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The One Foundation, the first officially recognized private charitable fundraising organization operating in China, has now also become the first Chinese organization to start accepting Bitcoin donations. The organization published a donation address on April 23, and received 230 BTC ($30,000) within two days, instantly making it one of the most successful Bitcoin charities to date.

The One Foundation was originally created in 2007 by renowned Chinese film actor Jet Li, who then took a year off film-making in 2008 to promote the foundation. Private fundraising organizations are highly regulated in China – even now most applications to create one are simply rejected, so for the first three years of its operation the One Foundation was not even an independent organization; instead, it operated under the umbrella of the Red Cross Society of China, a government-connected organization operated by the Ministry of Health. However, its partnership with the Chinese Red Cross was a restrictive one. “Jet Li complained that the One Foundation had little say in deciding on the use of money it had raised,” Xinhuanet’s Wu Chen and Wu Caixia write. “According to his plan, his foundation sought to focus more on supporting domestic grass-roots NGOs, which lack both money and professionals, while the Red Cross Society of China is an organization paying more attention to disaster relief.”

In 2009, the Chinese government started a trial project in its “special economic zone” in Shenzhen to streamline the registration process, allowing the local government of Shenzhen to register foundations – a power previously only held by the federal government. Shenzhen authorities were willing to work with the One Foundation, and it was finally able to register as an independent foundation in 2010. In 2011, the Chinese Red Cross’s reputation was damaged by a scandal in which a 20-year-old claiming to be the “commerce general manager” of the organization, Meimei Guo, publicly flaunted artefacts of an extravagant lifestyle that many assumed had been paid for with charity money (it was later discovered that she was the girlfriend of someone involved with the Red Cross; he has since resigned). Concerns over government corruption and extravagance are common in China; the Chinese Red Cross is administered by the Chinese Ministry of Health, and so its employees gain the “iron rice bowl” guaranteed job security and welfare benefits of public servants – benefits that many feel are undeserved when ordinary Chinese working outside government agencies have little of either welfare benefits or job security. The Meimei Guo incident reignited these concerns, and two investigations into the matter was carried out.

When the Ya’an earthquake struck in April 2013, the total lack of confidence in the Chinese Red Cross became painfully clear. “Right after the quake,” Financial Times columnist Julie Zhu writes, the RCSC said on Weibo, China’s answer to Twitter, that it had sent a team to ‘inspect’ the quake-hit region. Tens of thousands of Chinese microbloggers fired comments back. The message from most of them: ‘Get lost’”. “As an ordinary citizen, I will never donate a penny to the Red Cross Society,” one user of Weibo, the Chinese equivalent of Twitter, wrote, and another added “The RCSC is shameless. The earthquake is terrible enough. We don’t need you to ‘inspect’. Get out of our sight.” By the end of the day, the agency had received only $23,000 worth of donations. Because of its past relationship with the Chinese Red Cross, the One Foundation also took some of the reputational damage from the Guo Meimei incident; its staff had to frantically rush to remove an old Red Cross link from their site when a user stumbled upon it. However, at the same time the foundation is quietly gaining credibility as an alternative, although both organizations are careful to avoid outright competing with each other for individuals’ donations.

Soon after the earthquake struck, the One Foundation also decided to try something new: accept donations in bitcoin. The organization released the address on April 21, and within two days it received over 230 BTC – marking what appears to be the first significant Chinese Bitcoin fundraising drive in history. “Welcome geeks and hackers’ bitcoin donations to the One Foundation,” a representative wrote in a brief reply written in Chinese when asked about the donation address by Bitcoin Magazine. The 230 BTC donated are worth about $30,000 today; when compared with the agency’s total receipts of $2.4 million USD, this means that, within the scope of this particular fundraising drive, Bitcoin was responsible for an entire 1% of China’s largest independent charity’s revenue. The amount was not even from a single donor; the three largest donations were 88, 39 and 25 BTC respectively, but all other donations were 10 BTC or lower. Given that the organization had started accepting Bitcoin quietly, with no news of its Bitcoin acceptance or even the earthquake in the English-speaking Bitcoin media, this leads to an important question: where did the donations come from? There seems to be only one logical answer: a growing, and already quite developed, Bitcoin community in China itself.

