BitCoin and Moral Hazard

I love technology, and love imagining technology as a platform for a better future for the planet. Using technology to advance humankind is elementary, as Bill Gates shared in a recent article on the topic of human health (http://mashable.com/2013/11/04/bill-gates-interview-human-health), and the grand benefit that technology bestows on humanity is the lowering of resource barriers to improving people's lives. That is why, at least to me, BitCoin is so interesting, since a universal currency would improve upon the highly inefficient process of resource delivery, purchasing, procurement, etc. in the delivery of social services worldwide. For example, charities accepting BitCoin can distribute funding to disparate parts of their organization with the benefit of lower overhead, processing or conversion fees.

But the moral hazard is real, and could pollute organizations willing to risk accepting BitCoin as a donation vehicle. On the speculative side, I can't help but feel like this is a version of the dot com bubble or tulip mania (http://en.wikipedia.org/wiki/Tulip_mania), the 17th century tulip bulb bubble in Holland, whereby a speculative commodity soared in value without a sense for its real value. In Holland ultimately tulip bulb prices collapsed, and so too could BitCoin. For organizations taking donations in a form that could conceivably and irretrievably collapse, they risk their ability to deliver promises - either to their constituency or the donors themselves. Additionally, and sadly, one could imagine individuals using ill-gotten BitCoin (via drug or other illicit trade) donations to avoid Federal Income Tax. RICO, money laundering, and other Federal racketeering charges would soon follow, causing irreparable damage to an organization.

The technology has promise, but until there is clear evidence that BitCoin can increase our sector's effectiveness in delivering and resourcing charity, my advice would be to stay on the sidelines.