With $500,000, 2 Students Hope to Make Bitcoin MIT’s Currency

Starting in the fall, undergraduates at the Massachusetts Institute of Technology will each receive $100 in Bitcoin—seed money meant to jump-start a campus digital-currency economy that can be engaged with and studied by students and faculty members alike.

The project is being spearheaded by Jeremy Rubin, a sophomore studying computer science and electrical engineering, and Dan Elitzer, an M.B.A. student and the founder of the MIT Bitcoin Club. Together they have raised $500,000 from MIT alumni and members of the Bitcoin community. The money will be distributed in Bitcoin to as many as 4,528 undergraduates, who will be able to use the digital currency as they please. Mr. Rubin and Mr. Elitzer envision the creation of applications for things like crowdsourcing and microfinancing, among other uses.

“It is both jump-starting an economy, but more importantly seeding an ecosystem here,” Mr. Elitzer told The Chronicle. “We want to see the mutually reinforcing activities in the academic space, in the venture space, in the use itself. So there are really three different pieces there that we are hoping to catalyze.”

Exact details of how the Bitcoin will be disbursed to students, and the academic studies to be pursued as part of the project, are still in development. The time frame is open-ended, and students are being asked to participate on an opt-in basis. Mr. Elitzer said the feedback from the MIT community had been enthusiastic.

Bitcoin, a decentralized, open-source currency that is created and exchanged on the Internet without an intermediary such as a bank or broker, has captured headlines in recent months. Among the criticism is that it creates shadowy financial channels for criminals. In January the chief executive of a major Bitcoin exchange, BitInstant, was arrested and charged with laundering money for customers of a drug-trafficking website.

In March, Newsweek published an article supposedly outing the anonymous and much-conjectured-about creator of Bitcoin. The subject of that story—a Southern California resident named either Satoshi Nakamoto or Dorian Nakamoto, depending on whom you ask—continues to vehemently deny his involvement.

Higher education has not been immune to the Bitcoin buzz. In January the University of Cumbria, in Britain, announced it would begin accepting Bitcoin as payment for some courses. The announcement came two months after the University of Nicosia, a private institution in Cyprus, became the first university to accept Bitcoin for tuition and fees.

Mr. Elitzer said his enthusiasm for the potential of the digital currency was born out of his experience working in the nonprofit sector, specifically in international development. He sees opportunities to lower the costs of things like payments, savings, loans, and remittances.

“I think remittances is a great use case for Bitcoin,” Mr. Elitzer said. “Instead of paying a 5-, 10-percent fee to Western Union to send money overseas, we are talking about being able to put potentially billions of dollars back into the pockets of people who need it the most.”