Paying It Forward

Pay_It_Forward08 Mar 2014 / Inside Higher Ed – Before the University of Puget Sound could accept what has been called the first bitcoin donation to a U.S. university, Sherry Mondou had to clarify a laundry list of concerns.

“The risks that came to my mind were: Could there be a way for hacking or some way for the gift to be stolen while it’s in process?” Mondou, the university’s vice president for finance and administration, said. “By accepting bitcoin, is there some association with criminal activity? The big one was, really, in the end, how could we avoid the currency volatility?”

Bitcoin and its roughly 150 spinoffs, with names such as dogecoin, flappycoin and takeicoin, are cryptocurrencies — electronic money. Despite the illustration photo used for this article, bitcoin has no physical form. The currency uses cryptography, and stores all transactions in a public ledger called the block chain. As an incentive for good bookkeeping, users in the bitcoin community can earn coins by confirming the integrity of other users’ transactions — a process called mining.

Bitcoin, whose creator was allegedly unmasked on Thursday, has been around since 2008, but it is only recently that the electronic currency has established a significant physical presence. Thousands of businesses around the world now accept bitcoin, and the first bitcoin ATMs recently powered on in the U.S.

The currency’s growing popularity has also caused wild market fluctuations, such as when hackers gained access to the exchange site MtGox and got away with almost 850,000 bitcoins — about 7 percent of the bitcoin economy — which at the time was worth about $480 million. And since a part of the community is drawn to the currency to make illicit purchases anonymously, bitcoin has yet to convince many that it can be used as a payment tool or an investment strategy.

“You read a lot of headlines,” Mondou said. “You want to make sure you know what you’re getting into.”

Puget Sound eventually settled on BitPay, an electronic payment processing service, and billed the donor for $10,000 to circumvent the currency volatility issue. But apart from soliciting donations, colleges and universities have yet to find a use for bitcoin. Instead, students are leading the charge. Bitcoin clubs have in recent weeks sprung up at Ohio State University, Pennsylvania State University and the University of Michigan, among many other campuses, where students meet to educate one another on the uses of digital currencies….. Read more

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