
Announcing the MIT Bitcoin Project - jordn
http://bitcoin.mit.edu/announcing-the-mit-bitcoin-project/
======
twoodfin
If you wanted to spend $500,000 to encourage the emergence of bitcoin in a
"market" like MIT, I think it would be more productive to use the USD like a
traditional subsidy: Pay MIT merchants to offer discounts on BTC-based sales.
If I'm spending $40/week at LaVerde's, a 10% discount might be enough to get
me to convert a few hundred dollars of my own money into BTC.

As it is, the project will have to deal with getting merchants set up to
accept BTC anyway, and my bet is that most students will be content to sit on
their BTC hoping for another price spike rather than go through the trouble of
learning how to use it for everyday transactions.

~~~
dmix
That sounds just like a typical boring government subsidy. This is more akin
to a large scale academic experiment.

Economics should always be treated like experiments, rather than some attempts
at top down market manipulation, ala subsidies.

~~~
hayksaakian
a bitcoin subsidy has the side effect of requiring to actually use and spend
bitcoin.

a USD subsidy is just a discount you might receive without even realizing it.

------
dlss
This is very interesting. Having that many people all holding BTC will have a
bootstrapping effect around MIT.

The three obvious effects are:

1\. stores near campus will (probably) start supporting it

2\. the black market on campus will (surely) start accepting it

3\. Some undergraduates will invent things using it

I think #1 and #2 are more interesting by far than #3... I can't wait to see
what happens when BTC and USD are even vaguely on the same footing in a
geographic area.

~~~
perlgeek
4\. Lots of bitcoins will be stolen, because people don't realize how insecure
their various computer systems are

~~~
DennisP
They're MIT students. If they lose their free hundred bucks because they
didn't secure their computers, they should've known better, it'll be a
valuable educational experience, and maybe it'll motivate some to figure out
better ways of storing bitcoins.

~~~
Consultant32452
MIT offers degrees in gender studies, anthropology, theater, etc. Not everyone
at MIT is a computer geek.

~~~
tlrobinson
And not all computer geeks properly store their Bitcoins either.

~~~
jafaku
In my experience, geeks didn't realize mtgox and the like weren't a secure way
to store your money, while non-geeks did simply by using common sense (ie. Do
they have insurance? Can I sue them locally should something go wrong?).

I know that's not even the proper way to store your coins. But only security
experts knew better.

~~~
StavrosK
I'm a geek, I knew MtGox wasn't a secure way to store my money, but I didn't
know what a secure and convenient way was.

Hint: It was [https://electrum.org/](https://electrum.org/). It's amazing.

~~~
jafaku
The main point is having your keys secure from theft and loss.

No wallet software can keep your coins safe if it has to store your keys in
the same machine you use for your internet activities. You have to use either
an air-gapped machine (also called offline or cold storage) or multi-
signature.

Then there's also the issue about trusting what you have downloaded. Even if
you run the software in an offline machine, if it's meant to steal your coins
it certainly can do it. Do you trust Electrum's developers or whoever reviewed
the code? What about the maintainer of the website (or Github)? Did you use
SSL? Did you check the signature? Did you get the signature from a different
and secure channel?

For now I'm trusting Armory, but I'm planning to move to multi-signature once
I have time, and maybe use three different wallets to create the keys.

Losing the keys is a separate issue. You have to think about different
scenarios like disk failure, data decay, a fire in your house, your friend
dying and their family not letting you recover his part of your n-of-m backup,
police raid, etc.

~~~
BrokenPipe
Have you seen [https://greenaddress.it](https://greenaddress.it)?

Multisignature, deterministic, open source

~~~
jafaku
It seems to be good and they are very active. They also support tipping.

But I'm not sure if I like their 2-of-2 scheme. I would rather have a 2-of-3
one. Maybe I should re-read their paper.

Another thing that bothers me is that it's not very safe by default. The only
way to be safe is if you use a (reviewed) plugin and you don't let it update
automatically. Because if you use Javascript instead, they can take your key
whenever they want. Imagine if the FBI seized their servers and injected
Javascript malware like they did with Tormail.

