Bitcoin confusion reigns: funding terrorism or helping humanity?

19 Nov 2015

These are confusing times for the cryptocurrency bitcoin as, on the one hand, we have the European Union (EU) considering it a terrorist currency, while on the other hand charities are also using it to fund humanitarian efforts. So, which is it?

Well, for starters, no one seems to be able to define what the future of bitcoin will be as its total lack of central control by a nation state or central bank leaves it effectively without guidance or regulation, just the demand of the people using it.

After all, the very concept of bitcoin is as egalitarian as you can get in the internet age, with its open source nature considered so highly by technologists and economists alike that its anonymous creator could potentially be up for nomination for the Nobel Prize in Economics.

But, following last week’s terrorist attacks in Paris that killed 129 people, the EU sees bitcoin not as a purveyor of online free trade but a means of subverting justice by being used to buy and sell weapons used to conduct heinous acts.

According to Reuters, the cryptocurrency will be scrutinised and cracked down upon by EU interior and justice ministers, according to a draft document seen by the news agency.

Expected to meet tomorrow (20 November), the ministers could make it virtually impossible to make anonymous bitcoin transactions, as they fear in the wake of the Paris attacks that the currency offers terrorists a means of evading scrutiny.

In the document, it says the EU plans to “strengthen controls of non-banking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by pre-paid cards”.

The document goes on to say that, in doing so, they will “curb more effectively the illicit trade in cultural goods”.

21st-century philanthropy

And yet, at the very same time as this announcement, Fidelity Investments’ charitable fund, known as Fidelity Charitable, sees the currency in a completely different light, with it announcing that it will now accept bitcoin donations.

According to the Wall Street Journal, Fidelity Charitable has signed a deal with the bitcoin platform company Coinbase to help philanthropic donators take complex non-cash assets and turn them into donations.

Typically, this has appeared as donations of property or shares, but now the tide is turning and bitcoin is one of the newest means wealthy individuals or groups feel they can safely contribute to charitable causes.

Fidelity Charitable’s senior VP of donor engagement, Matt Nash, said of the decision to delve into the world of bitcoin: “One way we fulfil our mission to make giving simple and effective is to convert non-cash assets, like bitcoin, that may be too complex, costly or time-consuming for other charities to accept. At this point, we’re looking to gauge the interest in funding philanthropy with bitcoin and learn from that.”

And so we have two very conflicting ideas around a single currency, which will surely only fuel more confusion in an already confusing area. The battle between traditional finance and online finance looks like it will rage on for some time yet.

Bitcoin mining devices image via Shutterstock

Colm Gorey was a senior journalist with Silicon Republic