There are also other signs that point to a massive surge of interest in Bitcoin in the Chinese community. Just like everywhere else, interest in Bitcoin according to standard indicators like Google Trends and exchange trade volume has risen massively over the past four months, but in fact Bitcoin in China is growing even faster than elsewhere. While trade volume at the leading exchange MtGox peaked at about 10 times January volume during the peak two weeks ago, trade volume on BTCChina increased by a factor of 30. April 23 became the first day that any country downloaded the reference Bitcoin client more than the United States; the country in question was China.

There are a number of reasons to believe China has solid potential to take up Bitcoin. The Chinese already have experience with virtual currency in the form of QQ Coin, although that particular attempt at virtual currency was eventually crippled by Chinese regulatory authorities. Bitcoin may enable Chinese users to evade currency controls to a much greater extent than previous centralized systems like QQ Coin ever did. Earning or trading virtual currencies in video games is also a popular occupation; the archetype of a “Chinese gold farmer” collecting in-game assets in massively multiplayer online games to sell for profit is quite real.

The greatest hope, however, lies in bridging the Chinese and Western worlds. Most of North America and Europe are standardized on a number of proprietary platforms for payment: PayPal, Visa and Mastercard come to mind. China has its own equivalents; Alipay is perhaps the best known. Bitcoin will not fix the language barrier between the two worlds, but it can certainly make economic interaction much more seamless; a store catering to Chinese expats called IWannaBuy started accepting bitcoins only a few weeks ago. Bitcoin may even end up being a significant boost for the entire Chinese non-profit sector; charitable donations in China currently only amount to about 0.09% of GDP, so the fact that Bitcoin opens the door for these organizations to receive international donations – from, say, Chinese expatriates living in Canada and the US with families still in China, opens an opportunity for Bitcoin and Chinese charity at the same time. The Bitcoin community has just shown that it alone is willing, and able, to donate as much to the One Foundation as all of China did to the Chinese Red Cross – suggesting that Bitcoin may play a significant role in China’s non-profit, and perhaps even for-profit, sectors in the years to come.

The post Chinese “One Foundation” First to Accept Bitcoin, Receives $30,000 appeared first on Bitcoin Magazine.

Guardian – Bitcoin Migrates Off The Internet (Video):

Guardian’ s Kate Connolly (@ConnollyBerlin) and Guy Grandjean (@guygrandjean) cover the story happening in Kreuzberg, which is becoming a the world’s largest Bitcoin local economy.  Excerpts:

”’[Bitcoin is] an easier way of digital payment than credit cards, which cost me a lot of money as a business and to which I’m forced to sign up for years,’ [says Florentina Martens owner of Parisian-style cafe Floor’s].”
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“Graefekiez, a cosy neighbourhood established in the 19th century in the southern Berlin district of Kreuzberg, currently boasts the highest density of businesses accepting the currency in the world.”
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“‘Kreuzberg is traditionally an area in which people are very politically aware, critical towards existing systems and are constantly discussing and looking for alternatives to them, which makes it the perfect breeding ground for Bitcoin,’ says Joerg Patze [owner of Room 77].”
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“[Law student Jeff Gallas] taps the amount he owes Room 77 into the virtual Bitcoin wallet on his Android phone and, aligning it with a code on the bar’s device, presses a button to process the payment. A theatrical ‘kerching’ sound follows and Gallas is grinning from ear to ear. ‘It could hardly be easier,’ he insisted.”
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“[Wilko Bereit] likes the fact that Bitcoin scares people in suits, ‘because if this thing were to really take off, it would bankrupt a lot of bankers.’”

 – http://bit.ly/12rZ73O
 – http://bit.ly/17m9pER (Video)
 – http://bitcointalk.org/index.php?topic=188269.0 (Further discussion of the article and video)

All News – Daily E-mail Subscription – Twitter: @BitcoinNews

This week we had the privilege of purchasing drinks with bitcoin and speaking to Alex Likhtenstein, owner of EVR – the first restaurant/bar in New York City to accept bitcoin. A full walkthrough of the transactional process and highlights from our conversation with Alex are below.

