BOSTON — Cape Cod Healthcare will take your donation in U.S. dollars — and now, in cryptocurrency.
Twice this year, an anonymous donor has given the company $400,000 worth of bitcoin, a virtual form of payment managed by a computer network called a blockchain. The donation had little precedent in the world of health care, said Chris Lawson, Cape Cod Healthcare’s senior vice president and chief development officer. As cryptocurrency use becomes more popular, he said, the organization soon could be a first of many.
“I think what’s going to occur — without having a crystal ball — is that more and more charities are going to recognize that this is a real opportunity in terms of building philanthropic support,” he said.
A new type of donation
Lawson said Cape Cod Healthcare had no way of accepting cryptocurrency donations when the donor, who was a regular contributor, first asked about the possibility of sending bitcoin.
The organization needed clearance from president and CEO Michael K. Lauf, as well as its finance and legal departments, to pursue the gift, Lawson said. They relied on guidelines from the Internal Revenue Service about virtual currency transactions, he said, which include specifics for charitable gifts.
To accept the bitcoins, Cape Cod Healthcare had to open an account with a cryptocurrency broker, Lawson said. The broker gave them a unique QR code to send to the donor, who then used the code to transfer cryptocurrency into the health provider’s digital wallet.
Cape Cod Healthcare immediately converted the bitcoins into U.S. dollars that were deposited into a traditional bank account, Lawson said. Holding on to bitcoins for an extended period of time can be risky, he said, because their price fluctuates, which could change the value of a donation.
The donor’s first $400,000 contribution was about 10 coins, Lawson said, but their second contribution — for the same amount — was about eight coins just a couple of weeks later. He said this jump in value came after the car manufacturer Tesla announced it had bought $1.5 billion worth of the currency.
One bitcoin currently is worth about $60,000, according to the website CoinDesk.
This volatility in price sets cryptocurrency apart from the gifts Cape Cod Healthcare typically receives, such as stock, Lawson said. Otherwise, the process of cashing the gift is fairly similar.
“If somebody donates IBM stock, there’s a relatively good chance it’s not going to change so much in value by the time that you liquidate it,” he said. “Whereas cryptocurrency, there could be a swing in a day or two from $60,000 a coin for Bitcoin down to $45,000.”
In essence, a group of people called miners lend their computing power to verify other users’ transactions so that the same bitcoin isn’t spent twice. They are given new bitcoins as rewards.
Transactions typically are completed anonymously, making the currency popular among people who want to conceal their financial activity. However, investigators may still be able to tie transactions to a real person when bitcoins are converted into a traditional currency for spending elsewhere, according to the Associated Press.
The system was designed with a finite supply of bitcoins, with about 17 million minted so far and another 4 million to come. The rate of minting slows down over time, such that the final bitcoin isn’t expected for another century.
On Beacon Hill, a recent bill co-sponsored by Sen. Susan Moran, D-Falmouth, would create a commission to study the expanded use of cryptocurrency in the private sector, as well as state and local government.
The group would consider the feasibility of taxing cryptocurrency transactions, ways government agencies might accept cryptocurrency, steps to ensure equitable access to the technology, and possible regulations on the energy consumption associated with creating virtual coins, among other uses.
Cryptocurrency such as that in the…