Voters’ Perceptions of Cryptocurrency and Politics

The funding of political campaigns in the U.S. has been a controversial and contentious issue for almost 190 years, dating back to the 1829 campaign of President Andrew Jackson. Now, cryptocurrency proponents are waging their own campaigns to allow digital currencies to be accepted and used in political campaigns, but their recent efforts have failed to advance the cause. 

A variety of federal and state laws and regulations govern who can contribute to a candidate or political cause and how much, yet keeping tabs on how U.S. currency is contributed to and dispersed in modern political campaigns seems to be an ongoing challenge. Both Democrats and Republicans are equally suspect of who is allowed to contribute and how much. Adding the method of donations further complicates the issue.

To gauge support of cryptocurrencies role in political campaigns, we surveyed 1,023 registered U.S. voters for their take on how digital currency could affect the political process. Some of their thoughts may surprise you, but regardless, cryptocurrency is making significant gains toward mainstream status. Trust is only one example.

While voters may be suspect of politicians, political organizations, and even foreign involvement, they expressed great confidence in cryptocurrency and blockchain technology.

Well over half of the voters surveyed (60 percent) said cryptocurrency and U.S. currency should be treated the same in federal elections. In fact, only 21 percent of respondents felt otherwise.

In 2014, the Federal Election Commission, the governing body that oversees campaigns for federal offices such as the presidency, House, and Senate, issued a ruling stating that bitcoin – the first and arguably most popular form of cryptocurrency – could be accepted as an “in-kind” contribution at a limit of $100.

The ruling also explained the value of the contribution is “based on the market value of bitcoins at the time the contribution is received.” Bitcoin was trading around $440 when the ruling was released, before peaking at just under $20,000 in December 2018. At the time of this writing, the currency is trading around $7,000.

Several states are considering whether to accept one of the 2,216 (and growing) cryptocurrencies on the market today. From a political perspective, the overriding issues of cryptocurrency acceptance are the same ones the federal government and private sector are still wrestling with, namely value and security.

Another point voters agree on is that cryptocurrencies and traditional currencies such as the U.S. dollar should be treated equally.

Under the current federal law, U.S. currency and cryptocurrency are both acceptable forms of political donations but are not treated equally. 

Dollars received in the form of checks, cash, and credit card transactions are allowed for political donations under federal law. However, cryptocurrency donations are only approved as an in-kind contribution and are limited to $100, which can consist of subsidized rent, donated items, equipment, supplies, or other miscellaneous items. This definitely shows digital currencies are not on par with dollars.

While most states have campaign finance laws that are similar to federal statutes, there are differences. Some states allow candidates to accept money from corporations and others do not. Only two states, Tennessee and Virginia, have seriously considered legislation that allows donors to use digital currencies. Tennessee is the only state to enact legislation, and the language in the statute is somewhat vague.

Delegates in Virginia have considered legislation. However, the bill has not yet passed or signed by the governor.

Cryptocurrency advocates are encouraging the FEC and any state that considers legislation to place digital currencies on the same level as U.S. dollars. That’s exactly what the Tennessee statute has done, which sets a good example for other states to follow.

Is Cryptocurrency Safe Enough for Political Purposes?

Security, whether discussing cryptocurrencies or protecting personal information, is a concern for many; however, over half of those surveyed felt cryptocurrencies were secure enough for political donations. That’s great news for both candidates and their donors.

Of those identifying as Republicans, 63 percent felt cryptocurrency was secure enough to be used for political purposes, while 52 percent of Democrats believed the same.

Independent, or “Libertarian-minded” voters, at times appear more progressive or open to new ideas and concepts than their Democratic or Republican counterparts. Examples include foreign policy, social services, and economic policies. But in this case, only 45 percent of Independent voters were comfortable with donors contributing via digital currencies.

Overall, 73 percent of all voters who were knowledgeable about digital currencies believed security was not an issue when used for campaign donations.

However, many state governments haven’t jumped on the bandwagon. There are several reasons why state governments are hesitant to adopt cryptocurrency donations, but the two major ones are the validity of cryptocurrencies and the anonymity of the donor, one of the hallmarks of blockchain technology. A ruling by the Kansas Governmental Ethics Commission in October 2017 is an excellent example of why most states remain leery of digital currencies.

Speaking on behalf of the agency, Executive Director Mark Skoglund said, “Bitcoin is a digital currency. There is no physical manifestation of this currency in any way. It’s just alphanumeric characters that exist only online. It is not backed by a government. The value is subjective and highly volatile. However, there are millions of people who utilize bitcoin.”

Voters surveyed disagreed – only 26 percent said security was an issue – and since 2014, federal candidates have seen a steady increase in the use of digital currencies.

Stability Issues With Cryptocurrency’s Political Use

Given the wide price fluctuations of many digital currencies over the past year, the stability of cryptocurrency prices is another subject that is often discussed.

Fortunately, 62 percent of voters extremely familiar with cryptocurrency expressed confidence in using it for political purposes.

It’s not surprising that we see some difference between Republicans, Democrats, and Independents, however.

