Donation Model Development Based on the Methodologies of Blockchain

Introduction

Blockchain technology is as well known as used on Bitcoin which is defined as a peer to peer (P2P) electronic cash system by Satoshi Nakamoto (Nakamoto, 2008). In blockchain, information transmission between node and node is through P2P, the node here is seen as a computer or a user. The block is the basic unit of information exchange between node and node, the blocks are connected together to form a blockchain. In other words, there has no management organizations exist between blocks that is one of the blockchain characteristics called decentralized. In blockchain, all attended users have equal rights to verify the transactions in order to keep the fairness when no intermediaries intervening.

The technologies used in blockchain are raised attention because of successful Bitcoin. Blockchain has changed the operation in financial market mostly. In past decades, bank services are changed from fully human assistant tasks into internet self-assistant tasks. That means users could manage their transactions through internet self-services provided by banks without necessary of agent assisting. In blockchain, information transmission between users along with both users agreements is sufficient because of P2P transferring method. The distributed ledger method used in blockchain is adopted with the cryptography in both encrypt and decrypt transactions. The majority decision is taken to verify transactions in the blockchain. All transactions are secured, verified, transported in a P2P network, and they are stored in related blocks which are connected in sequence to form a secured and unchangeable blockchain (Iansiti & Lakhani, 2017) (Zhu et al, 2016).

The major characteristics of blockchain are decentralized, recorded data as block form in which, data cannot be deleted or changed, data will be secured and transmission procedures will be transparently. The data transference method used in blockchain is P2P, also as well known as decentralized concept, block connects other blocks directly without intermediaries. Thus, no additional fare would be charged because there has no middle organization providing services between blocks when transactions happening. All nodes in the same blockchain network have same weighting for verifying transactions after they sending requests (Shrier, Wu and Pentland, 2016). The verified transactions are saved in the blockchain permanently, all saved data cannot be modified or deleted. The encryption method is adopted in blockchain, each transaction is encrypted by secure hash algorithm and digital signature for the safety and privacy. Based on those characteristics of blockchain, the idea of Blockchain Donation Model (BDM) is appeared.

The motivation of BDM is arisen from problems of the current donation systems. Nowadays, currency donation is the common donation behaviour, which often occurs in donors allot their money to the specific organizations or government departments. Then, the decision power of the donations distribution is all on those organizations which receiving the donations, most donors could only expect or trust their donations are passed on to the people who really need help. However, the policy of donation transmission and the rules of donees choose from the third party to the donees who are suffered from natural disasters, political affairs or social violence etc. are always ambiguous. Hence, donors have no ideas where their donations are used to, and what they are used for. In order to solve the problems mentioned above, the objectives of BDM is to change current donation mechanism and solve the problems occurred in it. BDM is designed based on the methodologies of blockchain that records where is the donation from and where is it spent for. Besides, the transmission pathway of each donation is recorded in detail starting from donors toward the donees. In order to enhance the donation to be used in a proper way, each donation will be seen as a transaction in BDM, each transaction will be recorded in detail and transparently. For safety and privacy reasons, each of them will be secured by secure hash algorithm and digital signature. BDM might raise the efficiency of the administration works by P2P transmission method, also maintain the database easier and clearer because of the permanent data storage. The main contributions in this paper would be design a donation model with the characteristics of transparent, secure, convenient, no intermediaries transactions, called BDM.