The use of Bitcoins has been growing in popularity across the world, but Americans are not yet permitted to use the electronic currency to support political campaigns or committees at the national level or give to other organizations that seek to influence federal elections in the United States.
The most recent attempt to convince the Federal Election Commission to allow Bitcoin as a source of campaign financing failed when the six-member board deadlocked on the issue, in November 2013. The panel is expected to take up the issue again in the future, however, and proponents of the digital currency argue it should be made available to candidates and donors.
So what are the arguments for and against the use of Bitcoins in American politics?
Here's a look.
The Case for Bitcoins in U.S. Politics
Bitcoin proponents argue, first, that the Federal Election Commission already permits electronic and digital campaign contributions including bank transfers, credit card charges, electronic check and even text message.
"As technology progresses, the FEC has continually permitted the use of emerging electronic technology to make contributions," wrote the Conservative Action Fund political action committee in August 2013.
Bitcoin proponents also argue that federal election guidelines appear to permit the use of the digital currency. The Federal Election Campaign Act, they point out, defines permissible contributions as including any "gift ... deposit of money, or anything of value made for the purpose of influencing any election for Federal office."
Bitcoins do, of course, hold value. They are used across the world to pay for goods and services. The value of a single Bitcoin fluctuates just as the American dollar does. In 2013, for example, the value of a Bitcoin ranged from as low as $200 to closing in on $900. There are about 12 million Bitcoins in circulation.
Another reason proponents say Bitcoins should be allowed: They will open up access to more people.
"Bitcoin political contributions will expand the number of Americans who can get involved in campaigns to support the candidates they want, how they want," wrote Dan Backer, an attorney who filed the 2013 request for the Federal Election Commission to allow Bitcoin contributions. "It is the next logical iteration of democratization of the political process enabled by the Internet."
The Case Against Bitcoins in U.S. Politics
Skeptics of allowing Bitcoin contributions to American political campaigns say they are concerned that the digital currency operates outside of the federal banking system and that anonymous and foreign donors may use them to funnel money into elections in the United States.
Campaign finance laws ban both anonymous and foreign contributions.
Federal law enforcement officials also point to the fact that the use of Bitcoins has been instrumental in hiding illegal activity on the web.
"While digital currencies may provide potential benefits, they present real risks through their use by the criminal and terrorist organizations trying to conceal their illicit activity," Edward Lowery III, chief of the Secret Service Criminal Investigative Division, told a Senate panel meeting in 2013 on the use of Bitcoin.
Critics also worry about transparency.
While it's true that each Bitcoin carries a digital stamp of where it's been since being created. But that record isn't associated with a name. "Bitcoin transactions are private in the sense that there are no names attached to the public keys recorded in the blog chain," the Bitcoin Foundation wrote.
Bitcoins and Dark Money Already in Use
A couple of things to note about arguments on both sides:
At least one political party, the Libertarian Party, already accepts Bitcoin contributions, as have political campaigns in some states, without any serious issue.
And donors have already gotten increasingly wily about circumventing federal campaign finance laws to remain anonymous, particularly since the emergence of super PACs. Anyone familiar with dark money in American politics and those mysteriously funded television ads that pop up every cycle knows that donors are able to remain anonymous because of loopholes in disclosure laws.
On the other hand, the wild fluctuations in Bitcoin value raises interesting questions of how campaign collect, then disburse, the digital currency. How, for example, would a presidential candidate deal with $1 million in Bitcoin contributions that suddenly fall in value to, say, $100,000?
Secondly, the lack of substantial regulation of Bitcoin by the federal govenment makes transparency a real issue in the political arena, an area in which transparency is desperately needed.