WHAT happens when you hand college students free cash? That’s the question behind an experiment playing out in Cambridge, Massachusetts. Starting this month, $100 worth of bitcoins are being given to students at the Massachusetts Institute of Technology.
Bitcoin has been heralded as the future of money, an anonymous way to purchase anything from a coffee to illegal drugs. But it has struggled to make the transition to common currency. By injecting bitcoins into a real-world community, the MIT Bitcoin Project hopes to spur acceptance of the cryptocurrency among people who might not otherwise try it.
“We’re cultivating an ecosystem,” says Dan Elitzer at MIT Sloan School of Management, who runs the project along with Jeremy Rubin and Richard Ni. “We’ve got that density and that critical mass adoption to hopefully see what’s possible once Bitcoin is more broadly accepted and broadly used.”
To fund the project, Elitzer and his team raised more than $500,000 in alumni donations earlier this year; about half came from Alexandar Morcos, a former student who runs a high-frequency trading firm in New York City. The first stipends started rolling out to students who had signed up two weeks ago. The students are free to do what they want with the bitcoins – so long as it’s legal.
One popular way to spend the stash is on takeaway food. The Boston area boasts a number of shops that accept bitcoin, including Patty Chen’s Dumpling Room and Veggie Galaxy. It also had one of the first bitcoin ATMs in the US. In addition, the MIT campus store now accepts the currency in exchange for things like textbooks and college sweatshirts.
Sam Udotong, who studies aerospace engineering, plans to launch a start-up in the next two weeks sparked by the campus’s influx of bitcoins. His Fireflies app will let students request or carry out tasks for each other on campus in return for bitcoins, like picking up a meal from the cafeteria on a cold night. In August, Fireflies won the$1500 Awesome Award from a competition hosted by the MIT Bitcoin Project.
“You can go to restaurants or buy stuff online, but in terms of physically using it, there isn’t that much you can do yet,” says Udotong. “We’re hoping Fireflies will fill that hole.”
A number of students have chosen not to spend their bitcoins, instead keeping them as an investment or selling them for regular cash. Jonathan Harvey Buschel, a first-year student studying electrical engineering, says he plans to use some of his allotted bitcoins as a means of sending money to friends, as Bitcoin offers an appealing alternative to banking apps.
It remains to be seen whether the project will create a self-sustaining community around Bitcoin. Elitzer’s team is collecting data from users to find out how they used their money and whether their attitudes toward the currency have changed.
“I think that increasing awareness of cryptocurrencies is a positive thing, though it’s also important for people to be aware of the associated risks and regulatory issues,” says John Villasenor at the University of California, Los Angeles. For example, a crash at popular exchange site Mt Gox earlier this year cost customers millions in bitcoin. Regulations about the finer points of Bitcoin remain in a grey area, as seen in the recent legal battle over a mining tool named Tidbit.
“Increasing awareness of cryptocurrencies is a positive thing, though be aware of the risks”
William Luther, an economist at Kenyon College in Ohio, adds that the project may struggle to triumph over the limited opportunities to spend bitcoins and societal pressure to use more common currency. “It’s not a slam dunk. You can give a student $100 worth of Bitcoin, but you can’t make them use it,” he says.