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Announcing the MIT Bitcoin Project (mit.edu)
328 points by jordn on Apr 29, 2014 | hide | past | web | favorite | 139 comments



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.


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.


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.


Seeing whether the students sit on it is likely valuable data that is part of what they're trying to understand :)


It would be beneficial to Bitcoin if more people were to buy some and sit on it. Right now the market cap is only around 5 Billion. If BTC is going to realize the promise of making transactions easy then the total market cap needs to be large enough to absorb large buys and sells w/o causing huge movements in the price.


You want transaction volume, not total value outstanding, to help a market absorb larger transactions. The impact of a particular trade on a market is determined by the amount of trading going on (in particular, the size of the unfilled bids and the depth of the bids -- how much is available to trade, and how far away from the current market price is each potential trade.) At its most simple this is represented by the bid/ask spread, the gap between where you can buy and sell at a given moment - in more liquid markets, this gap is smaller.

Generally, a market where there are lots of transactions going on is going to have a bigger set of bids and asks right near the most recent transaction price. If a market is thin, than a large sale, for example, might have to chew through a lot of bids and push the price way down to get done.


large buys and sells will cause huge movements in thinly traded markets in which people "buy some and sit on it" (ie don't engage in transactions). I don't understand what you're getting at?


The larger the total BTC market cap the larger a large buy will have to be before it looks large.


False. A large buy order in a market without many trades will look large, no matter how large the bank accounts are. If you have a market with each participant holding onto $10M, but doing only a few $1 trades per day, a $10,000 trade will be large.


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.


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


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.


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


And not all computer geeks properly store their Bitcoins either.


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.


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/. It's amazing.


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.


Electrum has an airgapped mode, where you sign the transaction and then transfer the signature to the client. I'd like a feature where the airgapped computer displays a QR code and you just scan it, it would be very handy.

About misplacing the keys, Electrum has deterministic wallets, so you can just print the key and store it somewhere (or remember the ten words it gives you), and your wallet is never lost.


Have you seen https://greenaddress.it?

Multisignature, deterministic, open source


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.


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


> 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?



I've put a warning that suggests to users to use a local app!


That's great, thanks.


You underestimate the technical competence of MIT's gender studies, anthropology, and theater students :-)


People in general overestimate the technical competence of an average MIT computer science, engineering, mathematics student.


When I was at CSAIL, I got one of those targeted phishing emails like "YOURE MIT INBOX IS FULL!!11!!" full of typos and painfully fake. I laughed it off, thinking MIT CS students would be too smart for this, but I was surprised it seemed to legitimately come from a @mit.edu address. It turned out someone was hacked, their address was used to send this, and apparently various people had fallen for it.


And not only computer geeks should know how to secure their data. The entire world is becoming data. The layman needs to know how to do it too.


I keep my cash on hand folded up in a leather wrapper in my pocket. I recognize this isn't super-safe so I pay someone a small fee for the privilege of storing most of my money in a giant commercial vault and/or on computer systems protected by industry experts, tons of regulation, insurance, and a full faith backing by the United States federal government. I get this with practically no skill or know-how. In practice, it's really the only way reasonably convenient to store and manage my money. Nothing like this exists for bitcoins. The idea that a layman is going to reasonably protect their bitcoin assets is silly.


> The idea that a layman is going to reasonably protect their bitcoin assets is silly.

Take wallet.

Encrypt wallet.

Put sufficiently complex password on wallet (ie, no dictionary attacks).

Wow, you suddenly have a bank. Feel free to back up that file all you want, hell, if your password is solid you can publish it publically. I wouldn't, since you don't have to, but you still won't password crack it any time soon.


What's a wallet? A digital one? What the hell? Wait, there's a paper one too? What's the difference? Store the paper ones in a vault somewhere and use my digital one? How does that work? How do I encrypt these wallets? What is encryption? And I'm responsible for storing my wallets? I can't just pay someone to take care of them for me? Oh, I can, ok, are these companies insured and trusted? Let's just take a step back, how are Bitcoins stored in these wallets? I mean, what is a Bitcoin, really?

In other words, you're being disingenuous as to how simple it really is to get set up for Bitcoin. There are countless threads on Reddit and the like by confused geeks asking for advice and instructions on wallet generation/encryption/storage/etc.


They're MIT students; just because they aren't STEM majors doesn't mean they are idiots. These are concepts that should be within their grasp, even if it is too complex for the general public.

Hell, throw a brief rundown into whatever their equivalent of "University 101" is if it really does prove to be a problem.


Can they follow an online tutorial? Sure. Could they find converting their cash to BTC with the proper safety measures in place too cumbersome a process to make the experiment worth their time and, if not careful, their money? Absolutely, and that doesn't make them idiots.

Some people really like tinkering with new tech and are willing to put up with a lot. Others have a low threshold of frustration and might not see it as appealing. This isn't about intelligence, but ease and convenience. And anyone that says with a straight face that setting up BTC for even the average MIT student is a simple endeavor is severely underestimating the complexity and risks involved, especially when the alternative is using the established and relatively risk-free system you've grown comfortable and intimately familiar with for years.


