The value of ethereum, the second biggest cryptocurrency, also touched a record high. Both cryptocurrencies have retreated from their record values after helping boost the global market cap of cryptocurrencies beyond $3 trillion, according to CoinGecko prices.
As of Monday morning, CoinMarketCap, another prominent estimate, listed the market cap as $2.8 trillion. So far this year, Fidelity Charitable, the nation’s largest grantmaker, has received more than $274 million in bitcoin contributions – than quadruple its former high of $69 million in 2017, according to a company representative.
And the bitcoin donation platform Engiven announced last month it accepted what it dubbed the largest single Bitcoin donation known to date: a $10 million Bitcoin payment to an unknown faith-based charity. Many prominent charities and foreign assistance organizations, like The American Red Cross and Save the Children, have built up systems to accept cryptocurrencies or are employing platforms that allow them turn them into cash straight away.
But smaller organizations — who make up a large portion of authorized nonprofit groups in the country — are trying to sort out how to embrace these currencies, or if it even makes complete sense for them to do so, said Rick Cohen, the chief communications and operating officer at the National Council on Nonprofits.
Because it is not the traditional financial gift that many organisations are accustomed to, Cohen explained, “it can be a little frightening for them.” To put it up, he explained, “it’s not something that’s free and simple.” It’s also important for them to determine whether there is really a demand from their current contributors to be able to do it.
According to Aron Flasher, who leads business relationships for Action Against Hunger, the worldwide humanitarian organization began collecting bitcoin donations last year after a bunch of donors contacted them about receiving the assets. Using cryptocurrencies, he claims they have raised over $1 million in the intervening period.
“We believe that we have exposed our issues to a very varied group of people that we would not have reached otherwise,” Flasher said of the campaign. “And thus far, all of our estimates indicate that it will only continue to rise.”
According to a survey conducted by the Pew Research Center and released last week, 16 percent of Americans have invested in, traded, or otherwise used cryptocurrencies in some capacity. Since Bitcoin’s introduction in 2009, digital currencies have grown in popularity, largely due to the enthusiasm of millennials. However, some critics believe that the use of digital currencies is a transitory trend.
Chairman of the Securities and Exchange Commission Gary Gensler stated in September that investors were not adequately protected in the cryptocurrency market, which he described as “rife with fraud, frauds, and abuse.” He compared the cryptocurrency sector to the “Wild West.” Regulations have observed that digital assets represent greater dangers for money laundering, terrorist funding, and other types of criminal activity than traditional assets. In addition, some countries have taken steps to make the transactions illegal.
Cryptocurrencies are a desirable asset to contribute because they allow contributors to avoid paying capital gains tax on their donations. It is possible that donors will be liable to that tax if they convert their virtual currency into cash before donating it, which implies that less money will be available to donate to their chosen charity.
Another benefit is the ability to claim a tax deduction. According to the tiny number of cryptocurrency owners who donated any of their holdings to charity, tax savings were a motivating factor in their charitable donations, according to a report published by Fidelity Charitable in October.
Many of those investors also reported difficulty in locating organizations that accepted the virtual currencies, which can be volatile and hence unsuitable for charitable organizations to invest in. Following the donation of $1 billion worth of Shiba Inu currency — often known as a “meme” or joke coin — to the India COVID-Relief Fund in May, the token’s price plummeted by 50% following the announcement of the donation.
In a follow-up statement, Sandeep Nailwal, the founder of the relief organisation, stated that just $20 million had been spent due to difficulties in converting the bitcoin and complying with Indian government restrictions regarding the assets. After that, the value of Shiba Inus has skyrocketed in price.
Because of the volatility of the cryptocurrency market, certain giving platforms and donor-advised fund sponsors, such as Fidelity Charitable, convert cryptocurrency donations into cash as soon as they are received.
In an interview with The Giving Block’s Pat Duffy, co-founder of the renowned bitcoin contribution site The Giving Block, Duffy indicated that while it is uncommon, some NGOs who use the platform choose to hold the assets. Fidelity invests the income generated by cryptocurrency in a donor-advised fund, which allows donors to receive tax deductions up front before any of the money is distributed to a charitable organization.
It’s possible to have a situation where someone donates bitcoin, and if we don’t sell it soon enough, the cryptocurrency might lose as much as 20% of its value in a day, according to Tony Oommen, a vice president and charity planning expert at Fidelity Charitable Inc. Or, as Oommen pointed out, it could travel in the opposite direction. “However, we make no attempt to guess on that.”
Price fluctuations aren’t the sole source of anxiety. Earlier this year, the environmental advocacy organisation Greenpeace announced that it would no longer accept Bitcoin due to environmental concerns related with mining the digital currency. Despite this setback, James Lawrence, the CEO of the contribution platform Engiven, believes that the majority of NGOs will begin taking cryptocurrency donations within the next five years, despite the current pause.
The number of businesses that take cryptocurrency is estimated to be less than a few thousand, according to him. “There is a great deal of space for improvement.”
Pete Howson, a senior lecturer at the University of Northumbria in England who studies cryptocurrencies, believes that the usage of virtual currencies could, in some situations, increase what he refers to as “surveillance philanthropy.” Take, for example, GiveTrack, a cryptocurrency crowdfunding platform that employs blockchain technology in conjunction with data from charitable organizations to provide donors with reports on how their cryptocurrency contributions have been spent.
Connie Gallippi, the founder and executive director of The BitGive Foundation, which operates GiveTrack, claims that the report streamlines the recording of transactions on the blockchain and tells contributors exactly what their contributions have purchased with their money. Moreover, she added, the report demonstrates to donors how a charity uses money that have been converted into a local currency.
In his statement, Gallippi stated that the software’s purpose is to promote openness in the charity sector, and that any criticism of the tracking system is unnecessary because charities have the option to refuse restricted donations.
The fact that you have no control over the data that is displayed is the epitome of transparency, according to her. “It’s not your activities that are causing this data to exist.”