I've been in touch with a charity http://hide-e-hole.com
, trying to convince them to accept Bitcoin. Here are the emails (last three were sent today)
> To: Webmaster
> Ask a general question:
> Donate funds
> Hi. I came across your charity on Anthrocon's list of charity
> suggestions. I represent a charity fundraiser called Bitcoin100. The
> gist of our organization is that we try to get charities to add
> Bitcoin as a donation method, and once they do (a process we help
> with), we have 100 people who have already pledged to donate about $10
> each, and make the donation within a week (so about $1,000, just for
> adding the donation option). Accepting Bitcoin also puts you on a list
> of Bitcoin-accepting charities, which is maintained and viewed by
> those involved with Bitcoin, and thus gives you some free advertising
> as well. We have had three charities add the option and receive funds
> already, and hope you could be the fourth.
> Please let me know if this is something you would consider, or if you
> have any more questions.
> Thank you
> -- Dmitry
I would need to research Bitcoin. What is it? What does it do? We can
always use funds, but I don't generally do things like this without lots
Hi. Sorry for taking a while to reply. I was away in Iceland for a week (vacation).
Bitcoin is a virtual currency, like Facebook credits or VISA travel miles, except it's not really owned by any one company and can be sent by anyone to anyone else like e-mail. It's basically a new type of internet money that can be easily exchanged into and out of dollars (or any other world currency). There is a good description of what it is on http://www.weusecoins.com/ For your purposes, you would set up a Bitcoin donation option similar to a PayPal or VISA button (with our help of course), and whenever anyone in the world sends you a donation in Bitcoin, you will receive that amount in USD automatically the next day (receiving Bitcoin from anywhere and converting it to USD takes a few seconds, but it takes a while to transfer that money to your bank account). If you are a registered 501c charity, there are a few companies that will do the service of receiving and converting your money for you for free, otherwise they charge about 2.5%, similar to other business accounts.
In short, though, we are willing to help you set up another option with which to receive payments, our group of donators will send you about $1,000 for doing so, and if you get nothing more out of it, you'll at least get the $1,000.
What we get out of it, and why we have over 100 people willing to donate $10 or more each, is more awareness of Bitcoin. Since the Bitcoin system is able to send any amount of money to anywhere in the world almost instantly and for free, more awareness and acceptance of it would help out charities and businesses that exist in many third world countries, where banking is nonexistent, and transferring money is impossible. But for them to benefit, they need to know about it, and other people who may be interested in donating or transacting need to be aware of the option as well. We hope increased awareness and acceptance of Bitcoin will help the world overall in many different ways. Plus there's the issue of companies like VISA and PayPal charging very high transaction fees, blocking transfers to certain countries they deem high risk (Russia and India for example), and being a general pain for everyone, and Bitcoin just being a much better system over all.
Please let me know if you have any more questions!
Apparently there are a lot of people out on the Internet who think Bitcoin
is perhaps a hoax or at least a very bad idea. What are the risks of using
this? I haven't had time to really find out... I'm having trouble
picturing how this could be dangerous unless people could get into my bank
What is your opinion on this?
That's true, there are a lot of people who misunderstand it, and that's another reason we are hoping to get more people to accept it. The more companies and charities that use it, the more credibility it will get.
Regarding risks, since Bitcoin is digital and irreversible money, it can be stolen like any other file if your computer get hacked. The main risk is having to be responsible for keeping your own coin wallet secure, which means at least keeping your Bitcoin wallets or online services protected with a good password. The second risk is that, since Bitcoin value freely floats on the exchange market, which itself is still small, the value can fluctuate quite a bit at times. There have been cases where I have bought a few thousand dollars worth of Bitcoin, only to have it lose a few hundred dollars of value by next week (overall, the value has been going up though). Both of these risks can be avoided by using a third party service, such as BitPay, that handles receiving coins for you (they manage security risks), and instantly converts what they receive into dollars (eliminating currency exchange risk). I believe they don't change any fees for 501(c) businesses (for the same reason as us: they want to encourage the system to grow). You can also do what they do by yourself by using an exchange like mtgox.com as your receiving account, and setting up your account to instantly convert whatever you receive into USD. In both these cases your only risk is that either of these companies can fail and shut down while you are in the process of receiving/transferring your money to your own bank. Since they will only be sending cash to your personal bank account, they don't have access to be able to pull anything out. And, as I said, the worst case scenario will be that you will get to see how the process works, receive about $1,000 for your trouble, and never get anything through bitcoin or have to deal with it again.
