Ensuring Efficient Implementation of CSR Activities with a Blockchain Based Solution

In the words of Winston Churchill “Responsibility is the Price of Greatness”

Firms and businesses have a similar responsibility, as well as commitment towards the social and economic development of their stakeholders, community and the society at large. In fact, the practice of CSR or Corporate Social Responsibility as a business model has evolved from being a slogan that was considered trendy by some firms to the current era where it has become more of a business requirement rather than just an option.

Today, businesses have realized the significance of having an appropriate CSR strategy in place to ensure better financial positioning, as well as, talent pool. However, not all businesses are transparent about their CSR initiatives, making it difficult to verify claims of social responsibility and sustainability. This aptly reflects the limitations of CSR programs and how their focus lies on improving the current capitalist system rather than transforming it.

Research conducted across the U.S reveal that 95.4 per cent of the raised charitable donations disappear into thin air before reaching their intended beneficiaries. This shocking statistic narrates a woeful tale of lost humanity in this sector and can be attributed to some key issues including lack of financial transparency, dependability, measurement & reporting, governance and more. This calls the urgent need for a robust mechanism that can address various hurdles faced by organizations during the implementation of CSR projects while ensure a more transparent system. And blockchain can exactly be the tool to achieve their objectives.

How Blockchain is Making CSR more Transparent?

Blockchain implementation with CSR

The terms “transparency”, “authenticity”, and “security” are closely linked within the scope of Corporate Social Responsibility (CSR). Blockchain – A digital ledger technology can be leveraged to facilitate CSR projects while create a more transparent system out of the current capitalistic environment. Here’s how Blockchain can transform the humanitarian sector:

Provide Greater financial transparency: Given the fact that a major chunk of the charitable donations fails to reach the intended beneficiaries, organizations have failed to garner the much-required trust from the public. Blockchain – A decentralized technology has proved to be a great tool in ensuring greater financial transparency by allowing people to track where every dollar has gone. In fact, the presence of smart contracts will help people to track whether the funds are effectively spent and managed while reduce risk of mismanagement. In other words, people will be reassured that funds have reached the intended recipients.

Enable Transparent Communication: Blockchain allows all the stakeholders involved in CSR projects to access appropriate information at their own will and convenience. Smart contracts element of Blockchain enables transparent communication supported by digital contracts. By providing traceability of records all through the project life-cycle, this technology provides support in disclosures while facilitate access to philanthropists, regulatory bodies and investors.

Ensure Better Stakeholder Management: Stakeholder management is often a major challenge with organizations executing CSR projects. Often data isn’t available easily. Moreover, lack of standardized information, makes it extremely ineffective for analysis and measurement. Data management solutions powered by technologies such as blockchain and Big Data can play a significant role in reducing human errors while contribute to effective management of CSR projects.

Tracking Success of CSR Initiatives: Blockchain offers tracking and measurement solution that can hold the group responsible for their actions. With blockchain, it becomes possible to have an external verification of the internal implementation. This reliable proof or evidence of performance ensures that supervisory leaders remain accountable for everything. Since, programs and progress get verified and documented, CSR initiatives can grow way beyond potential of fake promises and ambiguous numbers.

Final Thoughts

To facilitate sustainable economic growth and build stronger communities, businesses require effective management of CSR projects. A robust system that can do away with the shortcomings of the conventional system is something what businesses require, to ensure trust and transparency in the system. By leveraging a blockchain based solution, businesses will be able to create a whole new ecosystem of smart humanitarianism. This will ensure that funds and benefits of different CSR activities reach intended recipients along with enhanced visibility for brands.

Sofocle Technologies – One of the leading players in the Blockchain space offers SofoChain Solution that can provide end-to-end traceability to monitor origin of products or record intangibles. This can provide businesses with a mechanism to provide authenticity to their social commitments. To know more about sofoChain solution, drop us an E-mail at [email protected] or Contact Us.

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Although Bitcoin got introduced in the market in the year 2011, it was 2015 when it reached the popularity and identification. It was the same year when the underlying technology- Blockchain caught the attention of the experts and the revolution of exploiting its potential started. Before this, Blockchain got recognised as just another data structure supporting an emerging trend, but in reality, it encapsulated great technology and promises of a tech-driven future.

