Bitcoin has been around for just over 10 years, and in that time it has become a big deal. It’s discussed in everything from Trump’s tweets to popular songs, TV shows and movies. Its popularity increased as younger generations, who grew up through the 2008 financial crisis, recognized that our financial system needed big changes.
What is Bitcoin?
Bitcoin is a type of digital currency where your transactions are recorded and maintained, and it operates independently to a bank. At its core, it’s a financial system where mathematics replace human emotions and errors.
Within the Bitcoin system are these things called “keys” which are number codes used to spend Bitcoins. If you can control your own bitcoin wallet keys, no bank can freeze your account. To maintain the value of Bitcoin, the code dictates that there will only ever be 21 million bitcoins ― which means no inflation. No matter who becomes president, or which party has a Senate majority, the US government (or any government for that matter) cannot print more bitcoin and hyperinflate the currency like we’re seeing in countries like Venezuela. These features, among others, have made bitcoin a rising star, and the best appreciating asset in recent history.
How large is the Bitcoin fanbase? There are approximately 50 million cryptocurrency (“crypto”) users currently, but that number is growing rapidly. Already, bitcoin is searched more often on Google than Kim Kardashian, Justin Beiber or Taylor Swift. With major companies like JP Morgan, Facebook and now Walmart creating their own cryptocurrencies, people are more interested in bitcoin and cryptocurrencies than ever before ― meaning that cryptocurrencies, in many shapes and forms, are here to stay.
Bitcoin has a $200+ billion market. If you had bought $100 of Bitcoin in 2010, it would now be worth around $20,000,000. Some people who made fortunes through Bitcoin are looking for a way to offset some of their gains ― and donating some of their crypto is the best way to do that. We’ll explain why momentarily.
Nonprofits and Bitcoin ― the new power couple
We’re seeing nonprofits accept Bitcoin and other cryptocurrencies at an increasing rate, generating attention and improving fundraising outcomes. In today’s world, attention is the new currency. Nonprofits accepting cryptocurrency donations stand out in a crowded field. Not only does it show that they are innovative, but it gives them a powerful tool for connecting with young donors to begin building lifelong relationships. Put simply, bitcoin is exciting and nonprofits who fundraise crypto are sharing in the excitement, earning new fans of their own.
Accepting cryptocurrency donations is an opportunity to connect with an entirely new pool of donors. Thousands of Bitcoin millionaires likely exist already, but that number is likely to increase. An Etoro poll showed almost half of millennials prefer investing in crypto over the stock market.
In our experience, donors of cryptocurrency weren’t previously donating to nonprofits at all or very little. Why would they donate cryptocurrencies instead of traditional methods? Simple – taxes. Cryptocurrency donations are treated the same way as stock donations; the maximum capital gains tax rate is 20 percent on long-term holdings. Because of this, you are actually giving 20 percent more directly to the organization than if you sold the cryptocurrency for its value and donated in cash.
Because large swaths of the globe are still relatively unfamiliar with Bitcoin’s technology, it’s poised to continue its growth as more investors pour in. Just this year, the price has tripled and doesn’t show any signs of slowing down.
So, is your nonprofit ready to connect with cryptocurrency donors?
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