Jeremy Rubin was a sophomore studying computer science and electrical engineering when he decided that he wanted to give every undergraduate student at the Massachusetts Institute of Technology $100 worth of bitcoin.
Seven months later – armed with half a million dollars in donations from alumni and bitcoin enthusiasts – Rubin offered to do just that, and 3,108 undergrads took him up on it.
This was back when the world’s most popular cryptocurrency wasn’t quite so popular, trading at around $336. Had all recipients of this free bitcoin let their crypto wallets sit idle, the “MIT Airdrop” collective would have been $44.1 million richer by today’s prices.
But some students didn’t hold on.
Researchers tracing the project, including Christian Catalini, now co-creator of the Diem stablecoin project initiated by Facebook, say that 1 in 10 cashed out in the first two weeks. By the end of the experiment in 2017, 1 in 4 had cashed out. The experiment creators stopped tracking transactions among the cohort after that.
Van Phu, now a software engineer and co-founder of crypto broker Floating Point Group, is still kicking himself for spending a lot of his bitcoin on sushi.
“One of the worst things and one of the best things at MIT is this restaurant called Thelonious Monkfish,” said Phu. “I spent a lot of my crypto buying sushi.”
Phu wasn’t alone in hemorrhaging his virtual coins at this campus dining hotspot.
Quantitative trader Sam Trabucco, who also took part in the experiment, estimated that half the people he knew spent their crypto spoils on fish.
“It was the only restaurant in Cambridge that was accepting bitcoin at the time, and it was a pretty popular spot,” he said. The restaurant has since changed its name and retired its bitcoin payment policy.
The MIT experiment
Rubin was halfway through a protracted legal battle with the New Jersey attorney general when he first got the idea for the bitcoin giveaway.
Unlike most 19-year-olds, Rubin was venting to his friends about the fact that state officials had accused him of being a “hardcore, hardened cyber criminal” who was “installing malware on people’s computers.” But Rubin says he had simply launched a bitcoin mining program called Tidbit. The project had just won an innovation award at a local hackathon known as Node Knockout, and Rubin, now CEO of bitcoin R&D lab Judica, was proud of what he had built.
The episode ended up with Rubin being cleared, but as it was happening, he kept noticing the blank stares from his friends each time he mentioned the word “bitcoin.”
“I thought, ‘This is MIT. I thought everyone was super cutting-edge.’ And I realized that no, it really wasn’t something that was all that widespread at that point,” said Rubin.
And so the bitcoin experiment was born.
In late October 2014, Rubin and fellow project leader Dan Elitzer, then an MBA student at Sloan, opened up enrollment. Students who wanted the $100 worth of bitcoin had to complete a few questionnaires and review educational materials.
“We wanted to get bitcoin out in the world more, and we wanted to spread the technology,” said Rubin. “We also wanted to study what it means to distribute a new asset.”
Students wanting to take part also had to set up their own crypto wallet, which at the time was hard enough to discourage participation. Still, in the end, 70% of students ended up jumping through all the hoops.
Phu was among the students who started a side hustle opening up crypto wallets for those who didn’t want to spend the time figuring out how to do it and were willing to yield a percentage of their bitcoin as a fee for services rendered.
“A lot of the students would pay the other students half of the bitcoin if they would set it up on their behalf,” explained Phu. He says he helped somewhere between 10 and 12 people set up crypto wallets in exchange for a commission paid in bitcoin. It’s somewhat taken the sting out of the fact that he spent $100 worth of bitcoin — worth more than $14,000 today — on two sushi dinners.
Trabucco says that back when he was a student, he didn’t think that much of the project, though he did manage to triple his bitcoin handout playing poker online.
“Half the people I knew actually registered it as an event,” said Trabucco. As far as he was concerned, he thought bitcoin was cool, but “didn’t really think it was going to be the future of finance.”
But already having a crypto wallet did lower the barrier to entry to the cryptosphere later in life. Trabucco now runs Alameda Research, which manages over $1 billion in digital assets and trades up to $10 billion per day across thousands of products, including all major coins and altcoins, as well as their derivatives.
“I can’t say for sure whether it was the deciding factor, but it certainly could have been, because if I didn’t already have an account, I’m not sure if I would have ended up doing this,” he said.
Phu, Rubin and Trabucco all declined to share how much they kept and how much crypto they’ve accrued since their days on campus.
Where all the bitcoin went
When CNBC spoke to Catalini, he was taking a walk to break up the 12 to 14 hours a day he spends on Zoom working.
Among Catalini’s lasting takeaways is the fact that bitcoin simply didn’t work as a method of payment on campus.
“Even at the time, the technology was quite user unfriendly,” he said. “Even within a pretty tech-savvy community such as MIT, it was kind of surprising to see how much work it really was to use bitcoin at the time.”
But that inability to spend was probably for the best.
“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,” he said.