NYC Chapter of Wikimedia Foundation Now Accepting Bitcoin Donations

There has been a concerted effort on the part of the Bitcoin community to encourage Wikipedia to accept Bitcoin donations. Wikipedia is, of course, a project of the Wikimedia Foundation. Wikimedia's current stance on the matter was stated back in November:

The Wikimedia Foundation, as a donor-driven organization, has a fiduciary duty to be responsible and prudent with its money. This has been interpreted to mean that we do not accept "artificial" currencies - that is, those not backed by the full faith and credit of an issuing government. We do, however, strive to provide as many methods of donating as possible and continue to monitor Bitcoin with interest and may revisit this position should circumstances change.

There was a breakthrough today, however, as the NYC Chapter of the Wikimedia Foundation has begun accepting Bitcoin donations. Whether this translates to an organization-wide policy change remains to be seen. Regardless, conversions such as these show that Bitcoin continues to gain broader acceptance as a real currency.

Bitcoins have been donated to the NYC Chapter of the Wikimedia Foundation, thus far (this is a live counter). Click here to get their donation address.

You can read more about this on the Bitcointalk Forums.

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Bitcoin and Conventional Business do not Mix

It's time to be truly honest about what we're up against in terms of motivating the adoption of Bitcoin.

Imagine the best-case scenario where Bitcoin exchanges accept credit cards, directly. There is absolutely no way they will be able to drop a credit card deposit fee below a very generous 2%, and that's assuming that chargebacks won't happen, which they will.

Add the additional 0.5%, or so, that you would have to pay for actually buying the Bitcoins on the exchange, and you're looking at a minimum of 2.5% in fees from the get-go. That 2.5% already negates any savings that a merchant could offer for someone willing to pay with Bitcoin. Right there, we know it makes absolutely no sense to offer a product or service for Bitcoin when the same thing can already be acquired with credit cards or PayPal. Now you understand why Cheaper-in-Bitcoins made almost no sales whatsoever, and why you'll never see Amazon adopt Bitcoin.

We also talk a lot around here about charities or non-profits that accept Bitcoin donations. Again, no one is going to go out of their way to acquire Bitcoins in order to make a donation; it just adds an unnecessary extra step. Nor are people going to acquire Bitcoins to be able to buy indy-music, make micro-donations to blogs (too bad!), or pay for shareware. Independent artists, writers, and software developers should accept Bitcoin as a secondary source of income, but it will never make up more than a small percentage of their revenue. Bitcoins will eventually trickle into their pockets, but they won't spur the actual adoption of Bitcoin.

So, if conventional online businesses and charities are out the window as motivators for Bitcoin adoption, then what will actually do the trick?

1) Illegal markets. Where there is a desire to maintain as much anonymity as possible, Bitcoin will thrive. Silk Road is what put Bitcoin on the map, and it continues to operate successfully to this day. There is no denying that Bitcoin will become the preferred method of transacting in illegal markets, because it gives an obvious advantage to both clients and merchants.

2) Virtual markets. Virtual currencies could always be purchased with credit cards, but then the user was constrained to one platform. With Bitcoin, users can move their money between different virtual worlds, assuming they eventually support Bitcoin. This is a multi-billion dollar market that can be exploited.

3) International markets. There's never been an easier way to move money across borders. Any business that can take advantage of the agility of Bitcoin will do so.

4) Online gambling. The reason why online gambling and Bitcoin make a great match is because of the ability to easily withdraw Bitcoins from a casino. Until now, it's usually been a pain in the ass to retrieve your winnings. Being able to get your money out of a casino as quickly as you got it in is sufficient motivation to go out to the bank and wire some money to an exchange.

5) Investing. If 1, 2, 3, and 4 begin to catch on, then Bitcoin will continue to be a viable investment for those looking to move their money out of fiat currencies and maybe diversify their precious metal portfolios. Given the ever-worsening sovereign debt crises, Bitcoin will become an even more attractive investment.

Between these five motivators, we're still looking at the possibility of a multi-billion dollar Bitcoin economy. Therefore, at the end of the day, we shouldn't get too worked up about whether or not Amazon or Wikipedia will eventually accept Bitcoin. Bitcoin's strength is not in the conventional.

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Bitcoin is Approaching the Mainstream

On December 12th, the Internet Archive announced they would be accepting Bitcoin donations. For starters, the Internet Archive is ranked 224th among all websites in the US and 213th worldwide. Let that sink in for a second.

In the two days that the site has been accepting donations, they've received over $1,000 in Bitcoins. Bitcoin users came through in a way that guarantees that other sites, possibly even bigger sites, will take notice that accepting Bitcoins is an extremely easy and effective method of collecting donations.

A comment from "apeterson", on Reddit, summed it up best:

"If you already have Bitcoins, the necessary steps are:

1) Copy the address;
2) Paste it to your wallet;
3) Enter amount; and
4) Press send.

