin products, demonstrating that investors had conflicting opinions about the cryptocurrency.
In addition, the report disclosed that multi-asset investment products had seen withdrawals of funds for the ninth week in a row, with the total amount reaching $6.4 million. This seems to indicate, according to James Butterfill, who is in charge of research at CoinShares, that investors are choosing to put their money into more specialised projects. Altcoins such as Solana (SOL), Cardano (ADA), and Polygon (MATIC) witnessed inflows as a result of this trend. On the other hand, Bitcoin Cash (BCH), Stellar (XLM), and Uniswap (UNI) suffered slight outflows.
In addition, investors shown interest in blockchain equities, contributing a total of $2.4 million in new capital. On the other hand, a more in-depth investigation finds that opinions continue to vary depending on the supplier.
The market for digital assets as a whole saw substantial growth over the course of the last week, with investment products witnessing record inflows and better volumes.
The overall trend indicates that investors are becoming more choosy in their investments, with mixed feelings concerning blockchain stocks, despite the fact that this attitude is consistent with the trend.
It has been brought to the attention of the retail customer base of the cryptocurrency exchange Binance that there is a possibility that they may be unable to access their accounts at some point in the not-too-distant future due to the fact that the exchange may go out of business. In the event that anything comparable occurs, there is a possibility that on-ramp and off-ramp bank money transfers will no longer be possible.
Users who wish to buy or sell cryptocurrencies for an amount that is less than one hundred thousand dollars and want to use the SWIFT payment method will be affected by the disruption in service that is currently taking place. After the temporary disruption in operation, customers will only have access to the SWIFT payment method to the extent that their bank accounts are denominated in United States dollars. This is the rationale for the aforementioned limitation.
The day that will mark the beginning of the day is going to be February 1, which is when the implementation period for the new rule is planned to begin. This day will also mark the beginning of the day.
Binance sent an email to its customers, also known as “Binancians,” on the 21st of January to inform them of the news and emphasise that the company is “actively seeking” a new SWIFT (USD) partner in order to prevent service interruptions for upcoming bank payment transfers. Binance customers are also referred to as “Binancians.” People who trade cryptocurrencies on the Binance market are referred to as “Binancians.” In the marketing materials distributed by Binance, customers are referred to not just as “Binancians,” but also as “Binancians.” Residents of Binance are sometimes referred to as “Binancians” when referring to themselves collectively in common vernacular. Binancians are users of the Binance platform who engage in cryptocurrency trading. Binancians are referred to by this platform’s name. The year 2017 marks the beginning of Binance’s operations.
According to Cityam.com media outlets, European Union lawmakers on Thursday voted in favour of new proposals that seek to outlaw anonymous crypto transactions.
Two parliamentary committees – the EU Committees on Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) – yesterday voted to extend the anti-money laundering requirements that currently apply to traditional fiat payments over EUR 1,000 ($1,115) to the crypto sector.
However, the new rules scrap one of the fundamentals of crypto payments, so payers and recipients of even the smallest cryptocurrency transactions would need to be identified. The legislation also cracks down on transactions with unhosted or self-hosted wallets (wallets whose private keys are held by the funds’ owner, popularly referred to as self-hosted or self-custody wallets). Furthermore, the new rules require cryptocurrency companies to identify the parties involved in transacting cryptocurrency beyond their customers. The measures could see unregulated cryptocurrency exchanges cut off from the conventional financial system.
The proposals are set to proceed to the trialogue stage, which will see the rules debated by the EU parliament, Commission, and Council.
The report shows that more than 90 lawmakers voted in favour of the proposals, a move that various stakeholders have described would invade privacy and stifle innovation.
Major players in the crypto industry have opposed the proposals. Last night, Brian Armstrong, the CEO of Coinbase crypto exchange, expressed his concerns about the new rules ahead of the vote, calling it an anti-law enforcement, anti-innovation, and anti-privacy proposal. The executive warned that the proposal will create a “new crypto surveillance regime” in Europe.
“Any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity,” Armstrong stated, criticizing the rules for treating crypto customers more harshly than fiat users.
Paolo Ardoino, the Chief Technology Officer at Bitfinex digital asset trading platform, echoed Armstrong’s comments, stating that the rules entail heavy security risks and privacy violations.
Combating Financial Crime
The debate about new rules for using cryptocurrencies has been going around for some time. In June last year, the EU Commission proposed that future transactions of crypto assets must be able to be tracked and assigned to individuals as part of efforts to combat money laundering and terrorist financing.
