Web3 is here — and it’s critical that nonprofit associations harness and adapt to this new technology to set themselves up for success.
In this blog we’ll go over the definition of Web3 and some other key terms, as well as what this new generation of internet technology can do to benefit associations big and small.
What is Web3?
Web3 is a term used to describe an interconnected third generation of the internet. It aims to present a more decentralized, user-owned platform through technologies like blockchain, cryptocurrency, and virtual reality among others. This new iteration of the internet is rapidly transforming how nonprofits do business and offering revolutionary benefits for connectivity.
However, in order to further understand Web3, it’s important to define a few additional terms as well.
A blockchain is a digital ledger of public record that tracks transactions. It streamlines activities like donations, taking into account different units of currency, property, or even tokenized votes. When used for nonprofits, blockchain technology makes it easy for individuals to see where their money is going, promoting transparency and reducing financial risk.
[Related: Six Helpful Virtual Tools for Your Nonprofit]
Cryptocurrency and Bitcoin
While you may be familiar with the term Bitcoin, you might not know exactly what it means. Bitcoin refers to a type of decentralized cryptocurrency. Launched in 2009 by a pseudonymous programmer named Satoshi Nakamoto, Bitcoin was introduced as an open-source digital currency that is exchanged through a peer-to-peer network using blockchain technology.
Although Bitcoin was the first instance of cryptocurrency, thousands of alternatives are out there today. After the launch of Bitcoin in 2009, other cryptocurrencies including Litecoin, Namecoin, and Etheream also started gaining popularity. Now according to CoinMarketCap, there are close to 23,000 cryptocurrencies in existence.
NFTs and Tokens
Non-fungible tokens, more commonly known as NFTs, represent specific, unique digital assets. These assets are currently used to create tokenized versions of virtual art, multimedia, and profile pictures (PFPs). Sometimes NFTs act as membership tokens, which can be used in the association world for individuals to gain access to previously locked benefits for in-person events and in virtual reality.
Decentralized Autonomous Organizations
Decentralized autonomous organizations (DAO), or corporations, are groups managed either entirely or in part by a decentralized computer program platform. Basically, DAOs are organizations owned by members and without centralized leadership.
Benefits and Applications of Web3 for Associations
When it comes to nonprofit associations, Web3 provides numerous benefits. This unprecedented technology can help further an association’s mission, grow its member base, and revolutionize the ways it finds success in a variety of ways.
Embracing new technology like blockchain and cryptocurrency can help your association get ahead of the curve and reach a younger, more tech-savvy audience. The transparency of this method of fundraising can keep your members confident about where their money goes and opens the door to a wider, global audience.
Additionally, incorporating NFTs as virtual artwork or tokens for sale with proceeds going toward your association can be a great new way to increase revenue.
With blockchain financing, both your association and your members can feel strongly that association-related finances are safe and secure. The absence of third-party banks and processing companies reduces operational costs, offers transparency, and improves efficiency — which can significantly increase the trust of your supporters.
Embracing Web3 can also facilitate introductions to a whole new world of partnerships for your association. Associations can take advantage of the opportunity to form mutually beneficial relationships with Web3-native organizations that are in the same industry, working toward a related cause, or operating in a shared community.
Web3 offers multiple benefits to associations, especially in relation to governance. Nonprofit entities can adopt tokenized or NFT memberships, as well as on-chain voting (where votes are submitted as transactions via the blockchain) to embrace transparency and boost the efficiency of their decision-making processes.
Participatory governance as well as the transparent disclosure of financial (and non-financial) activity can increase the autonomy and sustainability of associations.
One big benefit of Web3 is the incorporation of AI tools. Associations big or small can utilize revolutionary AI tech to help them in a variety of categories, including member engagement and membership management. These tools are especially helpful for smaller organizations with overstretched teams and tight budgets.
AI can help associations gain a deeper understanding of their target audience through analyzed insights. These insights can then help scale and measure an association’s impact and reach, and increase daily operational efficiency.
Move Toward Success with Dennison and Associates
At Dennison & Associates, we pride ourselves in offering association and nonprofit organizations the latest customized services and solutions. We’re ahead of the innovation curve and can confidently lead your association toward success. From digital strategy assessment to the latest in technology selection and implementation — Dennison & Associates can help.
Want to learn more? Contact us today to get started!
Featured image via Unsplash