Thursday, May 19, 2022

Wikipedia Will No Longer Accept Donations in Cryptocurrencies

The Takeaway:

This change is coming as more and more agencies and governments have started accepting cryptocurrencies as legal tenders.

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Wikipedia’s governing body, the Wikimedia Foundation (WMF), has announced that it will no longer accept payments in cryptocurrencies.

In its announcement, WMF stated that it “will discontinue direct acceptance of cryptocurrency as a means of donating.” It also noted that it would close its Bitpay account, restricting the acceptance of cryptocurrency donations.

The majority of WMF members voted 234 to 94 to ban donations in cryptocurrencies following a lengthy debate. Since 2014, Wikimedia Foundation has been accepting crypto as donations.

Why this change of stance? 

Negative environmental effects of cryptocurrencies, including Bitcoin, concerns about fraud, and the fact that the WMF receives relatively few contributions in cryptocurrencies as opposed to more traditional payment methods were persuasive arguments.

According to the organization, there were $130,100.94 donations in crypto in 2021, representing just 0.08 percent of the total contributions received by the WMF. After the community’s consent, the WMF held an internal debate and decided to halt crypto contributions.

Opposition’s Argument

Meanwhile, the opposition argued that there are less energy-intensive cryptocurrencies (proof-of-stake), and that cryptocurrencies provide safer ways to donate. They also talk about environmental issues of fiat currencies.

The Policy Review by Wikimedia Foundation

Due to several concerns, the WMF has to reevaluate its 2014 policy on accepting Bitcoin, Bitcoin Cash, and Ethereum contributions.

According to Molly White, a longtime Wikipedia editor and the creator of Web3 Is Going Just Great; the Wikimedia Foundation should no longer accept cryptocurrency donations because it contradicts the organization’s environmental sustainability and signals that the WMF supports “inherently predatory” investments. The Wikimedia Foundation accepted her application in February.

White (GorillaWarfare on Wikipedia) also mentioned Mozilla’s reevaluation of its involvement in the crypto industry. Customers, engineers, and even one of Mozilla’s founders expressed their displeasure with the company’s decision to stop accepting crypto payments in April.

As a final note, the WMF assured contributors and volunteers that it would continue to keep a close eye on the situation and be attentive to their requests.

Crypto’s Environmental Impact

To comprehend cryptocurrency’s environmental impact, we must first understand how new currencies are created. 

Because cryptocurrencies are decentralized, they rely on users to validate transactions. Cryptocurrencies like Bitcoin use a proof of work model for this validation process.

In this model, individuals validate cryptocurrency transactions by solving a complex mathematical problem. For each problem correctly solved, a certain quantity of cryptocurrency is awarded. Then the cycle repeats. 

It’s the most common consensus method; however, it is quite energy-intensive. PoW mining demands a lot of computational power, which uses a lot of electricity. In the US alone, Bitcoin mining emits 40 billion pounds of CO2.

Hence, Ethereum, the second-largest cryptocurrency, and others are looking to switch to more sustainable models like proof of stake.

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Rucha Joshi
Rucha Joshi
Rucha Joshi is a team lead at ChainTimes who is fueled by her passion for creative writing. She is eager to turn information into action. With her hunger for knowledge, she considers herself a forever student and a passionate leader.

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