This past May, the world’s most popular cryptocurrency was worth over 2,000 USD per coin for the first time ever. This made Bitcoin’s estimated market capitalization around 30.92 billion USD and its valuation is expected to continue increasing in 2017. The surge was primarily due to the influence the Japanese Yen has on the Bitcoin market, being the single largest currency being exchanged after the country recognized Bitcoin as a legal form of payment in early April.
Obviously, Bitcoin is doing a lot better than the early days when the first transaction involved an offer of 10,000 bitcoins for two large pizzas (25 USD). But despite its growth, some global markets still view the cryptocurrency as “magic internet money” and refuse to recognize it as having any true value. Then again, you might be reading this and thinking to yourself, what is Bitcoin and why should I care?
Without diving too much into the technical side, Bitcoin can be generally described as a type of virtual currency with most of its power stemming from the internet. Like traditional currencies (dollars, pounds, yuan), bitcoins can be used for a variety of transactions both online and offline. However, one of the selling points for users is the fact that bitcoins are a decentralized form of money. So instead of being tied to an economic system plagued by counterfeit, inflation, and human greed, Bitcoin is largely controlled by itself in a cyber world using encryption methods.
Ever go through the hassle of sending money to a family member in another country? Maybe buy something online and have to deal with processing fees? In the current system, many transactions are deemed inefficient because a huge portion of economic activity has to pass through a bank or credit card company and are accompanied by associated fees. Another highlight to using bitcoins is the elimination of the middle man. With Bitcoin, money can be sent instantaneously without remittance fees — a concern for much of the global population as many individuals do not have access to formal/semiformal financial services.
Now before you decide to forsake your traditional currency, I’d be remiss if I failed to mention the few drawbacks to using the digital currency. The first point of caution is the tendency for the value of Bitcoin to fluctuate in the short term. Case in point, Bitcoin reached over 1100 USD in late 2013 but then spent years in decline, ultimately bottoming out at 200 USD in the middle of 2015. Another concern relates to the longevity of Bitcoin. Though Bitcoin was the first to capitalize on blockchain technology, there have been several competitors that have expanded upon the features of the original cryptocurrency. And just as the price of Bitcoin has increased over the last month, so has its chief competition, Ethereum.
So where do non-governmental organizations (NGOs) figure into the Bitcoin world? As not-for-profit organizations, many NGOs spend a considerable amount of time and energy raising funds to support their cause. But with an unpredictable global economy and declines in donor funding, it’s vital that an organization be able to procure financial resources thus ensuring its sustainability. Considering that today’s society largely interacts in a digital world, cryptocurrency is a logical, innovative strategy to generate funds for nonprofit organizations.
With transactions happening in real-time, Bitcoin allows local charities to create a truly global campaign without the transaction fees that often accompany online donations. Organizations like the Human Rights Foundation already use Bitcoin to raise funds, with the following message being found on the organization’s donation page:
Human Rights Foundation only accepting Bitcoin donations because we care about our donors privacy and making sure that governments, government agencies other secret services can’t gain access to the funds.
We all have already seen in the past that some governments forced payment processors such as Visa and PayPal to block the public from financing organizations like WikiLeaks.”
Offering an alternative system not tied to a political system or ideologies can be a huge benefit for NGOs, especially if serving regions of geopolitical instability. Furthermore, Bitcoin almost becomes essential to developing economies in need of capital. Even the farmer in the middle of sub-Saharan Africa is able to access the internet via a cell phone. Using the power of the internet, Bitcoin makes getting those financial resources to the individuals its intended to for much easier and convenient.
So as NGOs continue to search for the means to continue their humanitarian efforts, using a cryptocurrency like Bitcoin as a form of funding is definitely worth considering. And who knows, maybe those 10 bitcoins could be the $20,000 needed to bring clean and safe drinking water to a community in India, provide healthcare to the people of Ethiopia, or build a school for a village in Cambodia.
Interested in learning more about Bitcoin and cryptocurrency? Check out the links below:
How Bitcoin Works http://money.howstuffworks.com/bitcoin.htm
TEDxBeaconStreet: What the #?!* is Bitcoin? https://www.youtube.com/watch?v=Vzjtvt77mgc
TEDxMidAtlantic: Digital currencies like bitcoin are coming (and it’s a good thing) https://www.youtube.com/watch?v=0GL9PTQiqxw
TEDxTampaBay: At the Speed of Money: How Cryptocurrency Will Transform Everything https://www.youtube.com/watch?v=a53YgjlGM2c
TEDxBermuda: The future will be decentralized https://www.youtube.com/watch?v=97ufCT6lQcY
Fundraising Bitcoin by Bit http://www.ngopulse.org/article/2015/08/13/fundraising-bitcoin-bit
Should Your Non-Profit Accept Bitcoin for Donations? http://www.thefundraisingauthority.com/internet-fundraising/non-profit-bitcoin/
Safello Enables Charitable Donations With Bitcoins https://www.forbes.com/sites/jenniferhicks/2014/08/17/safello-enables-charitable-donations-with-bitcoins/#40b90f0f32fe
Bitcoin: Rethinking Funding for NGOs