This is part of my ongoing series about Digital Currencies. This is my interview with Arryn Blumberg about Bitcoin. He works for PwC Canada and is an avid Bitcoin enthusiast. He also contributed to the PwC Consumer Intelligence report about Bitcoin around Casino Gaming.
Can you explain #Bitcoin?
Note that Bitcoin is a brand name, it is better to say digital or crypto currency. For example, all Ford Explorers are cars, but not all cars are Ford Explorers, the same is true for Bitcoin – all Bitcoins are crypto or digital currency, but not all crypto or digital currencies are Bitcoin.
For most people I think it is easiest to think of bitcoin as just another currency, such as dollars or pounds, but this currency is not controlled by any government or bank. Although ironically, and predictably, most governments and banks have tried to say that bitcoin is not a currency. No points for guess who is feeling threated by change.
Bitcoin is managed by the people who use it – a currency for the people, by the people on a global scale. With the added benefit that it’s primarily virtual, meaning you take it anywhere you want without the need to pay exchange rates, transfer costs, credit card charges etc.
What are the risks for a nonprofit that wants to take Bitcoin? What are the benefits?
With anything new there is risk and for Bitcoin, as the leading brand, the risks tend to be around long term viability, acceptance by other business, legality in certain jurisdictions, fluctuating values of the “coins” themselves. There is also the use of the near anonymous currency for criminal purposes that has and will affect its value.
Specifically for nonprofits I think the value fluctuation is the most concerning, given many of these organizations have limited financial resources anyway. Suddenly having their “money” drop in value could really impact the work they are trying to do. Additionally, they legality of the currency and acceptance or none-acceptance by governments may limit what nonprofit organizations can achieve when trying to work with these types of bodies both in the developed and third world.
However, even if Bitcoin as a brand does not last the idea of a digital or crypto currency is here to stay.
Something that is global, not bound or managed by any single government or bank, free to move above and independently of normal market forces i.e. stock market crashes and can be taken with you, with no constraints is very appealing and seems to be the next logical evolution of the internet-social networking that we have all experienced over the last few decades.
For nonprofits this could mean a much faster and more direct route from donation to delivering help, by cutting out the middle man i.e. banks. People may also be more inclined to give more as they will feel that more of their money is being used for a good cause. And finally the ease of giving, this is a virtual currency so donating via electronic means e.g. smart phone, laptop, smart device, wearable devices etc. becomes that much easier.
With the IRS ruling that Bitcoin is not a currency, should nonprofits be scared to deal with it at all?
No, is the short answer. Just because the IRS or other big government type entity rules that it is not a currency at the moment, does not undermine that you can still use Bitcoins as a means to pay or barter for goods or services.
The simple fact that is it not technically a currency, gives it real grass roots power to be used and shaped by the people and communities that chose to use it.
Going forward either Bitcoin or something like it will become the global norm or standard, so getting used to it now and understanding what it can offer is of value.
How would a nonprofit even approach to start taking Bitcoin for donations? Who would they hire to enable it with their current systems?
Either partner with or hire or get someone who has done this before to donate their time to support you.
Take donations in Bitcoins only from your local community that you know and trust (and I don’t mean geographically local as this can included your local social networking community as well), but make sure it does not represent the bulk of your funds and or convert Bitcoins to a standard currency on a regular basis and or spend them on actual goods or services rather than holding on to them like stocks.
Once you feel comfortable with Bitcoin then you can consider expanding – taking other types of digital currencies, have appeals based or focused on digital currency donations.
But just don’t rush in to it, at the end of the day this is still just money and not some magic fairy dust that will transform an organization.
If a nonprofit wanted to experiment with taking bitcoin, how would they start? Events? Galas? Mobile campaign?
As I said before, start small and keep the first few runs simple.
The other thing to keep in mind is that this should not be Bitcoin or…, but Bitcoin and…So it becomes just another vehicle that people can donate through, giving the person the choice to donate in a format that best suites them.
How long before we see wide acceptance (in small to mid-size nonprofits) of Bitcoin or other digital currencies?
Some of this will be dictated by the jurisdiction with-in which they operate and or the socio-economic maturity of their environment e.g. a charity in India is different to one in Malawi to one in New York or London.
That said, I do think that on average there will be acceptance of Bitcoin or similar as a means of donation in the near term. Say 18-24 months for many to have at least some form of means to accept digital currency donations, even if it is limited to their Facebook page.