When Kentucky senator Rand Paul recently announced that he plans to seek the Republican nomination for president, he made presidential campaign history by trying to appeal to the techno-libertarians of America. Along with the choice to donate via credit card or paypal, Sen. Paul listed bitcoin payments as another option to make campaign contributions. Visitors to his website can contribute up to $100 worth of bitcoin.
With this move, he became the first presidential candidate in American history to receive donations through a cryptocurrency. Although he is not the first candidate to accept bitcoin, since a few congressional and state candidates began doing so in the previous year, he is the highest-profile politician to align himself with the zealous concern for privacy of many bitcoin users.
The Appeal of Bitcoin in Campaign Contributions
Bitcoin is a creative and independent currency that allows for immediate, secure, and low-cost transactions. Lee Goodman, previous chairman of the political action committee of the Federal Elections Committee said, “Bitcoins are no more anonymous than any other contribution.” He also insisted that technological innovations should be embraced in the political system and that bitcoins should be treated no differently than a computer, securities, and other legal in-kind contributions.
Sen. Paul’s announcement is equivalent to a high-profile celebrity/candidate endorsement of bitcoin. The novelty of the payment method would help the presidential candidate highlight his edgy appeal to other libertarians, tech-savvy voters, and bitcoin advocates.
The senator’s acceptance of bitcoin harmonizes with his criticism of government surveillance. It frames him as a defender of civil liberties who, with internet freedom in mind, wants younger and technologically adept voters on his side. It would also help him win over the support of wealthy technological magnates, some of whom are sympathetic to libertarian ideas.
Concerns on the Legitimacy of Fundraising Campaigns
Last year, the Federal Elections Commission gave its approval for bitcoin fundraising, with a voluntary limit of $100, as a type of in-kind donation. However, federal law still bans contributions to individual candidates from foreigners, corporations or straw donors. Campaigns are expected to diligently collect and publicly identify donors with more than $200 contributions in a year, and to detect contributions that come from illegal sources.
The anonymity of bitcoin transactions make it difficult to ensure that the individual donors are complying with the rules above. Bitcoin will make it possible to contribute unlimited funds in multiple parts of $100. Moreover, the decentralized nature of bitcoin makes it virtually impossible to determine the legitimacy of a donation and it can be easily misused by anyone.
Democratic commissioners of the Federal Elections Committee Ann Ravel, Steven Walther and Ellen Weintraub were cautious in endorsing the limited use of bitcoins. “The fact that bitcoins are ultimately untraceable makes prophylactic measures at the outset of the transaction particularly important.”
However, these concerns are largely unfounded. All bitcoin transactions are public, traceable and permanently stored in the bitocin network. In fact, federal agents tracked a trail of bitcoin transactions to build up evidence against Ross Ulbricht, the person behind the black market website Silk Road.