Those of my fellow Bitcoin enthusiasts following news regularly might have heard about the recent move by Senator Rand Paul, the United States presidential candidate to accept campaign contributions in the form of bitcoin. This announcement is just the kind of encouragement Bitcoin is looking for. It has a potential to trigger wide spread adoption of Bitcoin at least in the United States.
Rand Paul’s announcement is equivalent to a high profile celebrity/candidate endorsement of Bitcoin. Even though it is a good way to keep up with the changing times, there are still genuine concerns about the rationale behind it. Especially with him running for the highest office in the country, which plays a very important role in global power dynamics.
Senator Rand Paul of Kentucky will be accepting Bitcoin contributions of sizes up to $100 on his campaign website where people can donate by choosing any of the three options of payment, viz. credit card, PayPal or Bitcoin. On the other hand, this move has also raised few concerns regarding the legitimacy of his fundraising campaigns, especially when there are conflicting regulations in place. The federal law on campaign financing states that, the candidate can’t accept contributions from foreign individuals or entities, corporations and straw donors (straw donors are the ones who contribute to a political campaign under their own name but with others’ money). According to the law, any contribution over $200 in a year needs to be singled out, the donor’s identity has to be collected, and publicly identified. The federal election commission allows PACs (political action committees) to collect no more than $100 in Bitcoin.
Given these two different regulations for campaign funding in place, the whole bitcoin contribution towards election campaign seems to be built on an assumption that
- People will voluntarily pay less than $100
- All contributions in Bitcoin are made by individual US citizens
Meanwhile, the anonymity of Bitcoin transactions makes it virtually impossible to ensure that the Bitcoin contributors are sticking to these rules. Bitcoin will give a way for all those banned from contributing to contribute unlimited funds in multiple tranches of $100.
We can argue that Rand Paul, being a forward-looking candidate and a sharp vocal proponent of privacy, internet and technology is walking his talk by embracing the future of economy and technology in the form of Bitcoin. There are also those who smell a conspiracy and believe that he is gaming the electoral system and laws by accepting Bitcoin (which is theoretically quite easy to do with Bitcoins).
Either way, the decision to accept Bitcoin contributions can be compared to a 2-edged sword that might cut both ways for Senator Rand Paul. It also reiterates the fact that the decentralized nature of Bitcoin makes it virtually impossible to identify the legitimacy of transaction and it can be easily misused by anyone.