~~~
BrokenPipe
disclaimer, I'm the founder of GreenAddress ;)

2of2 with time locked transactions means you can prevent double spend and thus
allow instant confirmation.

the android app doesn't update by default and the chrome app doesn't update if
installed from github but otherwise you are right although the web client
remains useful for watch only mode (no keys) or for small amount

these two local and open source wallet clients also verify data before signing
against the electrum network.

we are also working on our api, plugins for popular open source wallets
(including hardware) and a full Java desktop client using bitcoinj.

we also worked hard to make all user transactions non correlatable to users or
us (instant confirmation is out of band) and are working on a bunch of
interesting things on top of it

~~~
DennisP
> 2of2 with time locked transactions means you can prevent double spend and
> thus allow instant confirmation.

Could you explain this more, or link to an explanation?

~~~
BrokenPipe
Sure, I posted the design document/'white paper' here:

[http://blog.greenaddress.it/2014/04/05/firstpost-
updates/](http://blog.greenaddress.it/2014/04/05/firstpost-updates/)

Direct pdf link:

[http://ghgreenaddress.files.wordpress.com/2014/04/greenaddre...](http://ghgreenaddress.files.wordpress.com/2014/04/greenaddressp2sh2of2hd-61.pdf)

------
ScottWhigham
_Two MIT students have raised half a million dollars for a project to
distribute $100 in bitcoin to every undergraduate student at MIT this fall....
The bulk of funding for the project is being provided by MIT alumni with
significant additional support from within the Bitcoin community. The total of
over $500,000 already pledged will cover the distribution of bitcoin to all
4,528 undergraduates_

I guess I don't understand the "Why?". MIT kids are among the most elite
already - why would people donate $100 to each student for that student to
spend as he/she wishes? It's an honest question. As a company owner, why would
you do this? What would be the benefits you would expect to see? I am clearly
missing the "Why?" here. How would you feel if, after this first year, you
found that 50% of the kids never did anything with the BTC? Or if 50% of the
kids gave their BTC away to another student for nothing?

An interesting thing to see at the end was how many students ever logged in to
set up an account, or even check their balance. The funding covers less than
$50,000 for anything else - $452,000+ will go directly to the students. That
leaves less than $50,000 to cover the administration, the distribution, and
the education (a big part). If they get the education part wrong, it will have
wasted a huge chunk of the $452,000.

~~~
roymurdock
The "people" who are donating are MIT alumni and the Bitcoin community. Both
have clear incentives for Bitcoin adoption at MIT.

MIT alumni - A degree from MIT is prestigious because of the amazing work the
community does in creating and developing emerging technologies. Alums had the
chance to work on similar projects in their day. They want to put the
intelligence of the next generation to work. It's an investment in the future.

Bitcoin Community - Bitcoin needs to be trusted in order to be widely adopted.
If a prestigious institution is putting a lot of brainpower into developing
the infrastructure of the payment network, it well lend credence to the entire
scheme and provide a great test case for a USD-Bitcoin integrated economy.

MIT students are smart; they will do something with the Bitcoin, even if they
do just sell it for the $100. If you were given $100 would you give it away? I
don't think so.

------
downandout
Perhaps I'm wrong but wouldn't it make more sense to actually just use the
open source Bitcoin software to create their own altcoin......perhaps call
them Mitcoins? They could give the initial, easily mined Mitcoins away to
students, and spend the $500K on promoting it as a viable altcoin and getting
the major exchanges to add it to their trading mix. With the credence lent to
it by MIT, it would stand a far better chance of success than other altcoins,
and the students that keep their initial coins would likely wind up with far
more than $100.

This just kind of seems like they are squandering the $500K, and are
completely ignoring their greatest asset: their association with MIT. That
name carries alot of weight with the type of people that buy these currencies.

