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California's Fair Political Practices Commission (FPPC) has no rules or guidance on crowdfunding or Bitcoin donations to political campaigns. "It's still being discussed as to what the legalities are," Jay Wierenga, a spokesman for the FPPC, said of the Bitcoin contributions.
Parker said his campaign receives Bitcoins through a third party that converts them into cash, and then he discloses the contributions on his campaign filings. Parker praises what he calls "disruptive" and "innovative" technologies like this, but he said he recognizes the need for regulation.
Parker's interest in Bitcoin also goes beyond his own campaign finances. He said he plans to make the cryptocurrency a part of his economic plan for the city. In a YouTube video recorded at his Santa Monica fundraiser, he tells the audience, "We have a jobs plan that talks about creating 20,000 jobs by the year 2020. Technology is going to be one of those sectors. Clearly, ... Bitcoin ... if it continues to emerge, it can be an important catalyst in the growth of that technology sector, a sector that will provide jobs, good living-wage jobs to Oaklanders across a number of socioeconomic classes."
Parker added that he thinks Bitcoin can "create a culture of saving" among impoverished Oakland residents, lifting them out of poverty. We asked Parker to expand on this thought. He said, "Bitcoin gives us an avenue to get to the chronically under-banked." He pointed to the plethora of check-cashing stores in Oakland that exploit low-income people with usurious loans, and said he'd like to put restrictions on these kinds of businesses. He said he would then like to extend Bitcoin banking and payments technologies to the working poor.
However, academics who have studied Bitcoin scoff at Parker's proposal. "This sounds pretty silly," said David Yermack, professor of finance at New York University's Stern School of Business. "Whatever benefits Bitcoin may have won't apply any more to Oakland than they would in Denver or Peoria or anywhere else."
Yermack has studied closely the economics of Bitcoin and concluded that it more resembles a speculative asset investment than a currency. "The main exchange on which Bitcoin is traded [Mt. Gox] has come under attack from hackers, and I think the episode has highlighted the limits and vulnerabilities of Bitcoin in pretty dramatic fashion." Aside from hackers and faulty exchanges, the value of Bitcoin has wildly fluctuated, making it an incredibly volatile investment — the exact opposite of what might help extend credit and banking services to the poor.
Parker also has said he would consider making city salaries payable in Bitcoin. "As the markets evolve, assuming that it keeps this democratic purpose that it has, I can see it being a currency that you exchange for goods and services," Parker told Bitcoin Journal in an interview. "I think it's not far off that you could see it as a salary."
It also turns out that extending Bitcoin banking services would benefit companies linked to Parker's friend and fundraiser Brock Pierce. A former child actor who starred in First Kid and The Mighty Ducks, Pierce became a venture capitalist after his acting career tailed off. One of Pierce's first businesses was IGE, a company that sold virtual goods in the online game World of Warcraft. In the early 2000s, Goldman Sachs made an equity investment in IGE, valuing the company at $200 million. Pierce's co-founder sued him, claiming theft and fraud. After several years of legal wrangling, Pierce ended up selling the company and reincorporating some of its assets under a new firm called Affinity Media, Inc. Parker served as chief operating officer. Goldman Sachs was an investor.
Today, Pierce has investments in multiple companies that are trying to monetize Bitcoin including BitGo, Inc., Robocoin Asia, Expresscoin, KNCminer.com, and GoCoin, the company that collects Bitcoin contributions for Parker's mayoral committee.