Overall the transaction experience showed immense promise as an alternative payment technology, but had some drawbacks that are difficult to overlook. 

The Transaction

After consuming a round of single malts, it was time to test the world’s favorite new currency as a true medium of exchange. We informed our bartenders we’d like to pay with bitcoin and they returned with both a physical check and a tablet where the total had to be manually entered into the BitPay app, as bitcoin is not currently integrated with their legacy POS (point of sale) system.

Brandon, one of the most pleasant bar employees we’ve met in NYC, enters our transaction amount into the BitPay app.

The next step was rather awkward: they had to ask me what I’d like to tip since, unlike credit cards, the amount cannot be simply added to the charge before batching. Theoretically, they could have let me overpay by a tip amount, so I have to imagine this will drop from the process as people become more familiar with the system.

The final check is ready	Scanning the check with our mobile wallet

From there the process was nearly seamless. I scanned the QR code on the tablet check using my mobile wallet app and entered the payment amount. Seconds later, the bartender’s tablet showed a green light indicating the payment went through and the transaction was complete.

Strengths

• Easy and fast – took us a minute to learn the system, but doing this a second or subsequent time would be simple.

• Fed our deep, burning desire to buy whiskey with bitcoin in the real world.

Weaknesses

• The payment amount had to be entered manually into the tablet, then entered manually into our mobile. Deeper integration of BitPay into the POS system will be a welcomed change here.

• The bartender had to wait with the tablet as we entered the payment info and the transaction processed. I could see that becoming a frustrating use of their time.

The Interview

After testing the system we caught up with EVR owner Alex Likhtenstein, who provided some unique insight. His responses below are paraphrased for the purpose of continuity of this article unless otherwise indicated. 

Why did you initially start accepting bitcoin?
I’ve been a bitcoin enthusiast for a while and have wanted to accept it since we opened in January. I’ve been bugging Charlie [Shrem, CEO of BitInstant] to help me figure out how to implement this since before he was invested in EVR, but until recently there wasn’t a good way to do so.

How many people have used bitcoin since you began accepting them on April 8?
We’ve done approximately $20,000 equivalent of sales, the majority from bottle service. It’s difficult to say the number of people since wallets are anonymous and there may be repeats, but I’d estimate 20-50 individuals, with many of them paying for a group.

Can you explain how the backend of this transaction works for our readers?
We use a BitPay app to facilitate the transaction. The BTC price reflects the current market-equivalent USD value at the time of purchase. Every day, BitPay automatically sends an ACH to our bank account in USD for the last 24 hours of transactions. The amount we receive reflects the USD value at the time of the transaction, rather than the time of the deposit.

So you don’t take any direct BTC exposure, it’s purely for transactional purposes?
That’s correct, we see the USD value we charge the customer hit our account just like if we were using any other payment method.

What fee do you pay to BitPay for this service?
It’s around 1%, far less than credit card fees.

Do you charge any sort of premium or offer a discount for using bitcoin?
Right now it’s the same as the USD price, but we haven’t ruled out discounts in the future. 

What was the reaction from your bartenders and servers?
They thought it was weird at first, but we do a few transactions per night on weekends, so they’re getting used to it quickly.

As a merchant, what do you see as bitcoin’s greatest strengths?
Lower fees and no chargebacks are great. We also see deposits in our account less than 24 hours after the sale; credit cards transactions that go through banks usually take about three days.

Standout weaknesses?
It would be difficult to do high volume in BTC given the current logistics with the tablet. We would need better integration with our POS system for this to be possible on a larger scale.

Do you think bitcoin is viable as an alternative currency? Total replacement?
“I don’t think it will replace government currency, but it could be a viable alternative. Right now it’s a commodity that can be implemented in everyday use.”

Do you have / trade / invest in bitcoin?
“Yes, but not a ton. I’m not an expert like Charlie.”

Apparently we aren’t the only fans of EVR. This is from our visit on a Tuesday night.

The post Buying Drinks With Bitcoin, Our Interview With EVR Owner Alex Likhtenstein appeared first on The Genesis Block.