One technology which has changed the way we do things is cryptocurrency. But what exactly is cryptocurrency? Basically, this is a digital asset that is designed to operate as a medium of exchange using the concepts of financial transactions and strong cryptography to secure transactions. Unlike fiat currency (currency issued by the government), digital currencies are not centrally controlled making it highly flexible and secure. Examples of such digital currencies are Bitcoin, Litecoin, and Ethereum.
Many organizations, nonprofits included are beginning to see reasons for using this kind of exchange in their fundraising operations. With many institutions and individuals now embracing Bitcoin and other digital currencies, it has become necessary for nonprofits to adopt it. Some nonprofits such as Beam and Red Cross are already accepting cryptocurrency donations. Here are a few reasons why nonprofits should embrace cryptocurrency donations.
Fast and Efficient Transactions
Because digital currencies are decentralized, transactions involve fewer people and processes. The process bypasses onerous processes and paperwork which are a characteristic of traditional payment methods. Quick transfer of cryptos means that donations can reach the intended party faster and you can channel the money to its intended use. With such efficiency and speed, you can be assured of secure cash flow with little hassle.
The structure and design of blockchain, which is a basis of digital currencies such as Bitcoin is highly secure. Transactions cannot be modified without the ‘key’ consisting of random characters that are nearly impossible to guess. Unlike fiat or traditional transactions, no one can access funds stored in a wallet apart from the owner of the key. Also, donations and transactions conducted through blockchain are private and anonymous. Privacy and anonymity encourage donors to participate and therefore may increase the number of donors and donations.
Makes it easy to access international donations
Bitcoin is a promising form of currency which has gained international acceptance. It offers many benefits to companies and investors that accept it. These are the exact reasons why nonprofits should embrace it as well in donations. To begin with, accepting cryptocurrencies can help in the improvement of international donations as it eliminates financial barriers that exist when donating in foreign currencies. Furthermore, it eliminates processing and banking fees, a characteristic of fiat currencies. When a donation is made using cryptocurrency, it goes directly into the designated wallet removing all processes and fees.
It is an alternative payment option
Cryptocurrency is just another option that donors can use to contribute to a given cause or program. Adding this mode of payment to your site provides another option for donors
Despite the benefits above, there are a few reservations about cryptocurrencies that you should know of. It includes volatility of value in the market, tax regimes and its reliance on technology.
So should nonprofits adopt cryptocurrency in their operations? The decision depends on your organization and its views on the technology, but as you can see from the advantages above, setting up a crypto donation page doesn’t take long, will not break your organization and will accommodate tech-savvy donor base.