Slightly over half of the Republicans (52 percent) said cryptocurrency was stable enough for political campaign donations. Democrats and Independents showed less confidence, coming in at 40 and 35 percent, respectively.

Unlike the FEC ruling that limits cryptocurrency donations to federal candidates, Tennessee’s law allows cryptocurrency donations may be accepted with no restrictions, requiring the initial contribution to be recorded at the value of the currency when it is received. However, the value of most cryptocurrencies, namely Bitcoin, has experienced large swings in value, meaning it’s possible for the future value of the coin to be more or less than originally intended. Here’s an example:

Section 2(a) of Senate Bill 674, passed in 2015, reads, “A candidate or political campaign committee is allowed to accept digital currency as a contribution. Digital currency shall be considered a monetary contribution with the value of the digital currency being the market value of the digital currency at the time the contribution is received.”

Using our previous example, a digital contribution of one bitcoin made to a Tennessee candidate or campaign on July 6, 2015, was worth $279.54. One year later, that same coin was worth $661.54. If held until early July 2017, the value was $2,236.67. And, if the currency was held until July 9, 2018, the amount of the donation zoomed to $6,344.01, of which $6,064.47 would be reported if interest was redeemed and deposited into the campaign account. 

That translates into an annualized return rate of 183.12 percent. The average certificate of deposit bank rate in July 2015 for a one-year term was 0.27 percent, with the five-year rate at 0.87 percent.

Industry experts are also expressing confidence that digital currencies will become more accepted as prices stabilize for longer periods.

Cryptocurrency Donations Will Increase With Acceptance

An average of just under 25 percent of eligible voters in our survey indicated they would be more likely to contribute to political campaigns if cryptocurrency donations were an option.

Up until about 10 years ago, most campaign contributions came in the form of cash or a check written from a personal account. Donations by credit or debit card have increased in the last decade, mainly due to online giving.

Regardless of the method, more Americans are making political donations than ever before. 

Recent statistics show voters who said they contributed to a political candidate within the past 12 months doubled from 6 percent to 12 percent from 1992 to 2016. In addition, most contributions were less than $100, which is one reason former presidential candidate and U.S. Senator Bernie Sanders (I-New Hampshire), raised millions of dollars online.

Much like marketing or sales, political candidates and their campaign finance directors are continually seeking ways to increase donations within the legal guidelines. Over 20 percent of Republicans indicated they would contribute more substantial amounts if cryptocurrencies were an option. Sixteen percent of Democrats and 12 percent of Independents said the same.

Between the three major political parties, most contributors still prefer to donate with U.S. dollars, but a growing number said they would prefer to either give exclusively with digital currencies or a combination of both dollars and cryptocurrency. 

Foreign Involvement Remains a Concern

Fewer issues have received more political coverage since President Donald Trump took office than that of the involvement of foreign governments in American elections.

As previously mentioned, our respondents were more concerned that candidates, political parties, and foreign governments would find ways to manipulate cryptocurrency donations than they were about cryptocurrency or blockchain technology.

When asked if cryptocurrency donations would increase foreign interference in U.S. elections, 60 percent answered in the affirmative. Democrats were more concerned about this issue than was either of the other groups. 

Those who were extremely familiar with cryptocurrency were also concerned about increased foreign involvement, with 64 percent saying increased interference was likely.  

During a recent Congressional hearing of the Subcommittee on Crime and Terrorism, witnesses testified about their concern for increased manipulation of U.S. elections. However, when discussing the various ways blockchain technology could be used, Scott Dueweke, a cybersecurity expert with DarkTower, also noted, “These systems are not inherently bad, no more so than using cash or credit cards, and should not have a stigma attached to them.”

Concerns About Illegal Use

Would cryptocurrency donations increase unscrupulous activity in the U.S. political system? According to our findings, 62 percent of the respondents thought so.

These three groups have more they disagree on than agree on, but cryptocurrency being used illegally in political campaigns falls into the latter category. Independents came in at 64 percent, with Republicans and Democrats on their heels at 62 and 61 percent, respectively.

Even a slight majority of people who were incredibly familiar with cryptocurrency believed illegal campaign activity would increase. 

Since the FEC approved bitcoin for in-kind federal campaign donations, more candidates and political parties have embraced its usage. The first candidate to accept cryptocurrency for political purposes was Andrew Hemingway, a New Hampshire Republican who ran for governor in 2014. Interestingly, at the time, Hemingway was a young, 37-year-old tech entrepreneur who managed former Speaker of the House Newt Gingrich’s 2012 presidential campaign in New Hampshire. 

Kentucky’s Sen. Rand Paul (R) was the first presidential candidate to accept bitcoin, which makes sense given his Libertarian leanings. At the same time, Paul was hesitant about cryptocurrency’s future because of the difficulty in calculating a currency’s value. 

While candidates and political action committees (PACs) want to increase the acceptance of cryptocurrency, most state governments aren’t in the same camp.

The North Carolina’s State Board of Elections rejected a request in early August of 2018 from GOP candidate Emmanuel (E.J.) Wilder after he petitioned the board to allow cryptocurrency donations. In an email to the board before the ruling, Wilder wrote, “I know this is new, but there is a great opportunity to show that North Carolina is truly open to new emerging markets.”

