There has been a whole lot of discussion and a fair amount of hype over the last couple of years about the growing use of the digital cryptocurrency Bitcoin as it evolves from a secretive online currency used on the Darknet to something you can use to buy pizzas with.
Understandably, this has led to quite a bit of talk in the fundraising world regarding the importance, or otherwise, of adding bitcoin donation functionality to charity websites – and a number of organisations have already started to test this, including the RNLI in the UK and United Way in the US.
With Boxing Day 2014 seeing the inaugural Bitcoin Bowl college football game, promoted through the antics of its mascot Mr. Bitcoin, the Bitcoin hype looks set to continue apace this year. So, while not wanting to quash any Bitcoin-fuelled new year spirit of fundraising innovation, I thought it might be a good time to suggest four things to think about before you spend too much of your time on Bitcoin fundraising in 2015.
1. Bitcoin users currently represent a small, specialised market
While it certainly is growing, Bitcoin is still a very long way off being a mainstream payment option and there is no real evidence as yet that it is approaching the point where adoption goes beyond a relatively small number of tech-savvy innovators and early adopters. Estimates of the size of the active Bitcoin userbase vary widely, but most put the number at somewhere between 500k and 5 million world-wide (and I suspect the active base is closer to the lower than the higher estimates).
Added to this, Bitcoin users don’t currently look like your usual online donors. A typical Bitcoiner is apparently a 33 year old male, with above average household income, living in the US or Northern Europe. Some fundraisers believe that this very disparity is the key opportunity offered by Bitcoin – highlighting it as a way to attract younger donors. However, the truth is that attracting sufficient young Bitcoin donors to represent a viable income stream is unlikely to happen simply because you announce that you can take their cryptocurrency gifts.
Any non-profits whose brands are already relevant to this audience may not find this a problem – but I imagine they’ll be few and far between. The majority of organisations are likely to need to invest some serious effort in defining and supporting a fundraising proposition attractive to the tech-savvy, youth consumer demographic to generate sustainable income. Interestingly, in line with this, United Way has focused its Bitcoin initiative on funding for their Innovation Fund.
Combine the current market size with the challenging profile of the typical Bitcoin user and I fear that most Bitcoin fundraisers may be fishing in a rather small pool for a few years yet.
2. Bitcoin value is highly volatile
With its exchange rate to the US$ fluctuating from over $1,100 to under $320, during 2014 Bitcoin was the most volatile ‘currency’ in the world (although for a while the Ruble gave it a run for the title) and there is no certainty that this will not be repeated in 2015. As such, to make the most of Bitcoin fundraising your finance team will need to keep a very keen eye on exchange rate trends.
3. The smell of the Darknet remains
While several well known consumer brands, from Dell to Expedia, now accept Bitcoin, it retains its historic (and ongoing) association with dubious and downright criminal transactions on the DarkWeb, which for some years yet may lead to non-Bitcoiners questioning whether you’re asking for ‘dirty money’.
4. No fundraising team has unlimited time and resources – so you must focus where the largest fundraising opportunities lie
I have written before about the danger of FOMO (Fear Of Missing Out) leading to fundraisers trying to test every new digital opportunity that comes along and as a result not being able to focus sufficient time and effort on those tests most likely to deliver the best income returns. Many of these may involve far less trendy things than Bitcoin, such as properly addressing Conversion Rate Optimisation on fundraising pages, but are more likely to lead to increased online income.
I remain very interested in the long-term potential of ‘independent’ digital currencies like Bitcoin (and even more interested in potential applications of the block chain platform beyond Bitcoin). However, I believe there are so many other opportunities to deliver digital fundraising growth in 2015 with more potential than Bitcoin fundraising that if you’re serious about prioritising your time based on income potential (and not just PR potential) then Bitcoin will not come even close to the top of the list.
“But if we shouldn’t spend our time on Bitcoins, where should we spend it?”
Well, I’m very pleased you asked that. Because there are an exciting range of other digital fundraising opportunities that I would say should certainly be on your list for consideration this year – and over my next few posts here on Giving In A Digital World, I’ll be sharing some specific ideas about these.
Meantime, if anyone has any insights to share from their 2014 Bitcoin fundraising experiences – then please do share them in the comments section below.