Tuesday, Kentucky Senator Rand Paul became the first mainstream presidential candidate to accept bitcoin donations. But if his goal is to rake in as much money as possible, he’s might be going about it all wrong.
There are lots of reasons why a political candidate, especially Paul, would want to accept bitcoin: He gets to show he’s hip and technologically savvy, it adds to his libertarian image, and it provides his constituency more donation options. That’s good for the mainstreaming of a currency that 65 percent of Americans have never heard of or know almost nothing about. But it might be bad for his candidacy, because when companies have added a bitcoin option, their revenues and donations have actually declined.
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“At this time, bitcoin donations are not high enough to offset lost revenue”
On his website, you can donate using a credit card, Paypal, or bitcoin—crucially, all the options are presented on the same donation page. And that’s where he might be going wrong. In the past, adding extra choices—specifically adding a bitcoin option—has anecdotally led to fewer donations overall.
“The Rand Paul campaign would be advised to A/B test their user interface (have some subset not receive the “donate with Bitcoin” option),” Nicholas Weaver, a UC-Berkeley researcher and bitcoin expert told me in an email.
Screengrab: Randpaul.com
In late November, Mozilla, which makes Firefox and a few other popular computer programs, began accepting bitcoin donations. Within three days, Firefox had raked in $1,600 in bitcoin. In two weeks, it got $5,000.
Initially, Mozilla’s bitcoin donation option lived on a separate page from its normal donation page. Eventually, however, it decided to test its normal donation page with a small “Donate with Bitcoin” link.
“Given the volume of page views to that form (millions during the life of the campaign), I was concerned that adding any unnecessary text would distract donors and depress non-bitcoin conversions, the source of more than 99% of all our campaign revenue,” Andrea Wood, Mozilla’s head of fundraising, wrote in a blog post. “The test showed that revenue per visitor [with the bitcoin option] drops by about $.07 USD.”
“Seven cents doesn’t sound like much. However, at scale, it adds up,” she continued. “At this time, bitcoin donations are not high enough to offset that lost revenue. We want to make sure bitcoin donors can find a link to give bitcoin, but this test suggests our primary donation form isn’t the optimum location.”
Mozilla is not alone. Wholly Hemp, an online shop that sells hemp soaps, moisturizers, and waxes, ran a similar A/B test in which it had a pay-with-bitcoin option to some prospective customers.
“By prominently displaying bitcoin acceptance on my site I was losing 5.8 percent of my gross sales,” the company’s owner wrote on Reddit. “Businesses currently accept Bitcoin because it’s potentially a source for more revenue. But if the numbers say otherwise, businesses have no reason to prop up the Bitcoin economy.”
These are, of course, two small tests with two companies. It’s far from settled science and it’s hard to say whether there are any people visiting Paul’s page right now who see “bitcoin” and navigate away.
But many would argue that the paradox of choice is a thing. Mozilla’s customers are extremely tech savvy and Wholly Hemp has always been a bitcoin-oriented business. If bitcoin donations turned off those companies’ customers, what chance does Paul, a guy trying to appeal to regular Americans, have?
Paul may want to show support for the cryptocurrency, and could have decided that the risk is worth it. But are the handful of bitcoin evangelists who are going to donate to him specifically because of this move going to outweigh the number of people who see the word “bitcoin,” get overwhelmed, and walk away? I don’t know, but at the very least, the results of an A/B test on Paul’s page would make for interesting reading.
Paul is using a service called BitPay that instantly converts bitcoin into USD, so it’s not like he has an incentive to get bitcoin donations over regular USD. Other than nominally showing support for the currency and giving people another option, he’s not really participating in the bitcoin economy in any real way. He’s not going to take his bitcoin and go buy a campaign ad with them—not directly, at least. Paul’s campaign did not respond to a request for comment.
There is, of course, a simple change Paul can make to both keep the bitcoin donations rolling in and avoid dealing with any potential overall penalty that comes with accepting bitcoin alongside regular dollars. Paul could do what Colorado Congressman Jared Polis did—host his bitcoin donation page separately. The bitcoin diehards will find it, no doubt. And your grandparents will see a normal donation page without any scary words on it.
