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By Phillip Yu

Bitcoin is a peer-to-peer network-based electronic currency created in 2009 by an unknown individual under the alias Satoshi Nakamoto. Bitcoin owners store bitcoins on “digital wallets” and can transfer funds to others without the assistance of a central governing agency or a bank. The processes of acquiring, managing and trading bitcoins are largely anonymous. Some people use bitcoins as an alternative currency while others acquire bitcoins as an investment much like stock, hoping for value appreciation in the future. Currently, there are several marketplaces that allow people to buy and sell bitcoins, with Japan’s Mt. Gox being the largest.

Theoretically, bitcoins have tremendous potential positive impacts on international trade. First, international transactions can become cheaper since bitcoins are currently unregulated, thus avoiding many transaction costs. In addition, since bitcoins are not officially tied to any particular state, political risk is relatively low. Further, bitcoins are less susceptible to inflation, since bitcoin protocol demands a finite number of outstanding coins. Lastly, the fact that the bitcoin is a single, consistent currency eliminates the hassle and expense of exchanging currencies.

Despite accounting for a range of positive theoretical benefits, the mysterious anonymity surrounding Bitcoin and its connections to illegal dealings have garnered a great deal of controversy and concern. 

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March 01, 2014

By Matt Klinger

Bitcoin has been in the news a lot lately.  While the peer-to-peer currency is often associated with dodgy transactions involving contraband items, its use by the mainstream commercial market is expanding, slowly.

Baidu, China's analogue to Google, recently announced that it will accept payments in Bitcoin, and in October a Bitcoin ATM was unveiled in Vancouver.  A recent Senate hearing on Bitcoin indicated the U.S. would not interfere with the currency's use, and Chinese officials have taken a similar stance. 

All this positive press has given such a strong boost to Bitcoin's value that some commentators believe it has developed the hallmarks of a "classic bubble."  Bitcoins traded at less than $15 earlier this year and are now trading at around $1,000.  Many institutions, especially educational ones, will probably see this meteoric rise as simply too-good-to-be-true and not risk swallowing a potential loss on such a novel currency.  

For now, paying tuition with Bitcoins seems a long way off.  

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December 10, 2013