Goebel, pictured March 28, 2014, in Minneapolis,
is a University of Minnesota grad student who used
cryptocurrency to buy some items at a recent
silent auction for the Spare Key charity
mingling at a recent gala for the Spare Key charity didn’t
know it, but they had entered a new frontier in
nonprofit fundraising. Folks who bought auction items
ranging from French wine to a Mexican vacation were
allowed to pay with check, credit card — or
a term used to describe virtual currencies with names
such as bitcoin and dogecoin. They don’t exist in
paper or coin form but are downloaded from a virtual
wallet, often on the owner’s cellphone, to the charity’s
website, which is equipped to convert it to cash.
Key is one of the first Minnesota nonprofits to make an
appeal to cryptocurrency holders, and is among a tiny
but growing group nationally.
March, Spare Key even hired a consulting "director
of cryptocurrency development" to build online
infrastructure and facilitate donations by tech-savvy
currency users — who it believes are a largely
untapped market of donors.
are venturing into the unknown bravely," joked
Erich Mische, executive director of Spare Key, a
Minneapolis nonprofit that provides emergency mortgage
and rent payments to families with critically ill
children in the hospital.
demographic of people participating in the
cryptocurrency economy are not people who normally
contribute to Spare Key," he said.
demographic is embodied by Erik Goebel, a 29-year-old
University of Minnesota graduate student studying
chemistry, a self-described geek who "likes to
experiment with new technologies and try new gizmos and
showed up at the Spare Key auction after learning about
the nonprofit’s move into virtual currencies on
Reddit.com. He had donated to a couple of charities
online in the past, such as the Jamaican Olympic Bobsled
Team, but never in the real world.
was the first time I paid for something in person with
cryptocurrency," said Goebel. "It was pretty
awesome. To take my phone somewhere and use my virtual
currency and receive physical items back — that was
currencies can be bought and sold at online currency
exchanges, much like stocks, with exchange rates that
vary daily. Bitcoin, the best-known, started in 2009.
Since then, there’s been an explosion of others.
currency is not backed by any central bank or tied to
any nation, which creates risks for users. In February,
for example, a leading bitcoin exchange called Mt. Gox
filed for bankruptcy, claiming it had lost 750,000 of
customers’ bitcoins to computer hackers and saying
that $27 million in Japanese bank accounts was missing.
the currencies have been embraced by libertarians,
speculators and traders who like the anonymity and ease
of the transactions, as well as the ability to transfer
money anywhere in the world without fees.
tech-savvy folks are core users, part of a socially
conscious generation accustomed to donating to causes in
the silent auction at the Spare Key gala, Goebel used a
currency called dogecoins to pay for a bottle of cherry
rum, two restaurant certificates and an extra $25
make the purchase, he pulled out his cellphone, opened
up his dogecoin account, and transferred 90,000
dogecoins to Spare Key’s website. That’s roughly
Key, meanwhile, has an arrangement with an online
payment processor called Moolah, which captures crypto
currency and converts it to U.S. dollars.
in front of his computer last week, Mische demonstrated
how the transactions appear on his end.
you see that?" he asked suddenly, pointing to his
computer screen. "The exchange rate just
fluctuating rates are one of the greatest risks — and
rewards — involved in using digital currency.
you have 10 bitcoins donated one day, it could be worth
half that the next — or 20 times more," said Nick
Holland, senior payments analyst at Javelin Strategy
& Research, a California-based firm that analyzes
consumer payments behavior.
upside for charities, however, is there are no
transaction fees, so the entire donation goes to the
cause, he said.
currency is of "extremely limited use" right
now, said Holland, "unless you count taking funds
out and putting them in. But it is finding its
way," he said.
anonymity can attract the less-than-scrupulous. For
example, Bitcoin 100, a national nonprofit devoted to
encouraging charities to accept digital currency,
received several donations from someone who later
acknowledged he had "stolen" the currency.
Charities will need to decide whether they want to risk
taking tainted money.
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there can be a significant amount of cash in the hands
— or cellphones — of digital currency holders, in
particular those who invested early and saw their
about the financial implications for nonprofits, Mische
is hosting an April 16 meet-up on digital currency and
its role in the nonprofit sector.
folks like Goebel hope the number of charities accepting
digital currencies rises. It could be both a financial
lift for charities and a boost to the legitimacy of the
exciting to see a real-world charity joining the crypto
community," he said.