Key takeaways:
- Dan Elitzer and Jeremy Rubin started Bitcoin experiment in October 2014, which saw more than 3,000 undergraduate MIT students receive 100$ worth of BTC
- 10% of students converted BTC to fiat in the first two weeks, while by the end of the experiment in 2017 25% had cashed out
- A large number of Bitcoin went towards buying sushi at a restaurant on the campus, which is somewhat reminiscent of the famous ‘Bitcoin Pizza’ story
When Jeremy Rubin, then a computer science and electrical engineering sophomore enrolled in the Massachusetts Institute of Technology (MIT) in 2014, he expected that most of the students on the campus would be familiar and excited about Bitcoin. When he found out that wasn’t the case he garnered the support of crypto enthusiasts to collect donations, which he would use to give each interested student $100 worth of BTC. 3,108 undergraduates took him up on the offer and so the Bitcoin experiment was born.
The Bitcoin experiment
Rubin and his project partner Dan Elitzer prepared a questionnaire for each of the students to complete and provided educational materials to guide students on their Bitcoin journey. Rubin said that he was driven by the idea of spreading a new technology and at the same time he wanted to learn about the intricacies of distributing a new asset.
“We wanted to get bitcoin out in the world more, and we wanted to spread the technology. We also wanted to study what it means to distribute a new asset.” – Jeremy Rubin on the MIT Bitcoin Project
Despite MIT being on the cutting edge of science and technology, most students were unfamiliar with the idea of cryptocurrencies and had no idea about the future prospects of Bitcoin. A tenth of the BTC recipients cashed out their funds within the first two weeks.
However, a small minority took advantage of the opportunity and provided “Bitcoin customer support” of sorts by setting up crypto wallets in exchange for a commission paid in BTC. Van Phu, who later became a co-founder of crypto broker Floating Point Group, recalls setting up more than 10 people with crypto wallets at the time.
“A lot of the students would pay the other students half of the bitcoin if they would set it up on their behalf.” – Van Phu, co-founder of Floating Point Group and a participant of the BTC experiment
Some early adopters used their Bitcoin on sushi, others held on to it as an investment
Phu also recollects spending a huge amount of BTC on sushi, which he regrets to this day. In fact, spending BTC on buying fish was very commonplace as about half the people who received free crypto frequently went to Thelonious Monkfish, a sushi restaurant on the MIT.
Spending BTC to buy sushi is very reminiscent of the famous ‘Bitcoin pizza’ story. In 2010 programmer Laszlo Hanyecz spent 10,000 BTC on buying two pizzas from Papa John’s, which coincidentally marked the first time BTC was used in a commercial transaction. To make matters worse, Hanyecz reportedly made additional orders following the original one. Later on, the 22nd of May become celebrated in the crypto community as “Pizza Day”. At current prices, the two pizzas were worth approximately $445 million.
Cristian Catalini was among the researchers who were paying close attention to the experiment. By 2017, when the project was over as the transactions were no longer being tracked, Catalini says that 25% withdrew their crypto funds to fiat. This means that most students held on to their BTC. A hundred US dollars worth of BTC in 2014, is about $18,000 in today’s prices.
“What was fascinating is that in a sense, the MIT students got it right. The vast majority held on to their bitcoin as an investment. And maybe it sounds obvious given the price has appreciated so dramatically. But I think in 2014, it wasn’t clear at all that something that was worth at the time, I think $250, would be worth more than that.” – Cristian Catalini, co-creator of Diem
Several participants of the experiment give credit to the project as the reason for their involvement in crypto later on in life. For instance, Rubin became the CEO of bitcoin research and deployment organization Judica. The experiment’s co-head Dan Erlitz co-founded Nascent, a global, multi-strategy investment firm focused on crypto and open finance. Van Phu co-founded a cryptocurrency brokering firm. Sam Trabucco is CEO of Alameda Research, which specializes in Bitcoin and altcoin trading.
There are certainly other, less publicly known MIT undergrads of 2014 who also have their lives changed by a relatively small initial BTC donation. Having been introduced to Bitcoin early on and having a crypto wallet already set up certainly made it easier to establish a presence in the crypto industry and make a career out of it.