Just some background: BitPay has signed up over 1,500 businesses so far, despite only being about a year old. MtGox exchange has tens of thousands of customers, including wall street traders, and manages over $10,000,000 a month in Bitcoin trades. Some prominent companies that accept Bitcoin are Wikileaks, WordPress, and soon Reddit. And we have signed up 4 charities so far with no issues (it has been very difficult to convince some charities due to the fear and misunderstanding of people like those you found on the internet, and larger charities thinking it's not worth their time to bother). As for it being a hoax, there's no one specifically in charge of or behind the system. It is fully distributed, like e-mail, and is based only on agreement of all participants. So there's really no one to swindle or scam anyone with it. No more than can be done with dollars or euros, anyway.
Okay ... this is interestings, but I'm not seeing how people actually make
money at this. Where does the coinage come from in the first place??
It's not a money making scheme, it's just another currency, like dollars or euros, but with two major differences. One is that there is no single entity or country in control of this currency. New currency is created based on an agreed-upon mathematical formula that no one is able to change, and is paid to those who provide computer resources to secure the system. This restricted hard limit on the amount of Bitcoin is what gives it value, since you actually have to work to obtain it instead of just having anyone create it out of nothing. And since no one country or entity is in control, it can be used across borders without restrictions, just like e-mail or the rest of the internet.
The second major difference is that the transmission mechanism is built into the system from the start. Dollars and euros were created before the internet, banks have had to create complicated, and at times insecure systems to get their currencies to work over the internet. This is why bank transfers take days within US, or weeks for inernational transfers, why credit card theft is such an issue, and why businesses and charities can have their payments reversed (chargebacks) without recourse. Bitcoin has the currency transmitting mechanism built in, so coins can be sent between any two people anywhere in the world almost instantly, using computers or phones, with fees ranging from zero to about a half a penny.
The way people make money is by undercutting VISA/PayPal, who charge 3% per money transfer, or Western Union who charge $25 or more, because using Bitcoin one could convert USD to Bitcoin for 0.5%, transfer money to another country for free, and convert back from Bitcoin to local currency for another 0.5%, plus charge another 1% for their services, and their total 2% fee is still lower than 3% of those other guys. They can also set up businesses that they were never able to before. The one I am really excited about is people starting to set up businesses in third world countries in places like Africa and southeast Asia, where getting a bank account is difficult and transferring money costs $25 to $60. There, using Bitcoin they can now sell their wares locally or all over the world, with their bank accounts essentially being on their phones, and where they can receive even as little as $0.25 from anywhere in the world for free These people are only able to make money thanks to Bitcoin.
One of the charities we ended up sponsoring this past Summer was a university medical team that went to a poor village in rural Kenya in order to establish a rudimentary hospital/medical facility. They are still there, and the only way for them to receive money way out where they are is through Bitcoin, which they then can use right away to buy basic medical supplies like bandages and disinfectants. The fact that they don't have to lose 3% or up to $25 on every donation, and can receive donations as small as $1, has been a big boon for them as well.
Aside from the ideology of making banking easily accessible to everyone in the world, without having big banks charging us ridiculous fees and crashing the world economy every few decades, since many of us in the Bitcoin100 group are trying to set up Bitcoin related businesses, or invest in Bitcoin directly, any growth in the currency system is good for us as well, so we make money by investing in it and spreading it's awareness. I hope this answers the "what's in it for us" question.
As I'm sure we've all known, there's a lot of bad press out there, and people's first impressions of Bitcoin are sadly still heavily influenced by that press. Also, I really need to learn to writer short replies