According to KYC guidelines, businesses that provide crypto services would then have to identify users, such as using ID cards.
A new draft for crypto regulation in the EU is currently causing unrest in Brussels (the administrative centre of the European Union). The new draft states that there should be an identification requirement for crypto-asset transactions in all amounts. The EU Committees on Economic and Monetary Affairs (ECON) and on Civil Liberties, Justice, and Home Affairs (LIBE) have spoken out in favor of the complete anonymity of crypto payments.
On the day of the opening ceremony of the Beijing 2022 Winter Olympics, there were reportedly more transactions made in China’s central bank digital currency than those through Visa.
In a Wednesday report from the Wall Street Journal, a person familiar with the matter said transactions in digital yuan significantly outnumbered those of Visa on Feb. 4 at the Beijing National Stadium, also known as the Bird’s Nest — the location of the opening ceremony of the 34th Olympic Winter Games. However, many of the retailers allowing purchases with China’s central bank digital currency, the digital yuan — or e-CNY — were outside the Olympics’ quarantine “bubble” for athletes, journalists, and staff.
Bird’s Nest on the night of Feb. 4, when the opening ceremony of the Beijing 2022 Winter Olympics was held. pic.twitter.com/QjUTOPa6Hr
— XIE Yongjun 解勇军 (@XIEYongjun_CN) February 4, 2022
According to the report, those within the bubble have the option of paying for goods or services with cash, Visa, and digital yuan, and there are many automated machines allowing people to exchange fiat currency for e-CNY. Coupled with the likely intention of reducing contact between individuals in an effort to prevent the spread of COVID-19, it seems the country’s digital currency is pulling ahead of Visa — at least in an environment with limited use cases that includes participation from Chinese consumers.
“Replacing cash with digital yuan for payment can effectively reduce direct contact between people and the risk of the spread of Covid-19,” reportedly said the Beijing Organizing Committee for the 2022 Games.
Though payments using mobile apps like Alipay, WeChat Pay, and others are generally accepted at many retailers in China, these methods aren’t allowed at the Winter Games due to an exclusivity contract with Visa. The credit card company has reportedly not pushed back against the digital yuan payment options, possibly because it is awaiting approval of a domestic license application to operate in China.
CNN reported on Jan. 31 that the first international test run of China’s CBDC is facing hurdles due to the pandemic, with officials limiting the number of people allowed to enter the country. Though China hasn’t released data on the number of digital yuan transactions or athletes using the CBDC, U.S. lawmakers have warned Americans participating in the games of the potential dangers of testing the digital currency, including threatening U.S. interests in cross-border payments.
Related:China’s central bank releases pilot version of digital yuan wallet
At the time of publication, Cointelegraph was unable to find any reports of athletes claiming to have used the digital yuan for food or other essentials. The Wall Street Journal reported both the president of the Dutch Olympic Committee and a former Beijing resident now involved in television coverage of the games implied there was little point in using the digital currency when Visa was available. The Winter Olympics are scheduled to conclude on Feb. 20.
When analyzing Ether’s (ETH) price chart, one could conclude that the 3-month long bearish trend has been broken for a few reasons. The current $3,100 price range represents a 43% recovery in 15 days and, more importantly, the descending channel resistance was ruptured on Feb. 7.
Should Ether bulls start celebrating and calling for $4,000 and higher? That largely depends on how retail traders are positioned, along with the Ethereum network’s on-chain metrics. For instance, is the $30-plus transaction fee impacting the use of decentralized applications (dApps), or are there any other factors that will prohibit Ether’s price growth?
Ether (ETH) price at FTX, in USD. Source: TradingView
Since the 55.6% correction from the $4,870 all-time high to the cycle bottom at $2,160 on Jan. 24, Bitcoin (BTC) has failed to break the $45,500 resistance and traders concluded that a 12% correction was the most likely scenario.
On a brighter note, on Feb. 7, Big Four auditor KPMG’s Canadian wing announced the addition of Bitcoin and Ether to its corporate treasury. The decision reflects KPMG Canada’s belief that cryptocurrencies are a “maturing asset class,” according to Benjie Thomas, a managing partner for the firm.
Derivatives data tells a different story
To understand how confident traders are about Ether’s price recovery, one should analyze the perpetual contracts futures data. This instrument is the retail traders’ preferred market because its price tends to track the regular spot markets.
In any futures contract trade, longs (buyers) and shorts (sellers) are matched at all times, but their use of leverage varies. Consequently, exchanges will charge a funding rate to whichever side demands more leverage, and this fee is paid to the opposing side.