But they're not considered particularly exceptional in those areas. You don't go to MIT for a primary degree in those fields.


I agree with you, but I don't see how it matters in this context. The GGP implied that MIT students who don't protect their bitcoins "deserve" to have them stolen. The assumption by the poster seemed to be that MIT students would necessarily be technically savvy enough to protect their bitcoins. That's definitely not necessarily true since there's plenty of non-technical majors offered at MIT.


I think losing $100 given to you for nothing (comes from donations of alumni) because you didn't know how to secure it properly would be a very cost effective way to motivate someone to learn the basics or ask a friend for help.

Better $100 of bitcoin than your credit card information.


My credit card has fraud protection, so I would rather lose my cc info than $100


My assumptions are that (a) they're very intelligent, and at least have some technically-savvy friends, and (b) losing bitcoins that were given to them for free leaves them no worse off than if nobody gave them bitcoins in the first place.


They will just think Bitcoins are not secure.


Have you seen how bitcoin exchanges store their wallets? They don't do it securely either.


5. Lots of snail mail will suddenly start to be received by the MIT post office, sent from exotic locations such as Canada, Tijuana and Detroit

6. Lots of rich kid's dads will be drawn into Bitcoin, inflating the bubble further.

Sounds like win-win to me.


If you think selling "elevator passes" is profitable, wait until you can hit up freshmen for BTC.


I assume part of the point is to offset your number 4 with the above number 3: if BTC are stolen because the process of securing them is too difficult, one of the students might come up with a better method of securing them.

BTC has a lot of problems to solve before it can have a chance of becoming mainstream. Giving 5000 undergrad hackers an incentive to solve those problems is genius.


It would be nice if someone who has a world class CompSci program and perhaps a "captive" audience would spend some time working on making it easier for the normal person to use safely.


Just give everyone a paper wallet. Problem solved.


Cash is still a better medium of exchange in a localized black market than bitcoin, since cash is actually anonymous.


But much harder to store (hide), transport and spend in significant quantity.


But for the MIT undergrad black market I don't know if there would be the quantity or type of goods that would require a student to "hide" a significant quantity of money.


I'm thinking

0. A few smart undergrads become briefly the most popular people on campus for passing out $50 bills to a large portion of the student body.


4. Students figure out how to cash out to dollars and spend it on booze.


I would think that the cost of any single merchant converting their payment systems to accept bitcoin payment negates the potential value of doing so. It is a cool idea but I'm not sure $100 each is enought to move the needle.

I'm, of course, assuming the students don't all spend it at the same place.


Also assuming students don't decide they like bitcoins and get more of them.

One cheap way to set up is Coinbase. No fees for the first million dollars in revenue, no chargebacks, cash out to dollars every day, and they've got a point-of-sale app for your smartphone.


I would expect 1 and 2 to be driven by 3 to a large extend.


> the black market on campus will (surely) start accepting it

This made me guffaw. The black market on campus? Would that be the Hob where Katniss Everdeen sells her poached turkeys while the corrupt Capitol police look away? Are Jay and Silent Bob behind the campus bookstore selling blunts, stolen books and test answers? Is there a darknet on campus accessible only to Angelina Jolie style hackers? Maybe you meant some kind of informal marketplace on campus where people buy and sell drugs and stolen merchandise but I don't think such a place exists on MIT. It's mostly hard working students trying to make it through school. I think you've been watching too many movies.

Edit: I'm totally ok with this comment being downvoted, I would have downvoted it myself, but I couldn't resist.


Uh, you do realize that "the black market" is a term for underground exchange, right? Not a literal location.

As with any college campus, MIT surely has a healthy black market (buyers and sellers of alcohol, drugs, and various other illegal goods & services). With every student having Bitcoin, some will surely try to use it on said market.

Or perhaps you also thought the stock market was a building in downtown Manhattan...


Wall Street was where the original NY stock market place was. There is a commemorative statue there now.


Ha, isn't alcohol illegal for under 21s, AKA most college students? I'd be stunned if there isn't a way to buy drugs on campus too.


So MIT alumni selling drugs, will accept illegal transactions which are displayed on a virtual leather board where everyone has access and can never be erased?

I would expect MIT students to be smarter than that. Not to mention that most students will prefer to pay in USD than BTC.

ps. Bitcoin as a form of payment, has a really questionable success. If a virtual currency is going to be accepted by the public, will have to be state-backed in some way. So bitcoin as a currency, might be (extremely) interesting, but I'm sure 100% it will never be able to replace FIAT in it's current form.


A virtual ledger board that, with a small amount of effort, contains no information about the physical person who controls a wallet. Of course, MIT could implement the Bitcoin handout in such a way they they know the initial recipient of each wallet.


