Wikimedia Foundation (WMF) has taken a call on donations coming in as cryptocurrencies. The parent of the popular website Wikipedia has changed course, and said it will stop accepting cryptos.
The foundation cited environmental factors and lower proportion of donations coming in as cryptos as primary reasons for making an about face. Only $130,000 worth of crypto, about 0.08% of its revenue, came in as donations in 2021.
The WMF decided to accept cryptocurrencies in 2014. A year earlier, Bitcoin, the most-advertised virtual asset to date, traded at under $100. The following year, its value soared to over $700. Apart from Bitcoin, the non-profit had also accepted other virtual coins, including Ether, Dogecoin and other stablecoins.
The decision to scrap the crypto policy comes after the foundation ran a discussion page on the pros and cons of this new asset class earlier in January. It closed the discussion in April after gathering responses from its user community.
“We began our direct acceptance of cryptocurrency in 2014 based on requests from our volunteers and donor communities. We are making this decision based on recent feedback from those same communities,” WMF said in a statement.
As a result of this change, the non-profit will shut down its Bitpay account, which will keep the organisation from receiving any futured donations in crypto.
WMF reached out to its community for a discussion on the idea of receiving crypto donations. A little under 400 users voted and discussed whether the foundation should stop accepting digital asset donations. The majority voted yes to the proposal 232 to 94. Users who support halting the process were mostly concerned about the energy-intensive mechanisms of the digital currency market.
Supporters in the Wikipedia community opposed the idea, citing lesser energy-intensive cryptocurrency options and noting that crypto has shown its advantages to provide safer ways of donations for people in oppressive countries.
According to some estimates, Bitcoin, and other cryptocurrencies, uses more electricity annually than global gold mining operations. Burning that amount of energy could potentially impact greenhouse gas emissions, something climate activists are trying hard to bring down.
Environmental activists have launched campaigns asking cryptocurrencies to bring down its dependency on energy.
Bitcoin miners relay on sophisticated hardware to validate transactions as these involve complex puzzles. To solve these, computers gobble up a lot of energy in the process. And miners get new tokens in return for validating these transactions. This is called the “proof of work,” in which the energy used is a sort of price paid to verify transactions.
This process is deliberate made energy-intensive to keep bad actors from disrupting data that sits in a globally distributed ledger.
Campaigns by activists is forcing Bitcoin and other crypto assets miners from moving away from “proof of work” to a “proof of stake” model. The latter model is said to be less energy-intensive as it does not have to solve complex puzzles to validate transactions.
While the model proposed by may cut down carbon emissions, it will be hard to implement. That’s because miners have invested heavily to build their hardware, and would be hard-pressed to abandon it. And fans of the “proof of work” model hold the view that the current concept is the most secure way to validate transactions.
Within the crypto world, Bitcoin is said to be the most-polluting digital asset. Its rival Ether, which runs on Ethereum blockchain, is said to be transitioning from energy-intensive model to another one, which will consume much less electricity.
And even if cryptocurrencies switch to a new validation method, WMF may not return to its 2014 position as crypto donations to the non-profit hasn’t exceeded 1% of all its funding.
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Published - May 04, 2022 04:40 pm IST
