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.
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.
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.
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.
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.
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
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.
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.
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 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.
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.
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 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.
> 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...
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.
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.