Yes it's probably a tiny minority who buy it through off campus drug dealers and friends. Such as there are drug dealing trends, they will happen across MA, New England and the general area and will happen regardless of bitcoin experiments at MIT. I'm rolling my eyes at this notion of a single purpose black market, hidden in the depths of the halls of MIT, the ire of faculty and administrators alike. It's such a silly idea. Might make a great young adult novel plot though.



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.


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.


I think Google similarly gives employees some amount of ad spend just to get them more knowledge and buy in of the system. Not unreasonable for large BTC exchanges to want to pay to bring in users like this. May even be more cost effective than ads for bringing in lifetime users worth quite a bit.


Not until they can make one on a cryptocurrency platform like Ethereum. Right now building your own altcoin is too much overhead, it's risky security wise, and you have to put it on an exchange, otherwise people won't be able to trade it.

http://tpbit.blogspot.ca/2014/04/smart-contracts-and-demise-...


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.


That sounds like an awful idea WRT some bright spark will duct tape together a table covered in FPGA boards, take over 51% of the likely extremely small local altcoin network, then temporarily own every laser printer, soda machine, and cafeteria on the campus. Unless their altcoin gets into some weird whitelisting situation where some P2P hosts are more equal than other P2P hosts, which is screwed up.

On the other hand it sounds like a brilliant idea because there is some volatility in the BTC market, so you'll get some peculiar behaviors, where the infrastructure was originally implemented to get the lab monitors and food service workers out of the cash handling business, sometimes a laser printer page will cost five cents or ten cents under BTC or they'll be playing games with dynamic costs such that you may get considerably more paper or food at certain times of the semester than others if you provide a fixed qty of BTC.


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.


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.


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.


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


Because their goal is to provide students with a useful infrastructure they can creatively extend, not a copycoin-pump-and-dump.


Because the usefulness of money is proportional to its liquidity.

If you buy supplies with USD, and sell them for MITCoins, you are critically dependent on a small bid/ask spread, and there won't be if the only holders are MIT students.

Consequently, you would be able to choose to buy for USD at a store, or for MITCoins and pay a markup that is equal to the spread (since the buyer needs to pay the ask (to get his MITCoins) and the seller gets paid the bid (to get USD to buy new supplies)).

This would mean that no trading would ever begin.


I agree, in using a cloned 'MITcoin', there is less danger of serious money being stolen or lost, (assuming the coins are only used for low-value services like photocopiers or vending machines, etc). This would give a substantial community a gentler intro to how Bitcoin works.


There was a similar idea with Auroracoin.

Last I heard it was forked by attackers and destroyed.

Smaller coins leave you more vulnerable to shenanigans.

UPDATE:

Correction, AUR issued a patch, was not destroyed:

https://bitcointalk.org/index.php?topic=552895.0

Still, smaller coins are tough to manage.


> "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.


>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.

Agreed. The custom scrollbars are awful too. I wish browsers had a way to prevent certain things from being overridden (scrolling, right click, scrollbars, keyboard shortcuts) on a user configurable basis.


Fixing this right now. Sorry about the annoyance!


Plus it kills swipe-to-go-back in Safari.


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.


Marlin, I believe he is talking about the linked page not the HN page.


Ah, i didnt realize that by the wording of OP.

also, thx someone for downvoting a helpful attempt.

i see the cancer found HN also


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


Removed most of these. Sorry about that.


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


> Please stop hijacking the native browser scrolling.

Or just stop hijacking my browser. Why do I need Javascript to read an announcement?


Addendum to sidenote: the site also overrides Ctrl+PgUp/PgDn, which is highly frustrating.


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.


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

Bitcoin Lottery. You buy fortune cookies.


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.


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?


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...


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

http://stackoverflow.com/questions/19956088/how-do-two-bitco...


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.


Short version: some IPs/domain names are hardcoded in the source code. Long version: https://en.bitcoin.it/wiki/Satoshi_Client_Node_Discovery‎


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...


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


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).


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.


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...

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!


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.


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.


If the supply of the currency were inflated to "print" money to give to MIT students, people would rightly protest. It would be a simple wealth transfer from the overall population of currency holders to a small group of students who are already some of the most highly advantaged people alive in the world today.

One purpose of this project is clear: to promote Bitcoin (or cryptocurrencies generally). The value of Bitcoin is higher since this announcement was made, regardless of what the price is.


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.


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


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


> 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.


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

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


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.


"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)


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.)


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...


So, a cartel would not double-spend because it would cost them long term? The premise of the article is really that people don't act in their short-term interests, or did I not understand?


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.


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.


http://cryptocurrencylive.com/newest

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


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


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.


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.


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


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.


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


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


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.


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


Traceable through two blockchains, lose.


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


MIT joins the Bitcoin Ponzi scheme.


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.


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.


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.


... and in the same sense that most things humans do are [pyramid] schemes :-)


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


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


The phrase "backed by Americans" is very hand-wavy.


Earthians, gaians, world citizens ;)

Including me.


Humans with Internet access


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




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