4 Impactful Benefits of Donating Bitcoin for Charity
Bitcoin was the first cryptocurrency that was used as a form of payment without any intermediary’s interference. Its widespread usage in stock exchange, gaming, and other industries has resulted in exploring crypto transactions for charities.
According to a survey, approximately 2,352 US businesses accept Bitcoin, excluding its ATMs. In comparison to that, crypto donations soared to more than 1000 percent in the last year which includes Bitcoin assets.
The convenience of accepting and transparency are the biggest factors for digital transactions gaining traction. It benefits the donors as well as the charity organizations to utilize virtually without any hassle. Setting up a crypto account can be done individually or by the name of an organization.
While critics speculate about the risks of crypto philanthropy, the humanitarian aid reasons far outweigh them.
In this article, we will delve into the effects of Bitcoin on charity/donations, its benefits, and challenges, that are having a positive impact globally.
Instant Transfer and Security
There are numerous NGOs who are accepting Bitcoin donations and the reason is its lightning-fast network. The designated charity mentions crypto donations on its website with all the information just like for any wallet transactions.
The process is similar, and the funds are transferred immediately to the receiver. This seamless transaction mechanism is the biggest draw for small and big donors. The payment can be adjusted accordingly with one-time annual to monthly payments.
The blockchain ledgers rely on varied computer networks for their verifications and therefore, they are more secure compared to credit cards or any other digital currency.
DO YOU KNOW?
The UNICEF CryptoFund, launched in 2019, consists of a ‘pooled fund of bitcoin and ether’ that it donates and invests in early-stage startups.
Tax Savings
Giving back to society digitally using crypto assets also saves taxes, especially when donating crypto directly to a charity. In fact, the donors may receive a federal tax deduction against their income tax for the full value of the gift.
Some senders pass on a percentage of their annual savings to the nonprofit, which may result in much larger gifts for their favorite organization. After donating, the donor can buy more coins as per their requirement and investment strategy. This allows them to understand the present-day value and save even more on the capital gains that they would pay in the future.
Greater Value and Global Impact
Since Bitcoin is decentralized, there are fewer chances of market volatility, which makes it more secure than other cryptocurrencies. There is greater value when transacting with a Bitcoin, however, the charities are also required to have integrated those software programs to ensure easy digital transactions.
It is also significant for the NGOs to have an automated system that instantly converts the crypto into cash to avoid being affected by market volatility. These are most helpful when donating for recovery from natural disasters, reducing the global hunger ratio, or providing for children’s education platforms.
A survey conducted in 2018 indicated that in comparison to traditional donations, companies and individuals prefer crypto donations, as seen in the graph below. The pandemic did not deter the interests of investors but, in fact, saw a sharp rise in December 2022 in using crypto for charity work.
Philanthropy with Privacy
There are various pros and cons of donating Bitcoin as an anonymous donor. As charities are becoming well-informed about the type of gifts they receive, it is also relevant to save information about the sender.
However, not everyone is comfortable giving their name during the transfer of funds. In fact, while donating to a charity, most individuals prefer their privacy to be respected. The pros of knowing your sender is building a strong connection with them for the future, but also creating a receipt for them of the transaction received.
However, with an anonymous donor, the charity will not be able to provide a tax receipt without an email address. Preventing subversive organizations from using crypto for funding is a major issue quickly escalating and is not within the reach of the government.
Conclusion
Being a source of inspiration and giving gifts to charities with Bitcoin assets has already become a global trend. Big companies and individual investors are eagerly utilizing it because it is a secure way to transfer money without any interference.
While there are many benefits, donors, and NGOs should also take into account cryptocurrency market volatility and donor anonymity issues. The digital world always faces the threat of transacting in an unregulated space and indirectly supporting illegal activities.
Securing a future that is both for the betterment of self and society is the ultimate goal of all charities. Bitcoin has become a universal force that provides investors easy access with no security hassles, paving the way for a better world.
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