Monday, September 15, 2014

Dogecoin and Bitcoin, What it Can Mean to Charities

   United Way recently announced that it was going to begin accepting Bitcoin.  This is an incredibly important step in the evolution of cryptocurrencies.
   One of the common questions about Bitcoin and Dogecoin, is why should I bother buying any?
    This is an extremely valid question.  Most people are drawn to Bitcoin for investment purposes and are hoping for some large payout like some of the earlier adopters experienced.  Tim Draper thinks this is still possible and predicts Bitcoin could be worth $10,000 in the next 3 years.  I hope he's right, but there are other reasons to use Bitcoin other than just dreams of riches.
    One of the clear advantages to using Bitcoin or rather accepting Bitcoin is the potential for crowd funding and micro transactions.  
     Ask yourself, why is buying a coke from a vending machine such a pain in the ass.  I don't have change, because seriously who carries change?  The dollar thing thinks my wrinkled dollar is actually a tobacco leaf and keeps spitting it back out.   I don't really trust the damn thing to give it my credit card information and the vendor sort of hopes I don't use a credit card because the merchant service fee on a $1.50 coke is like $0.25.
    So in today's high speed world full of technology, I can't figure out a reliable way to purchase a coke.  Enter cryptocurrency.  
    The advantages of accepting Bitcoin or Dogecoin for a small impersonal transaction are clear.  

1. No fees.  You could be using a service like Coinbase which charges a small fee (1% typically), but you certainly don't have to.

2. No risk of stolen credit card numbers.  With cryptocurrency I initiate the transaction.  The vending machine never has access to my information and so there is no risk that someone might be trying to steal my information for later use.  You can steal my wallet address, but without my private key it's not going to do you much good.

3. Portability.  I can send bitcoin using my phone.  I have my phone more often than I have $1.50 in quarters.

   Great, but what does this have to do with charities and United Way?  Well, the same advantages that a vending machine enjoys applies to charities, plus one more.
   When Hurricane Katrina hit, a lot of people donated money to Red Cross to help with the relief effort.  One of the more popular ways of doing this was by using text message donations.  Whoever came up with this idea is a genius.
   Basically a text number was created specifically associated with Red Cross and Katrina.  If you texted the magic passcode to the text number, you authorized your carrier to charge you $5.00 or some other set amount.
   No one is going to go to the trouble of mailing a $5.00 check to the Red Cross.  But texting is simple and when you watch those poor people sitting on their roofs surrounded by debris infested water and floating balls of fire ants you can't help but send a text while wiping away a tear.
   Bitcoin allows for these types of transactions without the middle man.  No phone carrier has to get involved.  No fees being sucked out by a bank or some other blood sucking corporation.  It's just United Way and you and some weird sense of accomplishment when you magically support a cause you heard about on Facebook.
   For charities, they can use crowdfunding to get millions of microtransactions and it would actually be worth the trouble.
   This is a big deal, especially for charities.  Suddenly raising awareness is actually valuable as opposed to some weird marketing campaign where everyone wears pink.  Now numbers could equal value and real money.
    The difficulty of course is that people are going to be reluctant to exchange $500.00 into bitcoin just so they can donate $5.00 to United Way.  But, the potential is there which means someone smart will figure out a way to overcome this difficulty.
   

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