Over the years, especially in the first quarter of 2021, the topic of digital currency has gained the interest of millions of people. And the rate at which digital currencies rise today has been shocking.
Until early 2020, many people didn’t know much about digital currencies, also referred to as cryptocurrency. Today, many people are proud holders of at least one digital currency. And some financial experts have claimed it to be the future of finance – this is why more people are diving into the crypto world.
However, most cryptocurrency holders hold these digital assets for potential gain, as many have seen it as an opportunity to invest and earn extra cash. This is due to the rate at which the prices of digital currencies have increased since 2020.
Today, people are willing to donate to charity through their cryptocurrency wallets but are worried about how to proceed. However, the process of donating bitcoin is relatively straightforward. But before I discuss the steps, I’d love to answer a few questions you may be asking yourself.
Table of Contents
What Is a Bitcoin Donation?
Bitcoin donation is a charitable cryptocurrency contribution made with bitcoin tokens. And it’s registered through a public domain software called Blockchain. This digital currency can then be swapped for money, goods, and services, or invested.
Bitcoin is a prominent cryptocurrency and it influences the price of virtually all other digital currencies. Bitcoin and several cryptocurrencies have been available since 2009, and it’s a decentralized payment network operated by users – not financial institutions.
Like many individuals, profit and non-profit organizations alike are increasingly welcoming the idea of cryptocurrency transactions. Interestingly, several international charity organizations now accept bitcoin donations and contributions in other popular cryptocurrencies like Ethereum and Binance coin.
Following this latest trend in the finance world, many people find it hard to navigate the crypto world. And this will make it challenging for such individuals to make bitcoin donations to charity.
However, the process of donating bitcoin is relatively straightforward. But before I discuss the steps, I’d love to answer a few questions you may be asking yourself.
Why Should I Donate to Charity in Bitcoin?
It might sound unbelievable, but bitcoin is fast becoming a powerful donation tool today. Imagine you have it in mind to donate to a non-profit organization outside America. You’d probably be discouraged by the stress, processing fees, or Western Union issues.
Not everyone is willing to go through lots of stress or pay a considerable sum for processing an international payment. The use of bitcoin eliminates all issues relating to international donations.
Bitcoin acceptance improves the rate at which non-profit organizations – especially those in remote areas of the world – receive donations.
And the best part is that the entire process is easy and swift. No stress whatsoever. You also gain when you donate bitcoin to charity. Imagine how much money you’d save if you didn’t have to pay any processing fee whenever you donate.
Besides, bitcoin donations have helped address privacy and data protection, which are relevant to donors. Hence, donating bitcoin to a charitable organization could better conceal your details.
Why Charity Organizations Prefer Bitcoin Donations
Non-profit organizations need enough funds to execute their missions and every dollar counts. The price increase of bitcoin and other digital assets has helped several individuals and organizations alike.
Receiving donations in bitcoin helps charity organizations to gain more on donations received. This, among other reasons, is why nonprofits have welcomed the idea of accepting cryptocurrency donations.
Today, charitable giving via digital currencies has become an increasingly popular option for individuals and corporate bodies. And some of the world’s most prominent non-profits, including the Red Cross and Human Rights Foundation, accept cryptocurrency donations.
What About Tax?
You can enjoy some tax advantages when you choose to donate cryptocurrency to charity. For example, you bought $1,000 worth of bitcoin over a year ago. As of April 2021, the market value should be about $2,750.
So, you decide to donate the total amount to an IRS-recognized non-profit organization. The following are the two ways you could go about it:
● Sell Bitcoin and Donate in Cash
If you decide to sell your bitcoin before donating, you might incur up to 20 percent long-term capital gain tax (without additional medical care or state taxes), which could be about $350. Hence, you’ll donate approximately $2,400 at the end of the day.
● Donate Bitcoin Direct
If you were to donate bitcoin to charity directly, you’d likely incur no tax. A direct bitcoin donation to any charitable organization might spare you the payment of capital gains tax on your bitcoin.
Now that you know the advantages of donating bitcoin to charity, here is a detailed step on how to donate bitcoins to charity:
Download a Trusted Wallet
The first step is to have a bitcoin wallet. If you don’t have it, you can’t give it. There are several cryptocurrency wallets on the internet today, but not all are trusted. So, I’d recommend a few trusted wallets like Coinbase, Blockchain, and Binance. You can download either of these wallets as apps on your smartphone or visit their respective web pages.
When you decide on the wallet service you’d love to use, proceed to create an account and a bitcoin wallet inside the wallet. You’d get a specific bitcoin wallet address. This address aids the transfer and receipt of bitcoin.
Choose a Cryptocurrency Exchange
A cryptocurrency exchange is an online platform that facilitates cryptocurrency trades. It’s a place where buyers and sellers connect to exchange currency for coins.
There are hundreds of exchange platforms out there; so, you’ll want to go for one that offers low transactional fees and high security. Interestingly, wallets like Coinbase and Binance offer the crypto exchange service.
Select a Payment Option
The exchange platform you choose determines the payment options you’ll get. However, most top platforms allow you to pay via wire transfers, bank transfers, PayPal, debit, or credit card.
Choose whichever option sits well with you and purchase a desired volume of bitcoin. Note that some platforms may charge high transaction fees for specific payment options.
Now that you have some bitcoin, it’s easy to donate bitcoin to charity whenever you wish. All you need to do is get the bitcoin wallet address of the non-profit you want to support, input the amount you wish to send, and you’re good to go.
If you wish to support any charitable organization, it’s best if you consider the cryptocurrency option. If you donate bitcoin to a charity, like Food for Life Global, you’ll make their operations smooth and seamless.
Visit their website today to support their fight against world hunger by donating bitcoin or cash.