MIT undergrads to get $100 in bitcoin in digital money trial

BOSTON Tue Apr 29, 2014 6:50pm EDT

1 of 2. Massachusetts Institute of Technology (MIT) students Jeremy Rubin and Dan Elitzer (L) pose for a photograph at MIT in Cambridge, Massachusetts April 29, 2014.

Credit: Reuters/Brian Snyder

BOSTON (Reuters) - Every undergraduate student at the Massachusetts Institute of Technology next fall will be offered $100 in bitcoins in an experiment that students say will turn the prestigious university into one of the first places on the planet with widespread access to digital currency.

Bitcoin is not backed by any government or central bank, a digital currency whose value can swing dramatically based on demand. Users can transfer bitcoins to each other online and store the currency in digital "wallets."

Jeremy Rubin, a sophomore, and Dan Elitzer, an MBA candidate, raised half a million dollars from alumni and other sources to fund the experiment after coming up with the idea last month. The extra money will go toward infrastructure and education and the offer may eventually be extended to other students beyond undergrads.

"MIT's campus will become a place where bitcoin is more widely used than anywhere else in the world," said Elitzer, who is president of the MIT Bitcoin Club.

But not all bitcoin ventures have been a success.

Tokyo-based Mt. Gox, once the world's biggest bitcoin exchange, filed in February for bankruptcy protection in Japan, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking of its computer system.

To avoid such problems, the students have sought help from MIT computer scientists and staff as well as organizations that facilitate digital currency payments.

"We are going to make sure this is done in a secure fashion," Elitzer told Reuters. "We are making sure we get the right expertise in here."

The bulk of the funding for the project came from MIT alumni. Alexander Morcos, class of 1997 and co-founder of the New York-based high-frequency trading firm Hudson River Trading LLC, donated about $250,000, the students said.

Rubin said he believed that giving classmates digital currencies was similar to providing Web access in the early days of the Internet.

While anybody can exchange digital currencies from a computer, most bitcoin users are isolated from each other. By issuing bitcoin to every undergrad on campus, Elitzer and Rubin hope it will encourage them to exchange it between each other as well.

"There are virtual communities where it has been common to find bitcoin users, but there has been no physical, geographic location where you can go to and assume that a significant proportion of the population knows what bitcoin is and uses it," he said.

"You will have a critical mass. The assumption will be that the other person has it," he said.

It will be an opt-in program, which means that students will not automatically be issued digital wallets, but won't get any money if they reject the digital currency.

"We're planning on bitcoin or bust," Rubin said.

(Reporting by Jim Finkle; editing by G Crosse and Edwin Chan)

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Comments (3)
SmartThinking wrote:
“The extra money will go toward infrastructure and education …”

Yeah, like MIT needs spare cash.

Apr 29, 2014 7:38pm EDT  --  Report as abuse
I’m a early Bitcoin user. I cashed in because it became a distraction requiring more consideration than I’d intended. Completely on me for that, but it seemed that with minimal transaction costs and no regulation it would be too irresistible for a large holder not to manipulate price.
I see a future for Bitcoin as the currency of choice for artificial intelligence compensation as there is a similarity to the nature of their valuation. Its always going to be a little awkward to use as a general currency but could be “friction less and universal” as a means of payment for smart machine interaction. Smart machines will be specialized and will need to interact to solve interdisciplinary problems.
Think about the problem of paying for the “work” of smart machines and you”ll get led around to my conclusion. Ordinary currency is just not going to work. It will be too slow.
Gasoline was thought of as a waste product in the mid 1900′s. Stick around. Bitcoins will have their day. Just not real soon.

Apr 29, 2014 8:23pm EDT  --  Report as abuse
Correction: 19th century not 1900′s

Apr 29, 2014 8:48pm EDT  --  Report as abuse
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