In 2014 Dan Elitzer and Jeremy Rubin introduced the “MIT Bitcoin Project”.
Christopher A. Maynor
Jeremy Rubin was studying computer science and electrical engineering in his sophomore year when he decided to give $ 100 worth of bitcoin to every student at the Massachusetts Institute of Technology.
Seven months later – armed with half a million dollars in donations from alumni and Bitcoin enthusiasts – Rubin offered just that. 3,108 students took him in.
This was back when the world’s most popular cryptocurrency wasn’t quite as popular, trading at around $ 336. If all recipients of this free Bitcoin had left their crypto wallets dormant, the collective “MIT Airdrop” would have been 44.1 million US dollars richer than today’s prices.
But some students didn’t hold out.
Researchers following the project, including Christian Catalini, now co-founder of the Facebook-initiated stablecoin project Diem, say one in ten paid off in the first two weeks. By the end of the experiment in 2017, one in four had paid off. The creators of the experiment then stopped tracking transactions within the cohort.
Van Phu, now a software engineer and co-founder of the crypto broker Floating Point Group, is still kneeling on his knees for spending much of his bitcoin on sushi.
“One of the worst things and one of the best things about MIT is this restaurant called Thelonious Monkfish,” said Phu. “I spent a lot of my crypto to buy sushi.”
Phu wasn’t the only one to bleed his virtual coins to death in this restaurant hotspot on campus.
Quantitative trader Sam Trabucco, who also took part in the experiment, estimated that half of the people he knew were spending their crypto-loot on fish.
“It was the only restaurant in Cambridge that accepted Bitcoin at the time, and it was a pretty popular place,” he said. The restaurant has since changed its name and discontinued its Bitcoin payment policy.
The MIT experiment
Rubin was in the middle of a lengthy legal battle with the New Jersey Attorney General when he first came up with the idea for the Bitcoin giveaway.
Unlike most 19-year-olds, Rubin ventured to friends that state officials had accused him of being a “hardcore, persistent cyber criminal” who “installs malware on people’s computers.” But Rubin says he just started a bitcoin mining program called Tidbit. The project had just won an innovation award at a local hackathon called Node Knockout, and Rubin, now CEO of Bitcoin research and development lab Judica, was proud of what he had built.
The episode ended with Ruby being erased, but as it happened he noticed his friends’ blank looks every time he mentioned the word “bitcoin”.
“I thought, ‘This is MIT. I thought everyone was super innovative.’ And I realized it really wasn’t that widespread at the time, “said Rubin.
And so the Bitcoin experiment was born.
At the end of October 2014, Rubin and his other project manager Dan Elitzer, who was an MBA student at Sloan at the time, opened their matriculation. Students who wanted $ 100 worth of Bitcoin had to fill out some questionnaires and look through teaching materials.
Jeremy Rubin toured the NYSE in 2013 while doing an internship.
“We wanted to spread Bitcoin more in the world and we wanted to spread the technology,” said Rubin. “We also wanted to investigate what it means to distribute a new asset.”
Students who wanted to participate also had to set up their own crypto wallet, which was difficult enough at the time to discourage participation. Nevertheless, in the end 70% of the students jumped through all the hoops.
Phu was among the students who started a sideline opening up crypto wallets for those who didn’t want to spend the time figuring out how to do it and were willing to give up a percentage of their bitcoin as a fee for services provided.
“Many students would pay half the bitcoin to the other students if they set it up on their behalf,” Phu said. He says he helped ten to twelve people set up crypto wallets in exchange for a commission paid in Bitcoin. It took some of the sting out of the fact that he spent $ 100 worth of bitcoin – more than $ 14,000 today – on two sushi dinners.
Trabucco says that as a student he didn’t think much of the project, even though he managed to triple his bitcoin handout in online poker.
“Half of the people I knew actually registered it as an event,” said Trabucco. As for him, he thought Bitcoin was cool, but “didn’t really think it was going to be the future of finance”.
Phu, Rubin, and Trabucco all declined to share how much they keep and how much crypto they have accumulated since their days on campus.
Massachusetts Institute of Technology (MIT) campus in Cambridge, Massachusetts
(Photo: Bloomberg / Getty Images)
Where all the bitcoins went
When CNBC spoke to Catalini, he took a walk to break up the twelve to fourteen hours a day he spends on Facebook with Zoom.
One of Catalini’s enduring findings is the fact that Bitcoin simply didn’t work as a means of payment on campus.
“Even then, the technology was pretty unfriendly,” he said. “Even in a fairly tech-savvy community like MIT, it was surprising to see how much work it really was then to use Bitcoin.”
But this inability to spend money was probably the best.
“The fascinating thing is that, in a way, the MIT students did everything right. The vast majority stuck to their Bitcoin as an investment. And maybe it sounds obvious, given the dramatic rise in price. But I think in 2014 it was like it’s not at all clear that something that was worth $ 250 at the time would be worth more, “he said.