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With the recent addition of a Bitcoin address to their donation page, the NYC chapter of the Wikimedia Foundation has at least partially accepted Bitcoin as a valued currency and reduce the burdens and costs of donation. It seems to me a great lot of good could be done to the cause of Bitcoin if it was fully adopted as the Wikimedia Foundation's currency of choice. How can we, as both individuals and a Bitcoin communtiy, convince the organization that not only accepting Bitcoins but using it as a payment form is advantageous to their operations? Is there some sort of audit or study that can be conducted to present a cost-benefit analysis to switching to Bitcoin?

Wikimedia is a ripe target for this change because it is prominent yet small (as opposed to a large bloated corporation with many levels of decision making and more reluctancy to taking risks), internet-based organization with a global presence. Potentially, it could be the catalyst for the digital currency revolution, where organizations didn't only accept Bitcoins for donations, but exchanged them for goods or services (think server hosting fee, computer equipment, etc.) and potentially even pay employees across the Internet in one single denomination!

Am I wrong in being so optimistic? Is it simply not economically viable to make the switch?

  • Please format the question into paragraphs. – Meni Rosenfeld Dec 29 '11 at 18:24
  • Apologies, posted the question from my phone. Hope it is currently formatted properly. – user83 Dec 29 '11 at 18:37
  • This looks like a discussion topic to me but I'll wait for some close-votes before closing it. – D.H. - bitcoin.se Dec 29 '11 at 19:00
  • Apologies again, but I didn't realize the question isn't suitable for Stackexchange. Is there a better way I could phrase it? – user83 Dec 29 '11 at 19:13
  • @user83 - you could try phrasing your question so it would be structured like a narrow, specific question, and also use the last paragraph to ask the gist of what you want answered. For example, a good question would be: "What are the advantages and disadvantages for a company like Wikimedia Foundations if it decided to rely solely on Bitcoins for donation?". This scopes your question into something that can be objectively answered. If you want to discuss things, rather than get precise answers, go to the forum - bitcointalk.org . – ThePiachu Dec 29 '11 at 19:38
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If any business would decide to rely solely on Bitcoins as their medium of receiving donations, would face the following problems:

  • Bitcoins aren't mainstream yet, so a lot of people would not understand what is it that the company uses.
  • Currently, getting Bitcoins for an average person is a chore. A lot of people can't be bothered to register in an online store to buy something they already have in their shopping cart (PayPal is addressing that issue with a sort of an OpenID equivalent). There would be even fewer amount of people wanting to use wire transfers or the like to get Bitcoins at MtGox.
  • Bitcoins aren't stable in their value yet. If a company has predictable costs payable in USD, getting donations in something that can change its exchange rate to USD in seconds by a large factor is not an ideal situation.
  • Bitcoins don't have the stability of a bank or large institution when it comes to security. If someone hacked into your bank and stole your money, usually the bank would give you the money back. If someone hacked into your machine running Bitcoins and stole your wallet, your Bitcoins are gone forever and nobody will compensate you.

So all in all, advocating for someone to use purely Bitcoins for everything is a bad idea. If a company would loose a lot of money by doing that, they won't want to deal with it ever again. On the other hand, due to the low costs, promoting adoption of Bitcoins as an additional source of donations is a better idea. This way if it doesn't work out too well, no big loss, if it goes well, so much the better.

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They'd either have to convert from Bitcoins immediately into cash or become Bitcoin speculators. Neither choice is very attractive.

If they convert immediately into cash, they incur a transaction fee on their end and likely the donor incurs a transaction fee on their end too. They're also in uncharted waters as far as the tax status of those donations goes.

They should be deductible but at the purchase value or at the value at time of transfer? If I buy Bitcoins at $30 each and they drop to $8, can I donate them and deduct the full $30?

The only other choice to cashing them in is to hold onto them. If they become speculators/hoarders, someone has to manage their Bitcoin portfolio and there's always the risk they'll take losses. It wasn't too long ago that Bitcoins dropped from $30 to $3. A 90% drop in a portfolio is not something a non-profit can tolerate if their portfolio is a significant fraction of their assets. (And, of course, a non-profit cannot tax deduct its losses, though with sufficient effort and accounting cleverness, they may be able to sell them.)

So this just doesn't make sense yet.

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At this point it's a very bad idea for Wikimedia to start dealing solely with Bitcoin. And even if it wasn't, it would be futile at this point to try to convince them of this.

  • Could you more specific as to why it would be a "bad idea"? At the very least, would a partial switch or maybe establishing a roadmap for a transition be beneficial? – user83 Dec 29 '11 at 18:34

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