This indicator will tell us whether retail traders are getting excited, which would cause it to move above 0.05%, equivalent to 1% per week. Notice how the past couple of months showed a slightly negative funding rate, reflecting the bearish sentiment. Currently, there is no sign that retail traders are confident enough to reopen leveraged long positions.
One should analyze the Ethereum network’s on-chain data to understand if the lack of confidence is specific to leverage trading. For example, even though there is no set relation between Ether’s price and network use, low transaction volume and a decline in active users could be a concern if decoupled from a price hike.
On-chain metrics raise concern
Measuring the monetary value of the ETH transacted on the network provides a reliable indicator of effective use. Of course, this metric could be masqueraded by increasing adoption in layer-2 solutions but it remains a starting point.
Sum of native token units transferred per day. Source: CoinMetrics
The current $6.2 billion daily transaction average is a 55% drop from December’s peak and not really far from the 1-year low at $5.6 billion. Thus, it is safe to conclude that Ether token use is not showing signs of growth, at least on the primary layer.
Analysts should also check decentralized applications usage metrics. One must remember that the Total Value Locked (TVL) is heavily concentrated on lending platforms and decentralized exchanges (DEX). Consequently, gauging the number of active addresses provides a broader view.
Apart from the non-fungible token (NFT) marketplace Opensea, Ethereum dApps saw a monthly 28% decrease in the number of active addresses. In a nutshell, that is disappointing usage data because the smart contract network was specifically designed to host decentralized applications.
Unless there’s an uptick in Ether transactions and dApps usage metrics, investors will interpret any Ether price move above $3,000 as a potential bull trap. As for retail traders’ neutral funding rate, it might as well be a bullish sign that the investor class typically enters long leverage positions after a strong rally.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Solana (SOL), one of the most active proof-of-stake (PoS) blockchains, appears to be a PoS protocol consuming the lowest amount of electricity per transaction, according to a new report.
The Crypto Carbon Ratings Institute (CCRI), a research startup focused on the environmental impact of cryptocurrencies, released on Wednesday a new report calculating the electricity consumption and carbon footprint of major PoS blockchains.
The CCRI specifically analyzed PoS networks including Cardano, Solana, Polkadot, Avalanche, Algorand and Tezos.
According to the CCRI’s findings, the Solana blockchain consumed 0.166 watt-hours (Wh) of electricity per transaction within the study, becoming the most energy-efficient PoS protocol in terms of energy used per transaction among the six analyzed networks.
Cardano, a PoS network that has the biggest market capitalization at the time of writing, consumes the biggest amount of electricity per transaction, which is 52 Wh, according to the report. However, when it comes to a “per-node” comparison, Cardano uses the least amount of electricity per node, the CCRI found.
Electricity consumption per transaction for PoS systems and Visa. Source: CCRI
“This metric depends on the amount of transactions taking place on the respective blockchain, also the overall electricity consumption per transaction further depends on the number of nodes connected to the respective network. Generally, these numbers are expected to go down with an increase in the transaction rate, regardless which blockchain is in use,” the study reads.
Despite Solana’s low energy consumption per transaction, the PoS protocol still consumes a lot of energy due to the network’s massive usage, compared to other PoS networks. According to the CCRI’s study, the Solana blockchain emits 934 tonnes of carbon dioxide equivalent per year, compared to 33 tonnes for Polkadot.
At the time of writing, Solana is the most-traded PoS protocol, with $2.9 billion in daily trading volumes, while Polkadot has about $900,000 in daily trading volumes, according to data from CoinGecko.
Yearly carbon footprint of PoS networks compared to a roundtrip flight in business class. Source: CCRI
Related:Fossils vs Renewables, PoW vs PoS: Key policy issues around crypto mining in US
Unlike major blockchain networks like Bitcoin and Ethereum, which use mining operations to confirm transactions based on a proof-of-work (PoW) mechanism, PoS blockchains rely on users simply locking up tokens. As PoS blockchains do not need extra energy from miners in order to validate transactions, they are considered as being more energy efficient.
As previously reported, many global financial regulators have used PoW’s high energy consumption rates as yet another reason to ban the use of cryptocurrencies like BTC. They would probably also want to ban global banks as the traditional banking system was reportedly consuming twice more energy than the entire Bitcoin network as of March 2021.
