No Bitcoin Campaign Donations For You!

Mark Clear who is running for the Assembly in Wisconsin held a fund raiser on Wednesday. I’ve known Mark through the start up community in Madison so when the Facebook invite showed up I figured I should head over to the “Beer with Clear” event to show my support.

Lately here in town I’ve been “that guy” when it comes to Bitcoin. Whether I’m getting a coffee, a haircut, or paying my office rent I’m always asking “Do you take Bitcoin”? I’m amazed how it’s usually met with curiosity and lots of questions. So of course when I arrived at the donation table I jokingly said “So are you guys accepting Bitcoin”? I wasn’t expecting the answer from the candidate, “We can! I’ve got a wallet on my phone.” I probably should have expected that Mark being a Tech guy would have a Bitcoin wallet.

I told Mark that I’d be happy to donate $100 worth of Bitcoin and we initiated the transfer. Within seconds the transfer for .2213 Bitcoins appeared on Mark’s phone evoking that empowered feeling that many Bitcoin users know so well. Realizing we may have just transacted the first Bitcoin campaign donation in Wisconsin we happily tweeted our interaction.

Well it only took 12 hours to find out no can do. It turns out that just about 6 weeks ago the Wisconsin GAB had taken up this very issue. See here

So it’s good to see the GAB is trying to deal with Bitcoin but much of what is in the minutes is either technically inaccurate or misapplied. Unfortunately this meeting also took place around the time of the Mt. Gox/ Transaction Malleability fiasco. There is much discussion in the report on Transaction Malleability and how it throws doubt on the process. This is technically incorrect. Although TM allows the ID of a transaction to change before it is placed in the block chain, once the ID is in the chain it is immutable.

From the GAB minutes:
“While core information in a transaction ID cannot be altered, additional information that would be critical to any committee (such as address and employer information) could be changed through transaction malleability.”

The problem here is that additional information is not stored within the Bitcoin system. Campaigns would just enter a bitcoin transaction ID in place of the information they use for a monetary donation (check, Visa etc). So even if TM was a problem (which it isn’t) it’s not relevant as donor information is stored separate from the transaction.

In fact using Bitcoin for transactions is actually more transparent than any other means of donation. Had we done this via check or credit card this transaction wouldn’t be a public record like it is with Bitcoin.

Here’s the transaction with me sending .2213 bitcoins to Mark

Less than 24 hours later Mark returned the .2213 coins to me here

The FEC is currently deciding on Bitcoin donations. I hope if nothing else they’ll treat them like cash and allow donations of up to $100. I searched the Wisconsin GAB site but couldn’t find the cash limit there. My understanding is it’s $50. In the meantime I’m forced to use PayPal, Credit card, or check to contribute to Mark’s campaign all of which cost me more in fees and time than our simple 15 second transaction the other night.

Here’s a link to the local story on the transaction

2 thoughts on “No Bitcoin Campaign Donations For You!

  1. Philip Crawford

    I haven’t read any of the GAB ruling, but the IRS ruled bitcoin is property, right? So why the wringing of hands about the “additional information”? It isn’t like the additional information on any other in-kind donation can be permanently attached to the donation (as you point out).

    But then if bitcoin IS actually just property, can the campaign exchange the donated property for some other thing of monetary value?

    1. Monty Schmidt Post author

      One would think that the IRS ruling would make this all valid. However each government agency seems to be treating it the way that makes it most beneficial for them. The IRS treats it as property but as far as I know FINCEN, the Financial Crimes Enforcement Network of the US Treasury, treats it as currency. Thus having you apply all the Know Your Customer and anti-money laundering laws. The problem is that Bitcoin can act as many things, property, currency, or just an immutable data store. There’s lots of things that need to get worked out yet and it doesn’t help that it’s a strange concept and relatively technical thing that most people just don’t understand.


Leave a Reply

Your email address will not be published. Required fields are marked *