All MIT undergraduates to get Bitcoins

Last updated 10:56 30/04/2014

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Every undergraduate student at the Massachusetts Institute of Technology next fall will be offered US$100 ($NZ116) 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 the school's 4500 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 organisations 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 US$250,000 (NZ$292,000), 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.

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"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 or get any money if they reject the digital currency.

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

- Reuters

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