When Texas Rep. Steve Stockman announced recently that he'll accept donations in bitcoins, he raised some eyebrows.
Stockman, a conservative who is challenging incumbent Sen. John Cornyn in the Republican primary in March, has already had some run-ins with the Federal Election Commission over campaign finance issues — so he may not be the ideal political spokesman for a currency that has no centralized network or official physical form.
Still, Stockman appeared in a Dec. 31 YouTube video expressing support for the virtual currency: "I really think digital money is more about freedom," he said, adding that bitcoin is "a fixed amount of currency at a fixed rate, so very good for the markets." According to Business Insider,he said his Senate campaign would show support by accepting bitcoin donations.
Setting aside the question of Stockman's longshot candidacy, his announcement raised a question that has rarely been asked before: In political campaigns, what are bitcoins worth?
Symbolic Value
It's a hard question to answer, and it probably depends on whom you ask.
Created in 2009, the virtual private currency (also called crypto-currency) has a small, ardent and growing following. It gained significant media attention especially this past year as its progress hit noteworthy highs and lows: The exchange rate of bitcoin surged in value in April 2013, turning some early investors into poster children for the currency's success, but then it dramatically plummeted in December. Dating site OKCupid and game developer Zynga began accepting bitcoin, but it was also used in an alleged Ponzi scheme uncovered in July and on the black-market site Silk Road, which the FBI busted in October.
Those incidents pose problems because bitcoin derives its value from being accepted and trusted — the more widespread it is, the more valuable it becomes. That's true on the political stage as well. And right now, it seems, it just doesn't have enough of a presence to make it very valuable in politics.
In the short-term, at least, bitcoin's worth is largely symbolic.
James Henson, director of the Texas Politics Project, says the decision to accept bitcoin fits with Stockman's anti-establishment image. "This really is about projecting an outsider status," Henson says.
It's possible that, among other things, Stockman's announcement could boost his appeal with libertarians and others who are critical of centralized banking. But David Crockett, a political science professor at Trinity University in San Antonio, says it's a stretch to expect more than that.
"I'm hard-pressed to articulate what kind of voter would be interested in this," he says. "I don't think there are going to be a large percentage of those folks who are motivated politically by the bitcoin."
Besides, Crockett says, campaigns are about raising money for advertising — which is paid for by dollars, not bitcoins. "You could raise a billion of those things, but is that going to buy him air time?" he says.
Uncharted Territory
If nothing else, Stockman's announcement could produce two politically consequential results. The first: free media attention for the congressman. Now that the media are covering his bitcoin announcement, he's building up name recognition — which is one of his biggest obstacles in the upcoming election.
The second: If someone challenged Stockman over the legality of accepting bitcoin donations, that could force a court to make a decision about it, says Richard Hasen, election law expert at the University of California, Irvine.
So far, there's been little guidance from any regulatory body. In November, the Conservative Action Fund, a Republican PAC, requested a decision from the Federal Election Commission on whether the currency could be accepted in campaigns. What ensued was a discussion of transparency, as NPR's Peter Overby reported:
"PACs and candidates have to publicly identify their donors. There are contribution limits to comply with, and basically no money is permitted from foreign sources. But bitcoins are like cash, with no record of who owns them — making illegal or shadow contributions easier.
"Republican commissioner Matthew Petersen read from a letter submitted by lawyers for the Bitcoin Foundation. The letter says the bitcoin system is transparent, as Petersen read: 'This transparency is one of the features of the bitcoin network that makes it ideally suited for political contributions.' "
The commission ultimately — and unexpectedly — deadlocked on a decision on whether political committees could accept bitcoin donations. FEC chair Ellen Weintraub told the Washington Post that the issue needed more examination, but that it could come up again. "We have not seen the last of bitcoin," she said.
Henson, at the Texas Politics Project, says he doesn't see it going very far in the immediate future. There are still too many broad questions about crypto-currency like bitcoin for it to be taken too seriously.
But there's always a demand for anonymity and obscuring money in politics, he says. "As long as it lasts as a medium and campaigns are interested in it, it will have to come up again."
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