Bitcoin100's dilemma: Too many bitcoins, not enough charity

Dmitry Murashchik is faced with quite the problem. He's sitting on more than $30,000 (US) in bitcoins, just waiting to dole them out, but everyone thinks he's a snake-oil salesman.

Perhaps it's because he's dealing in bitcoins, and public perception of the crytpocurrency is still shaky. Or perhaps it just sounds too good to be true.

Murashchik is the treasurer for Bitcoin100, an organization dating back to November 2011 that aims to donate $1,000 worth of bitcoins to various charities. As a volunteer — all members of the group are — he's tasked with a number of responsibilities, from overseeing a website relaunch to finding beneficiaries to donate to. The latter has been proving especially challenging.

"It's like you beg people: Please take my $1,000. It'll be very quick and easy," Murashchik said.

To prove that Bitcoin100 isn't a fraudulent scheme, he said all transactions in and out of the charity are publicly visible.

"Any unauthorized expense will be instantly seen by everyone," he added. "We can't funnel money to personal expenses or hide it through accounting shenanigans, like some shady charities have gotten accused of before. Being able to easily verify and keep tabs on an organization that chooses to be public, without needing to necessarily trust the people behind it, is another benefit of bitcoin."

When Bitcoin100 was created, the idea was to donate 100 bitcoins per charity. But back then, 100 bitcoins were worth roughly $1,000. As of this writing, it's up an order of magnitude, closer to $10,000.

"Since bitcoin has gone up in price, we switched to $1,000 instead of 100 bitcoin(s) per donation," Murashchik said. "I guess we'll keep giving out money until we don't have any more."

To date, Bitcoin100 has received close to 1,600 bitcoins from about 110 donors. Though the organization originally asked for pledges, many contributors ended up donating directly to the group's fund, giving Bitcoin100 the discretion to distribute to charities on behalf of donors.

Beneficiaries include BUND Berlin e.V., a conservation group in Germany; Group B Strep International, which promotes awareness of the bacteria that affects pregnant women and infants; and My Refuge House, an organization that runs a safe house in the Philippines for sex-abuse survivors and sex workers. On Friday, Bitcoin100 added three more to the growing list: the news source antiwar.com; The Fessler Foundation, which funds spinal cord research; and Songs of Love, which creates personalized songs for children facing medical, physical or emotional challenges.

"There are so many advantages to accepting donations in bitcoin," said Stephanie Murphy, director of operations at Fr33 Aid, which provides supplies to medical skilled volunteers and offers educational health programs. "It is easier to start accepting bitcoin — just post an address — than to set up bank accounts, PayPal and other legacy banking system options. I think this lowers the barrier for starting charities and non-profit organizations because they can focus on their mission rather than dealing with banking hassles."

Fr33 Aid's account was locked by PayPal twice, she noted. "Both times, it was difficult to get in touch with an actual person, and the reasons for locking us down were not clear."

Murashchik added that charities have incentive to receive donations in bitcoins because there aren't transaction fees and the digital currency is accepted globally. Furthermore, bitcoin doesn't encounter the same chargeback issues associated with credit-card fraud. Increasingly, identity thieves are using stolen credit cards to donate to charities "as a nice gesture," he said. But when a credit-card company investigates fraudulent charges, it will pull those funds and levy an additional fee on the merchant ... in this case the charity.

Because Bitcoin100's donor base is so varied, the group avoids donating to political or religious groups. The charities, which volunteers bring on board, go through a vetting process to ensure they are in fact legitimate. After that, money is sent via BitPay.

Noble as its goal might be, the organization's mission has always been to promote Bitcoin.

"The main purpose is to spread awareness of bitcoin and the benefits of bitcoin," Murashchik said. "We're focused on getting as many charities as possible."

Still, supporters of Bitcoin100, some of whom have profited greatly from the currency's boom in value, have continued to pay it forward.

"Many of the charities we've converted (to accept bitcoin) have continued to receive donations, with members sending a few extra bucks here and there," he added.