BLOCKCHAIN RESEARCH AT MIT

In October 2014, all 4,494 undergraduates at the Massachusetts Institute of Technology were given access to Bitcoin, a decentralized digital currency. As a unique feature of the experiment, students who would generally adopt first were placed in a situation where many of their peers received access to the technology before them, and they then had to decide whether to continue to invest in this digital currency or exit. Our results suggest that when natural early adopters are delayed relative to their peers, they are more likely to reject the technology. We present further evidence that this appears to be driven by identity, in that the effect occurs in situations where natural early adopters' delay relative to others is most visible, and in settings where the natural early adopters would have been somewhat unique in their tech-savvy status. We then show not only that natural early adopters are more likely to reject the technology if they are delayed, but that this rejection generates spillovers on adoption by their peers who are not natural early adopters. This suggests that small changes in the initial availability of a technology have a lasting effect on its potential: Seeding a technology while ignoring early adopters' needs for distinctiveness is counterproductive.

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SOME SIMPLE ECONOMICS OF THE BLOCKCHAIN

by Christian Catalini (MIT Sloan) and Joshua S. Gans (University of Toronto)
November 23rd, 2016

We rely on economic theory to discuss how blockchain technology and cryptocurrencies will influence the rate and direction of innovation. We identify two key costs that are affected by distributed ledger technology: 1) the cost of verification; and 2) the cost of networking. Markets facilitate the voluntary exchange of goods and services between buyers and sellers. For an exchange to be executed, key attributes of a transaction need to be verified by the parties involved at multiple points in time. Blockchain technology, by allowing market participants to perform costless verification, lowers the costs of auditing transaction information, and allows new marketplaces to emerge. Furthermore, when a distributed ledger is combined with a native cryptographic token (as in Bitcoin), marketplaces can be bootstrapped without the need of traditional trusted intermediaries, lowering the cost of networking. This challenges existing revenue models and incumbents's market power, and opens opportunities for novel approaches to regulation, auctions and the provision of public goods, software, identity and reputation systems.


We are interested in finding post-docs or visitors with strong computer science background in applied machine learning. If interested, please contact us.


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WHAT IS BLOCKCHAIN? A SHORT INTRODUCTION

THE MIT DIGITAL CURRENCY EXPERIMENT

HOW BLOCKCHAIN WILL TRANSFORM
THE DIGITAL ECONOMY


Moderator: Prof. Christian Catalini, Assistant Professor, MIT Sloan (@ccatalini).

Panelists: Anders Brownworth, Principal Engineer, Circle (@anders94) Peter Nichol, Principal, PA Consulting Group (@PeterBNichol) Simon Peffers, Senior Software Architect, Intel (#SimonPeffers) Matthew Utterback, Co-Founder, Rex Mercury, Inc. (#MattUtterback) 

HOW DOES A BLOCKCHAIN WORK?

By Anders Brownworth. To try Anders' live blockchain demo, click here.




RESEARCH STUDY:
DIGITAL CURRENCIES AND INNOVATION ON THE MIT CAMPUS

Launched: November 2014
 

The objective of the study is to understand the process of diffusion of Bitcoin, a software-based, open-source, peer-to-peer payment system on the MIT campus. Bitcoin is an innovative payment network that allows for instant peer-to-peer transactions with zero or very low processing fees on a worldwide scale.

From the perspective of a user, Bitcoin is very similar to digital cash, with the additional benefit of being able to prove that a transaction actually took place because of the presence of a digital public ledger. The ledger tracks every transaction using digital wallet addresses that can be thought of as pseudonyms: when transacting with Bitcoin, a user is like a writer that publishes under a pseudonym, i.e. if her/his identity is ever linked to the pseudonym (the Bitcoin address), then all the work (transactions) can be linked back to her/him.

The technology has the potential of dramatically changing how we conduct transactions on a global scale, as it offers secure payments without the necessity of a costly and often slow intermediary. This could disproportionately help segments of the population that are currently underserved by financial intermediaries as well as countries with weak financial institutions.

With this research project the MIT community will have the opportunity not only to shape the evolution of digital currencies, but also to improve the lives of everyone who will use the follow-on inventions that our campus could deliver. 

The Bitcoin ecosystem currently resembles the state of the Internet in the mid-90s, i.e. many of the applications that will be built on top of it have not been created. This offers a unique experience for the most inventive and entrepreneurial students at MIT, as they will have a chance to experiment and test their ideas within a campus where the diffusion of digital currencies will be years ahead of anywhere else. Essentially, participants will be the first ones to see the opportunities and possibilities the technology opens up.    

In the same way that MIT gave students early access to computing resources through the Athena project in 1983, this project intends to give participants early access to a digital currency. The ultimate objective is to place the broader MIT community at the frontier of this new exciting wave of innovation.