: ‘It’s really hard to get people to give money to strangers on the internet’: Coinbase CEO’s charity enlists ‘ambassadors’ to help donate cryptocurrency

United States

The cryptocurrency exchange Coinbase will soon ask investors to buy into the business with an initial public offering.

But Coinbase Chief Executive Brian Armstrong has another proposal for people who want to dive into the world of virtual currency.

Armstrong’s charity, GiveCrypto.org, is recruiting “ambassadors” to find needy people who could benefit from cryptocurrency donations.

The ambassador program marks a new chapter for the charity, which Armstrong, whose current net worth is estimated at around $ 6.5 billion, founded in 2018.

“We’re very much disciples of the direct cash-transfer philosophy,” GiveCrypto CEO Joe Waltman told MarketWatch.

He said he’s heard criticism that just handing people money isn’t effective because recipients can’t always be trusted to use it wisely, but he rejects that line of thinking.

GiveCrypto isn’t a registered charity, but it has a nonprofit fiscal sponsor, an arrangement that allows donors to claim a tax deduction for their contributions.

Helping unbanked people

One of the organization’s priorities is to help unbanked people gain access to basic financial services — particularly women living in poverty.

Globally, an estimated two billion people have cell phones, but don’t have bank accounts, Armstrong explained when he launched GiveCrypto in 2018, citing data from the Bill and Melinda Gates Foundation.

Those phones could be used to set up a cryptocurrency wallet, and with a donation of virtual currency, the user could either cash out the currency to buy goods or services, or hold onto it for potential investment returns.

GiveCrypto focuses on making donations to people living in places with broken financial systems, including Venezuela, where hyperinflation has made smaller fiat currency bills worthless.

The organization’s goal is to “raise funds from early crypto holders and distribute payments to people all over the world who are either living in poverty or going through some sort of economic crisis,” according to Armstrong’s mission statement.

Experimenting with how to get cryptocurrency to people in need

“We have this new technology at our disposal and we wanted to figure out how to leverage it to help people,” Waltman said. That has proved challenging.

GiveCrypto has tested a few different methods of getting cryptocurrency into the hands of needy people.

One was a “donation marketplace” similar to GoFundMe where people could sign up to be a recipient and visitors to the site could choose to donate to them.

That didn’t work very well, Waltman said. “We learned the perhaps predictable lesson that it’s really hard to get people to give money to strangers on the internet,” he said.

‘We have this new technology at our disposal and we wanted to figure out how to leverage it to help people.’

— GiveCrypto CEO Joe Waltman

GiveCrypto has also experimented with small pilot programs targeting people experiencing unique financial challenges. One gave nine domestic abuse survivors in the U.S. $ 2,500 donations that they spent on things like first and last month’s rent on a new apartment for themselves and their children, Waltman said.

Digital currency is useful in situations where an abuser is controlling someone’s money, because it can be transferred in a “relatively clandestine manner,” he said.

The charity also facilitated donating cryptocurrency to Rohingya refugees in Bangladesh through a local person who found 21 recipients, set up their phones to receive $ 10 a week in donations, and convinced a vendor in a refugee camp to accept payment in cryptocurrency.

GiveCrypto’s new ambassador program uses a global web app optimized for phones, and the charity will also recruit ambassadors on Twitter TWTR, -1.47%, Reddit, and Upwork, a freelancing platform. Ambassadors agree to find and vet donation recipients in their communities and teach them how to use cryptocurrency.

Waltman says he’s hoping the new recruitment effort pays off by providing a steady stream of examples of how crypto donations change recipients’ lives. The more photos, videos, and stories GiveCrypto can produce, the more donors they’ll attract, Waltman said.

One piece of evidence he points to: GiveCrypto commissioned a study of just over 1,000 people living in poverty in Venezuela to measure the impact of cryptocurrency donations versus cash. After 15 weeks of donations, both groups reported “statistically significant” improvements in food security and psychological well-being, the study found.

Give Crypto has handed out just over $ 350,000

GiveCrypto’s goal is to eventually help one million people a year. There’s a long way to go to get there.

Since its launch in 2018, GiveCrypto has handed out just over $ 350,000 to 4,964 people, according to Waltman.

Armstrong’s initial goal was to collect $ 10 million in donations, and he said when the charity launched that he hoped to amass $ 1 billion in donations within 18 months.

He donated $ 1 million himself in 2018, the same year he signed The Giving Pledge, the campaign started by Warren Buffett and Bill and Melinda Gates to get billionaires to publicly promise to give half of their wealth away either during their lifetimes or in their wills.

‘We have this new technology at our disposal and we wanted to figure out how to leverage it to help people.’

— Joe Waltman, CEO of GiveCrypto.org

Other big names in the crypto world donated to GiveCrypto when it launched, including Chris Larsen, the co-founder and former CEO of the payments company Ripple; and Zooko Wilcox, CEO of Zcash. Both chipped in $ 1 million each.

In total, the charity garnered about $ 4 million in donations right after Armstrong announced it. Those donations dwindled in value to less than $ 1 million about a year and a half ago as cryptocurrency values fell, Waltman said, but have since rebounded to about $ 10 million in total holdings.

“Our belief is that we’re just at the beginning of a massive bull cycle for crypto,” Waltman said.

If that happens, there could be a fresh round of newly wealthy crypto investors looking for ways to do some good with their assets, or at least, get a tax deduction by donating to a nonprofit.

‘Condescending approach’

Some in the charity world have told him that it’s “irresponsible” to give needy people an asset that may not hold its value, but he shrugs off that criticism.

“I have some sympathy for that,” Waltman said, “but I’m also somewhat annoyed by the paternalistic, and almost condescending approach that some people in this space will take toward people in need.”

Up-and-down crypto values affect the recipients of GiveCrypto’s donations, of course. There have been some instances where the cryptocurrency a recipient has received has dropped significantly in value right after the donation, Waltman said.

But the opposite has also happened: a processing bug delayed some recipients’ ethereum ETHUSD, -2.15% donations by a few weeks while the cryptocurrency was soaring in value. Recipients ended up receiving triple what they had expected, about $ 1,000 each.

GiveCrypto’s recruitment of new ambassadors comes as bitcoin’s BTCUSD, -2.74% value has increased 1,000% over the past year, hitting an all-time high of $ 61,519 on March 13.

Meanwhile, U.S. Treasury Secretary Janet Yellen recently called bitcoin a highly speculative “inefficient” form of currency, and New York Attorney General Letitia James warned the public to use “extreme caution” when investing in virtual currencies, in part because criminals use the currencies for money laundering and other crimes.

Donating cryptocurrency to people in need comes with a certain amount of risk, says Waltman — there’s always a chance that people will commit fraud to receive donations.

“We expect a certain percentage to not act in good faith,” he said.

But he’s confident that once GiveCrypto finds the right method for handing out crypto donations, the charity’s reach will grow quickly.