Common Concerns Charities Have About Cryptocurrency

Posted by Duncan Cook on June 2, 2018

Stacked bitcoins


There is a lot of anxiety surrounding the emergence of cryptocurrencies. The fact that they seem to bypass the banks and all government regulation can be a worrying headline for those who are new to the technology; delve a little deeper, however, and you will soon find that the facts are far more watertight than the frenzy.

Isn’t cryptocurrency for criminals?

Cryptocurrency as a sector or tradable commodity is not illegal in the broadest sense.

Thanks to a criminal minority, cryptocurrency has something of a tarnished reputation to some, as there is evidence to suggest currencies like Bitcoin have been used on websites like Silkroad – the black market portal for the world’s sinister underbelly.

But to put this into perspective, global crime syndicates, the black market or Silkroad didn’t suddenly appear in line with cryptocurrency. Criminals of the world have been doing just fine up to now without it.

Let us explain:

  • The total value of the world’s money, excluding cryptocurrency, exceeds $90 trillion.
  • There is currently around 16.8 million Bitcoin in circulation – worth approximately $168 billion ($0.168 trillion).
  • The black market is valued to be worth $10 trillion.

It is inevitable that cryptocurrency will get used in illegal activity – just like fiat currencies – but as evidenced, if all the crypto in the world was used for criminal activity, it wouldn’t come close to making a meaningful dent in criminal spending.

Blaming cryptocurrency for criminal behaviour is as absurd as blaming the dollar for binge drinking.

Whilst one can facilitate the other, the existence of any one currency doesn’t propagate or exacerbate the problem.

Is mining cryptocurrency legal?

It is legal to mine or trade crypto in the vast majority of countries around the world.

However, in some countries like Morocco and Bolivia all forms of cryptocurrency activity have been banned. This includes mining, trading and spending. Penalties include fines or even prison for repeat offenders.

It’s important to be aware of the laws of the country you’re in before you get involved in crypto. It’s also important to understand what the tax implications are.

Whilst the US, UK and others have clearly defined their position on the taxation of cryptocurrencies, a great many haven’t. Just as you need to know whether you’re legally allowed to mine crypto, you need to be aware of your potential obligations too, as new laws are being introduced all the time.

Providing your country allows mining and trading then you are entirely within your rights to mine crypto either as an individual or as part of a mining pool, as well as to trade crypto or use it as a payment method.

Ultimately, cryptocurrency is perfectly ethical.

Is mining cryptocurrency safe?

Yes, but with a caveat.

Using mining software and/or joining a mining pool are entirely safe. The mining software just runs in the background exchanging anonymous (and essentially meaningless) packets of data back and forth, in a fairly similar way to your web browser.

The personal data of your supporters isn’t at risk, and nor is that of your organisation. The miner – despite its intimidating name – exists entirely to solve complex mathematical equations, and nothing else. Even if it could access your personal data it wouldn’t know what to do with it.

Of course, there are mining apps out there that can pose a risk to your network security but that’s true of any app on the internet. It’s merely a case of doing your research and downloading your mining app from a reputable source.

Most apps are built in open source, so if you’re concerned, a developer will be able to scrutinise the code and determine if the app is safe before you use it.

Is cryptocurrency a good investment for charities?

Crypto can be an excellent investment if handled correctly.

Of course, all investment comes with risks. Even entrusting your savings to a high street bank comes with a small (albeit heavily underwritten) risk.

Much like the stock markets, some currencies will naturally perform better than others. Backing the wrong currency can lose you money. Equally cryptocurrency markets fluctuate so even the stronger currencies can be prone to the odd slump.

As with any investment you need to know when a good time to sell is.

The other major risk is a whole new generation of Ponzi schemes built around crypto to take advantage of the ill-informed who want to make their fortune.

Unfortunately, these new schemes are proving highly effective at convincing people to hand over their money to make the organisers millions whilst leaving the investor with nothing.

Again, it’s important to recognise that Ponzi schemes – although made famous by Charles Ponzi in the 1920s – have been around since the mid-1800s. They are nothing new; it’s just something you need to be aware of.

For charities leveraging the Cudo Donate app, crypto is an incredible investment opportunity because it requires no investment and no risk.

Once you’ve signed up and encouraged your organisation and supporters to download the app, all you need to do is manage your crypto portfolio as it builds over time.

 

Sign Up Now.

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Topics: "Charity Mining"