~~~
yincrash
Because this way they can trade each other bitcoins for goods. If they just
gave everyone mitcoins, they would be worthless for a while, and most of the
students wouldn't care to even use them.

~~~
kylec
When I went to college, we could use our ID cards to pay for printing, meals
in the student union, etc. If MIT did something similar and accepted
"Mitcoins" for transactions done on campus, they would give the currency an
inherrent value.

~~~
jlev
There is already a TechCash system for making purchases with an MIT student
ID. All the on-campus food vendors accept it, as well as the student bar. No
need for crypto-currency, there's already a functioning local system.

~~~
hayksaakian
they could pin the value of the techcash currency to the USD/BTC rate

------
chill1
> "Two MIT students have raised half a million dollars for a project to
> distribute $100 in bitcoin to every undergraduate student at MIT this fall."

> "The organizers admit they do not know how students will decide to use their
> bitcoin. However, they plan to use the time between now and when the bitcoin
> is distributed to build up the Bitcoin ecosystem at MIT."

I've been waiting to hear about the next phase of bitcoin development; beyond
exchanges and marketplaces. What would be the easiest way to keep tabs on the
bitcoin projects at MIT? Is there a publicly accessible message board for this
project?

Edit:

Reorganized this post a bit. Didn't mean to side track so much from the
content of the article.

Side note:

Please stop hijacking the native browser scrolling. I don't know if it's
because I ate guláš for lunch, but the custom scroll effect on this site makes
me feel nauseous. Additionally, the site doesn't work at all without
JavaScript. Why? The site could probably very easily be built to static HTML
files for faster load times, decreased load on the server(s), and wouldn't
require JavaScript to render views.

~~~
marlin
Dont understand your issue. the only javascript served by this page should be

    
    
      <script type="text/javascript">
      function byId(id) {
        return document.getElementById(id);
      }
    
      function vote(node) {
        var v = node.id.split(/_/);   // {'up', '123'}
        var item = v[1];
    
        // hide arrows
        byId('up_'   + item).style.visibility = 'hidden';
        byId('down_' + item).style.visibility = 'hidden';
    
        // ping server
        var ping = new Image();
        ping.src = node.href;
    
        return false; // cancel browser nav
      } </script>
    

for the <a> links, as such:

    
    
      <a id=up_7666264 onclick="return vote(this)" href="vote?for=7666264&amp;dir=up&amp;xxxx">
    

and this makes it surely works correctly even without javascript.

~~~
nikentic
Did you make that up? There's like 10 jquery plugins loaded in the bottom of
the body, including jquery.nicescroll

~~~
marlin
No, i misunderstood OP, thought he meant HN, due to his wording.

------
netcan
I once read some account or theory of akkadian proto-currency. Market
officials would issue clay coins stamped with a pictogram in exchange for
goods like cattle or wine. These coins could be exchanged in the market and
then would be be cashed in for the goods at the exchange. At that point the
coin would be smashed. I guess more durable goods like wine could be stored
long term in the exchange and the coins could function as a medium of
exchange.

You could do something similar with bitcoins that might be fun on a campus. A
trusted bank-like-thing issues clay coins that can be smashed to retrieve the
private keys. It might be nice to be able to go from digital back to clay from
time to time. It would be interesting to see if they trade at current bitcoin
prices, how many get smashed, etc. It also adds a layer of anonymity that can
be seen and understood by non tech savvy folks.

~~~
moheeb
I'll give this idea away for free...

Bitcoin Lottery. You buy fortune cookies.

------
gojomo
Part of me is hoping this is a Caltech prank, and when the MIT students try to
redeem their "bitcoins" they just find some obscene taunt left for them inside
the blockchain.

------
uptown
I've read the technical docs for bitcoin, but something I still don't
comprehend. With a distributed network like Bitcoin, how does the initial
network get started? How do the first 2 or 4 or 12 nodes of a network find one
another?