NFTs, or nonfungible tokens, have created a wealth of opportunities over the last year. Data from market tracker DappRadar found that NFT sales reached $25 billion in 2021. Artwork NFTs in particular have seen impressive growth. Financial services firm FinancePR recently determined that 257 artists generated at least $1 million in the past 30 days from selling NFT artwork. It’s also notable that NFT transactions have continued to increase, despite recent slumps in the crypto market.
Yet with so much revenue being generated over a short period of time, some may be wondering how NFT creators are applying these new streams of income. While this is a tough question to answer, industry experts believe that NFT philanthropy is becoming a major trend as sales from nonfungible tokens increase.
Alex Wilson, co-founder of The Giving Block — a nonprofit crypto fundraising platform — told Cointelegraph that the rise of NFT philanthropy has mirrored general growth across the NFT sector. Wilson said that NFT philanthropy started taking off about six months ago, noting that The Giving Block has already seen over $12 million in cryptocurrency, or 30% of its donation volume, come from NFT-giving initiatives:
“In most cases, creators are selling their NFTs and then have a portion (or all) of the proceeds donated to their favorite crypto-friendly charity. Since most NFTs are sold for ETH, many of the NFT-related donations have also come in the form of Ethereum.”
Given the amount of interest in NFT philanthropy recently, Wilson stated that The Giving Block is currently working with a number of major NFT platforms to make crypto donations easier by integrating the concept into their core product. “For example, we are working with NFT platforms to ensure that when someone is setting up an auction, they can select a charity from a dropdown and then have the proceeds automatically sent there,” he said.
In addition to initiatives from The Giving Block, Graph Blockchain, a decentralized finance and altcoin company, announced on Jan. 24 that the company has entered a share exchange agreement with Niftable, a charity-focused NFT company. This agreement would essentially allow Graph Blockchain to own Niftable after the acquisition is closed.
Paul Haber, CEO of Graph Blockchain, told Cointelegraph that focusing expertise on NFTs in the charity space offers a number of benefits. He added that most charities today rely on volunteers and lack expertise in the emerging NFT world.
Betting big on NFT philanthropy
While emerging solutions from The Giving Block and Graph Blockchain could be game-changers for NFT philanthropy, artists and organizations have also begun using their own resources to ensure proceeds earned from NFT sales go to good causes. Many of these initiatives are focused on helping children.
For example, Sheqonomi is a project that uses NFTs to give back to children in need, particularly girls in developing countries. Anu Bhardwaj, founder of Sheqonomi, told Cointelegraph that the rewards-based podcast is designed specifically for low-income populations who don’t have access to streaming media services, like Spotify:
“This podcast was designed for people to listen, learn and earn, especially during COVID-19. We built Sheqonomi on KaiOS, which is a $10 mobile phone that has a partnership with the Indian telecommunication company Reliance Jio. This will incentivize 150 million JioPhone users to listen, learn and earn digital assets and rewards in the very near future.”
Bhardwaj further explained that users listening to the app have the ability to earn reward tokens as an incentive for providing the platform with user-generated data. Listeners are then able to hold these tokens in their virtual wallets or spend them on the NFT artwork soon to be featured on Sheqonomi’s platform. Bhardwaj said:
“On March 8, 2022, which is International Women’s Day, we will have an NFT gallery where people can purchase artwork NFTs with their tokens. Proceeds from each sale will be donated to participating charities on our platform. For instance, a minimum of 25% of NFT sales will be given to The State of Women Institute, a 501 (c)(3) nonprofit organization championing the stories and issues faced by young women and girls.”
According to Bhardwaj, Sheqonomi uses NFTs for philanthropy since these digital assets represent the voices of women and girls everywhere. “The main thing we want to spotlight is divine feminism in all forms. For instance, one of the NFTs that will be featured in our gallery was created by an eight-year-old girl who wanted to have 50% of proceeds donated to refugees.”
NFT created by eight-year-old Isla Mostaque. Source: Sheqonomi
Moreover, Bhardwaj noted that giving back using NFTs allows Sheqonomi the ability to continually add charities to its platform while letting users understand where exactly those funds are going thanks to the transparency provided by blockchain technology.
This concept also resonated with UNICEF, or the United Nations Children’s Fund. In order to commemorate UNICEF’s 75th anniversary, the agency launched 1,000 NFTs to support digital connectivity among schools in underserved communities. UNICEF partnered with data visualization scientist and artist Nadieh Bremer to create the collection “Patchwork Kingdoms.”