And in a state that uses technology as a way to recruit new businesses and is known for its infamous “Research Triangle,” the board denied Wilder’s request. 

“We do not have the confidence that we could adequately regulate contributions to a political campaign in North Carolina in the form of cryptocurrency,” wrote Kim Westbrook Strach, the board’s executive director.

Do Voters Trust Politicians With Cryptocurrency?

One benefit to the influx of news over concern about the role of foreign governments in U.S. elections is that it has taken some of the attention over voters’ distrust of elected officials.

When asked if they believed politicians would find ways to illegally take advantage of cryptocurrency donations, 64 percent were concerned that could happen. Independents led this response at 70 percent, probably because they are suspect of both major parties. Democrats came in at 66 percent and, consistent with our overall findings that Republicans are more comfortable with political cryptocurrency usage, only 56 percent of GOP respondents felt the same.

It hardly comes as a surprise that Americans’ trust in their political leaders has steadily declined over the last 40 years. 

In their book, “Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World,” authors Don and Alex Tapscott make the case that through “mass collaboration and clever code,” people will come to trust cryptocurrencies and the technology they use.

Distrust at the Party

Political parties, the organizations millions of Americans on all sides of the political spectrum align themselves with to support issues and candidates, don’t come out of our survey unscathed either.

Well over half, or 56 percent, of voters in our survey thought political parties would misuse crypto political donations.

While our results clearly show Republicans are more favorable to cryptocurrency’s use in political campaigns, 90 percent of eligible voters in the survey thought the red-state party would misuse the currency. Democrats’ misuse was also high at 83 percent. These same respondents also said Libertarians and Green Party voters couldn’t be trusted at 63 and 60 percent, respectively. 

As you might expect, voters from one party were more suspect of other political groups when it came to campaign misuse of cryptocurrency. Interestingly, Independent voters tended to lay more potential blame at the feet of Republicans and Democrats than they did Libertarians and the Green Party. 

Overall, it’s safe to say followers of one political party don’t trust the others.

Will Crypto Find a Place Within Political Campaigns?

Cryptocurrency has already gotten its foot in the door as an accepted, albeit limited, method of contributing to federal political candidates and campaigns. State governments haven’t yet jumped on the cryptocurrency bandwagon, but if the FEC and other federal agencies expand its use, then history indicates many will follow. 

Brian Forde, a former aide to President Barack Obama in the Office of Science and Technology Policy, received cryptocurrency donations in the low six-figures during his 2018 bid for California’s 45th Congressional District. This amount is more than all other federal candidates combined have received in digital currency, and Forde apparently caught the attention of many prominent technology and cryptocurrency investors, such as Tyler Winklevoss, Brad Bonham, and Peter Briger.

In addition to Tennessee, states such as Oregon and Virginia may not be far behind.

“Cryptocurrency is here to stay, and Oregon needs to adapt to that reality by allowing this new form of donating,” Secretary of State Dennis Richardson told the Portland Tribune in June 2018. “Allowing cryptocurrency to be a part of our elections process is a new and innovative way to expand participation in Oregon elections.”

More importantly, voters in the survey expressed more confidence in cryptocurrency and its associated technology than they did in how foreign governments, people, or parties might use or misuse the currency. Voters also expressed confidence in the stability and security of cryptocurrencies. That’s a positive step in lobbying the FEC and state agencies to expand the use of digital currencies in political campaigns.

Expect to see more exciting news about cryptocurrencies in the very near future. Hopefully, people will be using crypto for many products and services they enjoy. 

Methodology

Researchers surveyed 1,023 people using Amazon’s Mechanical Turk. All respondents were eligible U.S. voters, and weighting was applied by political party affiliation to achieve a representative sample of the American voting public. Respondents who were identified as “extremely familiar” on cryptocurrency throughout this study were those who reported the highest possible level of familiarity with cryptocurrencies on a seven-point scale. 

The data presented in this study rely on self-reporting. Survey respondents read and responded to each question themselves without researcher influence or assistance. Some of the potential issues with self-reported data include but are not limited to: selective memory, incomplete or mistaken memory, exaggeration, and under-reporting or over-reporting.

This data is presented for entertainment purposes only; it is not intended to influence, inform, or otherwise affect any actions of the governing bodies and political proceedings of the U.S. and its territories and was not conducted by a politically affiliated organization. In addition, the information is not intended to promote or influence the price of any digital currency or exchange.

Sources

• https://www.smithsonianmag.com/history/andrew-jackson-americas-original-anti-establishment-candidate-180958621/
• https://www.fec.gov/files/legal/aos/2014-02/2014-02.pdf
• https://www.fec.gov/help-candidates-and-committees/filing-reports/bitcoin-contributions/
• https://www.coindesk.com/price/
• https://www.investing.com/crypto/currencies
• https://www.fec.gov/help-candidates-and-committees/making-disbursements-pac/making-kind-contributions-candidates/
• http://www.cfinst.org/law/states.aspx
• http://www.capitol.tn.gov/Bills/109/Bill/HB0701.pdf
• http://thehill.com/homenews/campaign/281399-5-things-the-libertarian-party-stands-for

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