(editor's note: two of these steps will go away when the URI scheme is implemented)

If you already have a credit card the necessary steps are:

1) Choose from one amount in the options (25, 50, 100, 250, 1000 or other);
2) Select additional options and optionally sign the donation with your name;
3) Add to basket;
4) Review your basket, and untick the hidden option to donate an extra $2.00 to justgive;
5) Proceed to checkout;
6) Login as donor, either by your existing account or by creating a new account;
7) Create an account;
8) Enter email, first name, last name, birth year (chose between 4 options: 1979 or later, 1965-1978, 1946-1964, 1945 and earlier), gender, and how you heard about the site;
9) Untick "I would like to get spam";
10) Enter billing info (full address);
11) Enter credit card info; and...
12) [this is where apeterson surrendered]

The pain alone to complete [these steps hurts more than just giving them] the 5 BTC I sent them."

One other turn of events that will push Bitcoin closer to the mainstream is that you can now sell your Bitcoins on either Mt.Gox or Tradehill and withdraw your cash to PayPal. The significance of this should not be understated.

You now have some serious ammunition to help you convince someone that Bitcoins are actually worth something. Many an argument about the legitimacy of Bitcoin can be put to bed simply by telling someone they can sell their Bitcoins, right now, and withdraw the cash to their PayPal account, right now. You could even offer someone Bitcoins in lieu of cash and not feel like an eccentric Internet geek; the divide between Bitcoin and fiat currency has grown smaller.

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PayPal, Regretsy, and the Bitcoin100

If you missed all the hoopla today, here's the Coles Notes on what happened: Regretsy set up a PayPal "donate" button to collect money to buy Christmas gifts for kids. PayPal didn't like the way the donate button was used and held on to the funds. The Internet then exploded with rage in the form of 1350 comments and 11,000 Reddit upvotes.

Meanwhile, in the Bitcoin community, thousands of "in-the-know" people tried their darndest to withhold their collective "I told you so" responses. As Bitcoin users, we've become pretty used to hearing stories of PayPal's indiscretions, kind of like when you buy a car and suddenly everyone around you seems to be driving that same car.

What caught my attention among the Reddit comments were the feelings of resignation:

"You have to admit PayPal had a pretty strong position. They're used by tons of people, integrated in many shopping carts. So the next thing will have to have some seriously earth-shattering benefits. The problem is even if there was something like that, how would it get adopted in the face of PayPal? Can marketing even do that?"

"They're not going to care. PayPal has a virtual monopoly in the industry. They don't care about bad press or pissed off customers."

"It must be said, a million times: Paypal is not a bank. Paypal is not a regulated service. Paypal can, at any time, for any reason, decide to take your money and not give it back, and there is absolutely shit all you can do about it. I have a paypal account for convenience, but I don't leave a single penny in it, precisely because of this. When I sell stuff, I don't use it, because they can just magically reverse things months later with no proof at all, and again, you're fucked, because they're not a regulated service and can do whatever they want.

Frankly, I'm surprised that we're in 2011 and there's still no regulated, insured, no-fucking-around way for me to send money to you and not get screwed by it, or at least one that's taken off and achieved the critical mass required to be useful. I guess paypal will just have to fuck around some more."

"I had a moneybookers account (exactly because I wanted a Paypal alternative) and, unfortunately, my overall experience was even worse than with Paypal. They froze some of my money (which Paypal hasn't done to me yet), the whole interface was confusing, customer service slow, fees even higher than Paypal... I decided to stop using it and grudgingly only use Paypal now."

"They have a... um, it rhymes with "nonopoly", that thingamajig where they can tell anyone they want to go fuck themselves at any time. When's the last time you saw a direct marketing or PR effort by Paypal? They're the only game in town, and you play by their rules if you want to play at all."

"PayPal is a horrible, horrible corporation, and I am pissed as all Hell that I am forced to use them in damn near every online transaction I make anymore."

"I have a feeling their customer base is just too big for them to feel the effects of stuff like this. When they're handling your money, there isn't much you can do but give in."

"A company soliciting payments can't effectively threaten to leave because they would cut themselves off from a huge amount of customers/donors. And losses from fraud cut into the razor thin margins paypal already faces. So "donation" buttons are treated with maximal suspicion and complaints are basically ignored."

Cue the Bitcoin100, a group of 100 (and eventually more) Bitcoin users who will donate at least one Bitcoin each to charitable organizations that are willing to add a Bitcoin donation option to their web page. There are over 60 people already signed up, including myself, with several offering to donate two, five, or even ten Bitcoins per charity.

The Bitcoin100's first target will be Regretsy. The moment Regretsy decides to accept Bitcoin, they will instantly receive several hundred dollars worth of Bitcoins which they can then exchange for dollars without having to deal with any bullying from PayPal. The Bitcoin100 is here to prove that accepting Bitcoin is painless and free.

Clearly, the Internet is desperate for an alternative to PayPal. Bitcoin will eventually be that alternative; maybe not yet, but eventually. Today's events have proven that the need is there and Bitcoin is well positioned to fill that gap.

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