The point of donations is for people to donate to our server with real money. If everyone bought Premium in game then why would be bother selling it on the website?
This all started before Minetime came about. The ranks were Major (Premium), Captain (Enhanced), *General (VIP), **General (MVP), ***General (Executive), ****General (CEO), and *****General (Admin), but no Commander rank. You were able to buy Major in-game for people who could not donate and wanted some extra perks. This helped Collin gain more votes to turn PvPFest into a bigger server, ultimately creating Minetime. As a result, Premium is available to buy in-game on PvPFest, but not on any other server.
Let's imagine that there was 2,500 people that wanted premium and the got it with IG money, then if those same people got it for the $5 that goes to the server. That's 12,500 that the server gets JUST OUT OF PREMIUM. They make a lot of money so they don't let you buy it with IG money.