Digital currencies like Bitcoin are poised to make a dramatic impact on most people’s lives over the next decade. They offer tremendous possibilities for growing our global economy, and, similar to the cell phone, enabling developing nations to leapfrog the tech of developed nations. But, we are at a pivotal point for this nascent technology. Getting digital currencies right and realizing the projected impact, present daunting challenges that will require significant research and development to overcome.
That’s why I’m excited to share that today, the MIT Media Lab announced the launch of the Digital Currency Initiative. The goal of this initiative is to bring together global experts in areas ranging from cryptography, to economics, to privacy, to distributed systems, to take on this important new area of research. The effort will reach across the MIT campus, and we look forward to including collaborations with leading experts around the world.
In launching this initiative, the Media Lab will work closely with MIT CSAIL’s Nickolai Zeldovich (systems and security) and Ron Rivest (cryptography); the Sloan School of Management’s Simon Johnson (former chief economist of the International Monetary Fund), Christian Catalini and Catherine Tucker; and MIT’s Catherine Fazio, Thomas Hardjono, and Jeffrey Schiller. Within the Media Lab researchers involved with the initiative include Alex “Sandy” Pentland, Andy Lippman, Ethan Zuckerman, and Visiting Scholar Cameron Kerry. Students at the Media Lab and across campus will join in, with Jeremy Rubin, the undergraduate who helped run the MIT Bitcoin Project having an active role. Interested companies, developers, and forward-thinking policy makers will also be engaged in the effort.
Because many people reading this post may not have a full understanding of the potential for digital currencies, I’d like to give a brief overview of why we’re focusing on this emerging technology before I dive into the goals of our initiative.
Let’s take a step back and think about the impact of the Internet. It enabled people to easily call each other without a phone company, send a document without a mail carrier, or publish an article without a newspaper. As a result, today more than 2.9 billion people depend on a decentralized communications protocol–the Internet–to more efficiently communicate with one another.
Similarly, blockchain–the underlying technology behind Bitcoin–is a decentralized public ledger of debits and credits that no one person or company owns or controls: users control it directly. This new system lets people transfer money without a bank. Write simple, enforceable contracts without a lawyer. Or, turn physical items like real estate or tickets to the ball game or concert into digital assets that can be sold with low to no transaction fees. Many are projecting that the impact will be similar to that of the Internet–disrupting traditional industries, challenging existing regulations, and significantly increasing the volume of commerce by dramatically lowering the cost to transact and establishing trust between two previously unknown parties.
It’s not just the developers and early adopters who think this; over the last 12 months, more than $600 million has been invested by venture capitalists in startups building on this technology. Additionally, companies like UBS, IBM, and Intel have established labs to identify opportunities to leverage digital currency. With this significant amount of commercial activity, one might ask: “Why the Media Lab Initiative?” But from our perspective, it couldn’t be more clear.
For comparison, the Internet had more than 20 years to mature in academia and government before its tremendous impact on mainstream commercial and personal use. The first bitcoin was created in January 2009, a little over six years ago. While promising, it’s clear that much work still needs to be done before this technology can become truly safe, secure, and significant. We believe that we can make important contributions to its technical safety, security, and reliability through rigorous academic research.
It’s no secret that Bitcoin and other cryptocurrencies are off to a rocky start. You don’t have to look far to find headline-grabbing stories about the insecurity of wallets, volatility of price, and illicit use cases. But today, building off of the work of the MIT Bitcoin Club and Bitcoin Project, the Media Lab is making a commitment to work with developers, academics, the private sector, governments, and nonprofits to conduct the research necessary to support the commercial and social viability of this technology.
This initiative has three goals:
- Conduct research and engage more students on digital currency topics that address questions about security, stability, scalability, privacy, and economics.
- Convene governments, nonprofits, and the private sector to research and test concepts that have high social impact.
- Provide evidence-based research to support existing and future policy and standards.
We are at a pivotal point for this nascent technology. As someone who has worked in developing nations and in government, I believe there are tremendous opportunities to increase access to critical financial services for all, create more transparent democracies, and develop services that dramatically reduce barriers for global commerce. My hope is that we can provide the support needed for the digital currency community to help realize these predictions.
I look forward to connecting with you. If you have research ideas, feedback on our initiative, or would like to receive email updates about our initiative please send me a note at firstname.lastname@example.org.
Brian Forde is the Director of Digital Currency at the MIT Media Lab