NFT from the “Patchwork Kingdoms.” Source: UNICEF
Chris Fabian, co-founder and lead at Giga — UNICEF’s global school internet connectivity initiative — told Cointelegraph that all of the proceeds from UNICEF’s NFT sale went back to support Giga:
“The entire sale generated 235 ETH worth of revenue. Through the minting of the NFTs alone, we raised 175 ETH. We then had an in-person auction for one unique piece that sold for 40.9 ETH. Finally, royalties from OpenSea allowed us to receive 20% back from secondary sales, where we’ve generated 20 ETH. In total, we’ve raised 235 ETH, all of which was given back to UNICEF.”
To date, Fabian explained that Giga has connected over 3,000 schools to the internet, benefitting over 700,000 children, and mapped over 1 million more to help target investment in connectivity.
He explained that using NFT proceeds has allowed Giga to bring in a new community of donors seeking social good opportunities through cryptocurrency. Moreover, Fabian mentioned that the utility behind UNICEF’s NFTs allows donors the ability to continue giving back to underserved communities. “We have flipped the way of looking at NFT utility, which is refreshing,” he said.
In another example of NFT artwork being used for charity, American entertainment company iNDIEFLIX recently released a documentary entitled Angst, which features a series of film NFTs focused on raising awareness for children’s mental health.
The film will stream until Jan. 31, 2022, on a blockchain network created by digital content management firm Eluvio.
Scilla Andreen, producer of Angst and chief operating officer iNDIEFLIX, told Cointelegraph that the production company wanted to use film NFTs to create a marketplace for creatives to directly connect with the film’s audience. “We wanted to use a story to build community. COVID hit everyone hard, so we pivoted by doing a hybrid approach to deliver content through different models, NFTs being one of those,” said Andreen.
Andreen explained that viewers can easily claim a free NFT by creating an Eluvio digital wallet from the film’s event page. There are three community NFTs featured, each containing a supply of 10,000 unique nonfungible tokens with a specific theme related to the film:
“The NFTs are meant to symbolize three stages of anxiety: revelation (to normalize and address our most common fears), action (tips and tricks to help children hack their brain to create calm), and change. A special thank you NFT will also be airdropped to the community following the event. Each NFT is linked with metadata that contains video clips from Angst.”
Angst “Change” NFT. Source: iNDIEFLIX
While the NFTs from the film are given to viewers for free, Andreen shared that a “special film” NFT will be available for purchase. She said that 50% of the proceeds from this sale will be given to the organizations Jack.org and Lady Gaga’s Born This Way Foundation, both of which focus on children’s mental health.
Michelle Munson, co-founder and chief operating officer of Eluvio, told Cointelegraph that her firm has spent years working on incorporating blockchain technology with digital media content. For instance, in August of last year, Fox Corporation made a strategic investment in Eluvio to help develop Fox’s NFT business model. Munson explained that NFTs have opened a mechanism for value and engagement to occur through film content:
“NFTs are a new form of digital identity that can help reach youth. The backstory, though, is that NFTs can also be very profitable. NFTs can be viewed as a way to eventually provide a new type of equity finance, working as blockchain equity through NFTs. This is a huge area that our company believes will accelerate fast. Many projects are using NFTs to engage with an audience while funding their own work and charitable initiatives.”
Challenges could hamper adoption
While NFTs for charity are certainly a growing sector, challenges remain that could hamper adoption. For instance, as NFT sales gain traction, a number of scams have plagued the space. Therefore, it’s important for both donors and organizations to carefully consider each nonprofit accepting NFT donations.
For instance, Wilson mentioned that The Giving Block has vetted every nonprofit the organization works with, noting that these are all registered charities. In terms of ensuring that donations actually go to the intended recipients, Wilson added that The Giving Block is automating its distribution or payout models. “For example, on some platforms like Foundation, you can set a payout address so that a portion (or all) of the proceeds are automatically sent.”
Technical challenges aside, Munson pointed out that she believes the biggest challenge surrounding NFT philanthropy is awareness. “We need to educate the world on the possibilities. There is a real need to keep amplifying what is possible with NFTs.”
Even with the present challenges, NFT philanthropy is poised to be an ongoing trend. Alex Salnikov, co-founder and head of product at Rarible — an NFT marketplace — told Cointelegraph that there has been an increase in NFT philanthropy efforts lately. Salnikov said that while the number of donation volumes are impressive, the fact that NFT community members are becoming first-time donors is equally important:
“This presents an entirely new audience who might be even more generous than investors across other sectors. This trend is giving rise to a crowd that is just more comfortable with donating via NFTs and crypto, be it for tax reasons or just because they’re more comfortable with on-chain assets as opposed to fiat assets processed by centralized authorities.”