~~~
unreal37
Satoshi posts a link to the software to a cryptography forum, and gets 2-3
other people to download it and try it.... and then people begin to dream of
the possibilities...

~~~
uptown
Right - but how do those first nodes "find" one another from a technical /
networking / communication standpoint?

Edit: I'll answer my own question.

Apparently the current method is to use DNS seeds. Known relatively-permanent
node addresses are hardcoded into the client software in order to enable
initial connectivity to the network. Once they achieve this initial
connection, they're able to obtain additional addresses from the nodes already
operating on the network.

After this initial network connectivity is achieved, the addresses are saved,
so upon relaunch re-connect attempts are made to the database of previously
found nodes. If these fail, then you fallback to the DNS seeds to start the
process over.

IRC used to previously be the communication network used to initiate the
client connectivity, but this has been deprecated since the network is now
more self-sufficient.

[https://en.bitcoin.it/wiki/Satoshi_Client_Node_Discovery](https://en.bitcoin.it/wiki/Satoshi_Client_Node_Discovery)

[http://stackoverflow.com/questions/19956088/how-do-two-
bitco...](http://stackoverflow.com/questions/19956088/how-do-two-bitcoin-
clients-discover-each-other)

~~~
nwh
That's completely correct. In order the node tries it's inbuilt knowledge of
the network, the falls back to DNS seed nodes to discover peers, then falls
back to hardcoded nodes if all of those fail. If no single peer can be
contacted the node is dead in the water, and needs manual intervention to help
get bootstrapped.

------
patcon
I like the premise, but it's pretty evident that MIT will then have the
highest concentration of naive Bitcoin users on the planet. Not sure what sort
of folks might notice this and focus nefarious efforts there...

------
quantabytes
It would be really interesting if the organizers recorded and tracked the
Bitcoins that are distributed in this way using the block chain. It could be a
financial parallel to the MIT Reality Mining dataset:
[http://realitycommons.media.mit.edu/realitymining.html](http://realitycommons.media.mit.edu/realitymining.html)

------
syntheticnature
Both the announcement and the comments here focus on the amount in USD. When
will (the majority of) that half-million USD be converted to BTC? (Via
exchange? Via swap with an individual or entity holding a bunch of coins? Nice
way to hedge liquidity if you've got the BTC.) What does it say that it isn't
already done, and that it wasn't "each MIT student will receive 0.2 BTC" (or
whatever a recent exchange would be for $100)?

There is probably more information available without having to contact those
organizing it, and the article was written for media press-release ingestion,
but I'm surprised to see no comments on these facets here (at the time of
writing, and HN seems to be acting up a touch so I've been trying to submit
for a bit after I wrote this).

~~~
nhaehnle
My bet is that the vast majority of those funds has been in the form of BTC
for a long time, and a large part has _always_ been in the form of BTC.

Think about it: You're sitting on a large BTC mining fortune, and you've been
watching the price of BTC slowly but surely decline over the last few months.
What do you do?

Pooling your BTC with others to fund something like this in the hope that it
will cause the price to go back up again in the longer term sounds like a
really good investment if you're in this situation.

------
gesman
I launched free Wordpress plugin allowing anyone to build online store that
accepts bitcoins (along with dollars) for physical and digital goods:

[http://wordpress.org/plugins/bitcoin-payments-for-
woocommerc...](http://wordpress.org/plugins/bitcoin-payments-for-woocommerce/)

Advantages:

\- 100% proceeds goes to you (no middleman service).

\- 100% secure and hack proof - impossible to lose bitcoins even if everything
on your store is hacked. It utilizes Electrum Master Public Key logic that
generates receive-only addresses without need of any private keys.

\- 100% free (wordpress + WooCommerce + bitcoin plugin - all free)

With more people getting access to bitcoins - it's the right time to offer it
as a payment method as well.

Enjoy!

------
eliaskg
This is great news for the community (and for the students)! I wonder if MIT
is actively investing in coins or using pre-mined ones.

------
hessenwolf
So, half a million dollars to raise the demand for bitcoin, while, as ever,
the supply remains roughly the same.

Gosh, I wonder why governments like to maintain a flexible money supply?

I am not saying that that is the intention of the organisers. I am just
postulating it as a thought experiment, on one of the downsides of having a
fixed money supply.

Not that there are not also upsides. But there are also downsides.

