The MIT Media Lab is continuing its support of Bitcoin research, announcing yesterday a new $900,000 developer fund that furthers the mission of its year-old Digital Currency Initiative.
That mission, in a nutshell, is open-source development work on the Bitcoin currency. While the fund is largely intended for three leading Bitcoin Core developers who joined the Media Lab last April, it could also support other cryptocurrency experts if there is a demonstrated need.
"First we'd look at their technical contributions to Bitcoin," says Brian Forde, Director of the DCI. "Then we'd like to understand what might prevent them from continuing to do their work: Lack of funding, institutional support, et cetera."
You might be wondering why an institution like the MIT Media Lab is interested in Bitcoin in the first place. The biggest reason is blockchain technology--the underlying technology that makes Bitcoin work--about which Forde recently spoke to my colleague Will Yakowicz on the Inc Uncensored Podcast.
In the same way that the Internet decentralized communications--you can now send documents without a mail carrier or publish articles without being a media member--blockchain has the potential to decentralize banking. It can create a public ledger of debits and credits that no single bank or company controls. Instead, users control it. Imagine the ability to wire money to another person without the assistance of a bank or a financial institution. Then you can begin to grasp the potential of blockchain technology.
Of course, this potential is why investors are salivating over Bitcoin too, to the tune of more than $1 billion invested in the technology. Likewise, big financial companies such as NASDAQ, American Express, and Visa have invested in Bitcoin startups. Last month, Goldman Sachs and IBM joined the club. And as Forde points out, companies like UBS and Intel have opened labs to search for opportunities in the realm of digital currency. What's more, Bitcoin is only one continent on the digital currency map. A rival virtual blockchain currency called Ethereum has drawn attention from JPMorgan Chase, Microsoft and IBM, according to the New York Times.
In the same way that the Internet spent more than two decades in academic and government settings before its use became commercial, the Media Lab believes that a similar gestation could be important for blockchain, too--so it can become secure and reliable enough for mainstream use.
All of which is why the Media Lab launched DCI about one year ago. Since then, many companies and individuals have reached out to the Media Lab, offering financial support to the initiative. It was those offers that led to the creation of the $900,000 fund. Company donors include BitFury, Bitmain, Chain, Circle, and Nasdaq. Individual donors include Jim Breyer, Jim Pallotta, Jeff Tarrant, Reid Hoffman, and Fred Wilson.