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Implications of Blockchain in Telecom Industry

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Hashgraph & Blockchain: Similarities & Differences

The world is finally moving to the next level of revolution in IT & Internet. The Blockchain is tout to be ‘the internet 3.0.’ It is based on the distributed ledger technology, though the real potential of this technology was realized only when the Blockchain came into existence. And when, still many people are in the process of understanding use cases of the Blockchain Technology beyond Bitcoin, a new technology is making news, hyped as the ‘future of distributed ledger,’ the Hashgraph.

What is Hashgraph?

Hashgraph is based on distributed ledger like Blockchain, however, it offers an alternative consensus mechanism. It uses techniques like ‘Gossip about Gossip’ and ‘Virtual Voting’ to achieve fast and secure consensus.

‘Gossip about Gossip’ technique attaches a small additional amount of information with the two hashes containing information about the last two people talked to. Utilizing this information, a Hashgraph is built and is regularly updated when more information is gossiped on different nodes. Once it is ready, the system knows what a node would vote, since it is aware of information that each node has and when they knew it. This data is further utilized to find which transactions have reached consensus quickly and as an input to the voting algorithm.

The detailed explanation is as follows:
A node in Hashgraph can spread signed information called events of the new transactions and transactions received from others, to randomly chosen neighbor nodes. These neighbor nodes will compile received events with the events received from other nodes into a new event and the process continues. Eventually, all the nodes are aware of the information created or received.

What Hashgraph offers over Blockchain

difference between hashgraph & blockchain
Blockchain is an immutable distributed ledger of transactions which can be coded to record not just financial transactions but anything that has a value. On the other hand, Hashgraph claims to support a superior data structure capable of solving the major problem which the Blockchain community is facing, the consensus mechanism.
The consensus mechanism which Blockchains offer can be divided into two categories based on the type of Blockchain i.e. Public or Private.

The Public Blockchain relies on consensus mechanism such as ‘Proof of Work’ or ‘Proof of Stake.’ For these, every node must agree with the order of the transactions in which they have occurred, which narrows down the number of applications where such technologies can be practically employed.

On the other hand, Private Blockchain relies on leader-based consensus mechanism which restricts usage only to trusted partners. However, it has loopholes in the form of relaxed security standards make these networks potential targets for DDoS attacks.

Read About : Different types of Blockchain

Compared to these, Hashgraph consensus algorithm overcomes these shortcomings as it requires neither ‘Proof of Work/Stake’ nor any other leader-based mechanism. It is expected to deliver low-cost quality performance with no single point of failure. Low-cost quality performance means less energy consumption as compared to Bitcoin and Ethereum. Also, Hashgraph is 50,000 times faster than Bitcoin and offers up to 250,000+ transactions per second.

Hashgraph – The Reality Check

Hashgraph is no doubt a promising technology, but declaring that it will outdo Blockchain or make it obsolete would be a bias statement. Let’s do a reality check on what Hashgraph is and what it is not!

  • The Hashgraph claims to be very fast as compare to the Blockchain. However, till now, Hashgraph is only deployed in private, permissioned-based network. Its potential in a public network is yet to be discovered.
  • Hashgraph uses ‘Gossip of Gossip’ technique for faster and secure consensus. However, when a node chooses its successors uniformly at random, there is some probability that all the chosen nodes may be malicious. And in case these malicious successors node stop passing the transaction to the next group of nodes, it will prevent the transaction from reaching two-thirds of the network and eventually that would result in unfair outcome for the authentic creator.
  • Hashgraph employs ‘coin toss’ protocol for nodes to make decisions when there is no progress in the consensus protocol. There is a non-zero probability that all of the honest nodes will have the same value, after numerous rounds of coin toss. In case the malicious nodes disrupt the mechanism by manipulating the gossip protocol, it may take numerous rounds to reach consensus, decreasing the effectiveness of the protocol.

Conclusion

Hashgraph is another great technology like Blockchain and is surely promising. However, while we appreciate this technology we should not underestimate the original underlying technology i.e. Blockchain which has paved the way for this new technology. But like Blockchain has grown in last few years, and many of its limitation has been found and resolved, Hashgraph would also have to go through the similar stages of maturity and only then, its true potential would be revealed.

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