~~~
baddox
That's a tired old criticism of Bitcoin. The creators of Bitcoin are well
aware that they're basing the currency on financial principles not accepted in
mainstream economics.

~~~
hessenwolf
It might be old, but money supply is far, far from a tired issue, whether with
respect to bit coin, or to fiat currency.

------
panon
Prediction: Students will a) Buy drugs on the internet. b) Exchange for $
asap. c) Sit on it and probably forget/lose it.

------
stevewilhelm
> a project to distribute $100 in bitcoin to every undergraduate student at
> MIT this fall.

They probably should have studied how habits are formed. $100 is not enough
money to change people's shopping behavior.

It will more likely provide the vast majority of the students a frustrating
first impression of digital currencies.

~~~
wyager
>$100 is not enough money to change people's shopping behavior.

It's about getting them interested, not necessarily changing their behavior
long-term.

------
3pt14159
When I first read the title I thought that MIT was going to set up a large
mining project, partially as a research piece, and partially to counter
balance the very large mining pools that are risking the 51% attack. Which I
was very excited about.

This is cool too though.

~~~
roymurdock
"It is often asserted (for example, in the Bitcoin white paper [22]) that a
cartel can double-spend Bitcoins. In a strict sense, this is true: a cartel
can spend a Bitcoin by paying it to a player Alice, receiving goods or
services, and then shifting the consensus choice of history to a branch where
that coin is instead paid to a different player Bob. However, we argue that
double-spending by a cartel has a limited payoff. Bitcoins have value because
people are willing to trade them for goods and services. If players were
unwilling to accept Bitcoins for trade or unwilling to spend Bitcoins for fear
of having their payments nullified, the value of Bitcoins would diminish
significantly as players lost confidence in the system.

Worse, because players are encouraged to generate a new identity for each
transaction and because identities are not linked to any side information,
players cannot easily determine whether a proffered payment is coming from the
double-spending cartel or an honest user. Thus, a rational player should
refuse to accept any payments when there is a significant threat of double-
spending. As a cartel must outmine the entire Bitcoin network and thus
outspend the entire Bitcoin network for as long as it would remain a cartel,
we believe it is very unlikely that a cartel could double-spend enough to
recover the cost of the attack." \- The Economics of Bitcoin Mining in the
Presence of Adversaries (11-12)

