While the world looks to label Bitcoin for all of the things it isn’t–as a major financial mechanism of terrorism, or a smart way to perform money laundering–let’s take a look at one of the paths it does take. The charitable donation, for example. The charity industry has had their own public relations issues over the last several years for many fly-by-night organizations turning out to be full-on scams, like some alleged “Bitcoin exchanges” of days gone by. Bitcoin’s digital currency and its blockchain public ledger are seen as a way to improve not just the efficiency of corporate banking interests, but also smaller operations like charities.
Charities can grow quite large, too. Two of the largest, the United Way and Greenpeace, have been accepting Bitcoin for some time now. The attraction to Bitcoin by more and more charity organizations becomes clear when you consider the inherent advantages of Bitcoin over legacy economic models like debit cards. Transparency is one that is readily apparent.
“Charities always face issues in terms of managing the trust,” said Rhodri Davies, head of the Giving Thought policy program at CAF. “With blockchain, you will be able to see where the money goes and track your donation as it goes through the charity.”
Identity theft is virtually eliminated, maintaining a level of trust in the charity. For those who don’t want to reveal their donations publicly, personally-identifiable information is not tied to these transactions, directly. Also, there is no limit on the amount of the transaction, often brought on by a merchant processor. You could deliver $0.50 USD or $1 Million USD with the same amount of ease. If you want to donate $1 million USD via traditional channels, however, it immediately becomes both public, time-consuming, and subject to potential theft through a potential attack of the intermediaries that hold these transactions.
“‘Nano-donations’—much smaller amounts of money—could become the way in which people donate in the future,” said Peter Smith, chief executive of Blockchain, told the Financial Times.
“At the moment, you can’t really donate tiny amounts of money—and can’t send small amounts of money, as well. With Bitcoin and blockchain, you could now [donate money to] pay schoolchildren a dollar for every assignment that they complete or a cent for every page they read in a book: you can incentivize reading. There are lots of really cool models.”
On top of that, for those companies that hold a portion of these donations for any length of time, they can also see a nice appreciation that can increase the value of their funds.
The value of using Bitcoin as a method of payment is very clear, for those who care to investigate what it has to offer, like the Royal National Lifeboat Institution. They have recently raised over 2,500 British pounds, or almost $4,000 USD, on 600 Bitcoin donations. Such small donations would be gobbled up by processing fees using a traditional debit or credit card, but Bitcoin users are spared these unnecessary third-party expenses.
“We look at bitcoin as an online cash box,” said Luke Williams, project leader for bitcoin at the RNLI.