Published: July 17, 2014
Dan Elitzer and Jeremy Rubin of the MIT Bitcoin Project
This fall, Dan Elitzer will give every MIT undergraduate $100.
There are a few catches. Elitzer, MBA ’15, will distribute the money through the MIT Bitcoin Project, which has raised $540,000 from donors, mostly MIT alumni. And the no-strings-attached payments won’t be in U.S. dollars. They will be in Bitcoins.
The digital currency—which is “mined” through computer processing power that verifies payments—has drawn praise, criticism, and confusion, all in no small measure. Bitcoin enthusiasts say much of their excitement for the technology can be attributed to its newness and its untapped potential.
That’s why the MIT Bitcoin Project, a student group headed by Elitzer and MIT undergraduates Richard Ni and Jeremy Rubin, is giving money away to students. Nobody really knows what happens when a bunch of people in one place have access to Bitcoin. Even Elitzer isn’t sure if the experiment will work, let alone what might qualify as success.
“We listed close to 150 metrics that we could potentially track here,” Elitzer said. “I think we’re looking not just at Bitcoin use and adoption on campus, but more broadly, does this help stimulate other more entrepreneurial activities on campus?”
The payout, dubbed the MIT Bitcoin Project, was announced in April. This summer, the MIT Bitcoin Project is holding a series of hackathons at the MIT Media Lab, where faculty including director Joi Ito have been involved with the project, as well as a hacking competition to develop software and other ideas that might go hand-in-hand with the mass disbursement of Bitcoins. The first hack nights have been well attended, Elitzer said, with about 50 students, MIT faculty, and other interested people attending each event.
Meanwhile, Elitzer and Rubin are determining how and when the money will be distributed to undergraduates. Elitzer said he expects students will be able to receive their funds through a selection of Bitcoin wallets, the apps and clients that allow people to conduct Bitcoin transactions.
“Can we build a Bitcoin ecosystem here?” Elitzer asked. “This is continuing a long tradition at MIT. Think of the Athena project, giving students access to computing resources beyond what the average person has available to them, or giving Ethernet connections in dorm rooms. It’s giving access to a whole world.”
The MIT Bitcoin Club formed late last fall after Elitzer met others interested in Bitcoin through the MIT Sloan MBA Class of 2015 email list. The group held a series of events, including a Bitcoin expo day, throughout the spring. Rubin initially thought of disbursing $100 to 1,000 students. But the organizers found a lead donor and decided to expand the project.
Bitcoin has garnered both excitement and controversy since its creation in 2009. Supporters point to its ability to conduct transactions without a middleman and with little oversight. Detractors say that same secrecy opens the door to illegal activity, theft, and fraud. High profile news stories like the bankruptcy of Mt. Gox, a Bitcoin exchange that folded earlier this year after about 650,000 Bitcoins ($400 million today) went missing in an apparent theft, have not helped its image.
But Elitzer said the technology is still young and that its best uses may be yet to be discovered. That’s where MIT students come in. Elitzer wants to see what happens when the new technology is handed to 4,500 of the world’s brightest young minds. Sure, he said, many of them may just cash out. But he thinks others might begin hacking with the technology.
“What might a community look like where you can assume broad access to Bitcoin?” Elitzer asked.
MIT Sloan Assistant Professor Christian Catalini, who studies entrepreneurship, crowdfunding, and innovation, will closely follow and help shape the project as it unfolds.
“When it comes to invention and hacking new technologies, we are lucky to be a campus that attracts the very best talent available,” Catalini said. “It will be interesting to see what our students will do with this opportunity and how they will shape the evolution of the technology.”
“There’s a lot of attention right now on Bitcoin as an alternative to traditional currencies like the U.S. dollar, but what I find more interesting is the possibility for Bitcoin to be a technological platform for numerous, derivative innovations,” Catalini said. “Bitcoin lies at the intersection of software, economics, and markets. It allows for privacy and disintermediation in a way that was previously not possible.”
“While part of our students would have worked on Bitcoin related ideas no matter what,” he said, “I’m interested in seeing how the project will engage those who wouldn’t have otherwise been exposed to the challenges and opportunities the technology unlocks. Will we see them pushing the frontier of the Bitcoin ecosystem forward? Will we see a meaningful entrepreneurial response to that or not?”
Marketing Associate Professor Catherine Tucker, who studies electronic privacy, said she is interested in “the sheer ambitiousness of such platforms. We have had money regulated by the state for so long now that the need for state-sponsorship of currency is almost an unquestioned assumption. And it is exciting to see such unquestioned assumptions challenged.”
At MIT, “we are not scared to embrace the new,” Tucker said. “We are at our happiest when we are thinking about how technological advances improve the world.”
So what will happen when every MIT undergraduate receives $100 worth of Bitcoins?
“We don’t know,” said Catalini. “It could be that many students will receive the $100 and simply cash it out right away. Maybe MIT is too early and most students will not see a compelling use for their digital wallets yet. But you can also imagine a scenario where at least some of them will, and that will shape the rate and direction of the technology for years to come.”