~~~
dragonwriter
This presumes that the only reason a double-spend cartel would exist would be
to make a direct profit from double spending, rather than, e.g., being
sponsored by an entity whose financial or other interests were threatened by
the viability of bitcoin and who thus wanted to undermine trust in bitcoin
(to, perhaps, make a profit _outside_ of bitcoin) rather than profiting
directly through double spending. When you consider that motivation, the trust
factor cited in that critique as making a cartel attack _less_ viable based on
how undermining trust in bitcoin also undermines the ability to make a direct
profit by double spending is irrelevant (or, rather, illustrates exactly why a
double-spending cartel may be attractive to a bitcoin-hostile entity that
wants to undermine trust in the bitcoin system.)

~~~
roymurdock
Agreed. The authors make this point in order to move on to the main analysis
of the paper: The Goldfinger attack.

"As described above, a 51% cartel attack is unlikely to generate enough reward
within the Bitcoin economy to be worthwhile to the attacker. However, this
does not rule out the possibility of a 51% attack that aims to destroy the
Bitcoin economy in order to achieve utility outside the Bitcoin economy. We
call this the Gold nger attack after the character in lm who tries to
undermine U.S. currency by ruining its gold backing [15]. There are at least
three possible motivations for a Gold finger attack. First, a government or
institution might want to block Bitcoin transactions, to enforce the law,
deter money laundering, or achieve some other institutional goal. Second, a
non-state attacker might seek to gain some political or social goal, perhaps
as a form of social protest (such a model was previously postulated by Becker
et al. under the name \Occupy Bitcoin" [6]). Third, an attacker might seek an
investment gain, for example by taking large short positions in Bitcoins so as
to profi t if the value of Bitcoins is diminished. In all of these cases, the
attacker must achieve enough utility to justify the substantial cost of an
attack. We agree with Becker et al. that it is unlikely that a protest
movement could muster the resources to launch a successful attack. And at
present it does not appear possible to acquire a short position on Bitcoins
that is large enough to justify an attack."

One of the best papers published on the game theory of Bitcoin to date in my
opinion.

[http://weis2013.econinfosec.org/papers/KrollDaveyFeltenWEIS2...](http://weis2013.econinfosec.org/papers/KrollDaveyFeltenWEIS2013.pdf)

------
agalaria
This will definitely help bitcoin to grow as more people get involved with it
but it will also create lot of problems like black market will get attracted,
stealing of coins will start. Yes, this move is required but everyone involved
needs to careful.

------
tmalsburg2
This initiative reminds us painfully that Bitcoin still hasn't found its kill
application (apart from Silk Road). If it had, they wouldn't have to give away
BTC for free but these MIT students would queue up to buy BTC.

------
ragis
[http://cryptocurrencylive.com/newest](http://cryptocurrencylive.com/newest)

Crypto Currency Live is a social news and blog aggregator for Bitcoin, Altcoin
and Crypto Currency Mining

------
bdcravens
I wonder how many will turn around and blow it in 5 minutes on just-dice?

------
kolev
I have a lot more than $100 in BTC and the only good use so far is
speculation. With $500K, they should've funded a Bitcoin project hackathon
instead and get some fruit at the end.

------
13throwaway
This is a really good idea. Everyone knows everyone else has 100 more dollars
in their pocket, and the smart kids will come up with business ideas to collet
the bitcoins.

------
platz
Will they be able to avoid the same fate that happened to auroracoin?

~~~
mcintyre1994
It seems harsh to downmod this, I don't think it's a troll? Auroracoin was a
new coin technically independent of all the others, with its own blockchain.
That was the problem - there wasn't enough mining power to secure its
blockchain. In this case, these are just normal Bitcoins - secured by the
enormous hashing power of that blockchain.

~~~
platz
Ah, I misunderstood - I thought they were getting their own coin. If it's just
bitcoins then it's not an issue.

------
marlin
Students get 100$ each for silk road shopping, damn!

~~~
mootothemax
_Students get 100$ each for silk road shopping_

They might also get a nasty lesson in the traceability of BTC, depending on
how the BTC's distributed to them.

~~~
marlin
swap BTC for LTC. swap LTC for other BTC's, win.

~~~
ISL
Traceable through two blockchains, lose.

~~~
kylebrown
But only traceable by people who have access to the BTC/LTC exchange's
database.

------
jebblue
MIT joins the Bitcoin Ponzi scheme.

~~~
baddox
A Ponzi scheme is an investment operation where the founder pays returns to
initial investors with the funds from new investors, and fraudulently keeps
this fact from investors. So Bitcoin is not a Ponzi scheme.

~~~
patmcc
It may, however, be a pyramid scheme, where early adopters can only profit by
getting others to invest at ever-higher prices.

History will either record Bitcoin as a currency or a pyramid scheme, and
anyone who says they're sure which one it'll be is either a fool or a liar.

~~~
baddox
Yes, but only in the same sense that every currency that has greater face
value than the value of its physical ingredients is a pyramid scheme.

~~~
jebblue
The US dollar is backed by Americans. A bit coin is backed by who?

~~~
vbuterin
Bitcoin users. Which is a larger population than that of many countries that
have national currencies.

------
jonrimmer
Can't believe they didn't call this "MITcoin".

