Carnegie Mellon University students might have the option of buying their lunches with cryptocurrency rather than meal passes or cash by this time next year.
The university is in the process of developing its own digital currency that would exist outside the traditional banking system — CMU Coin.
It’s not only a foray into building out the tech powering cryptocurrencies, called blockchain, but it also will serve as a test bed for examining people’s interactions with the new-age payment method.
Experts at CMU in economics, finance, accounting, consumer behavior and privacy are working to improve blockchain technology and policy surrounding crypto, said Param Vir Singh, an associate professor of business technologies at CMU’s Tepper School of Business.
Plus, “This blockchain would be a fertile ground for CMU students to develop their startup ideas,” he said.
Cryptocurrencies, a hot trend at the intersection of finance and technology, are a form of encrypted digital “money” that does not require a bank or other third party to verify transactions. It’s not tangible, it’s not a real coin, but you can purchase it on an exchange — sort of like a stock.
As the federal government grapples with how to regulate the currency, some retailers like Overstock.com are already accepting the digital payment method and hoards of speculators are snatching up Bitcoin and other forms of crypto, hoping to strike it rich.
Mr. Vir Singh and his CMU Coin co-lead, Ramayya Krishnan, dean of the Heinz College of Information Systems and Public Policy, want to demystify the currency.
After noticing that his son was increasingly using peer-to-peer payment platforms like Venmo and Zelle to digitally exchange money with friends on campus, Mr. Krishnan had a hunch that a cryptocurrency could serve the same purpose.
CMU Coin is in its infancy, Mr. Krishnan said. Students are competing to find the best-use cases before they build out the technology’s architecture. It’s too early to discuss what the market cap for CMU Coin might be or what its relationship to the U.S. dollar might look like.
On Friday evening, one Bitcoin was worth $8,235.
CMU Coin could be used in the environments the team ultimately selects, like transactions in the cafeteria. That way, students with leftover passes could trade. It likely is not going to be accepted at your local 7Eleven convenience store or other retail spots outside campus, though, because crypto is not a widely accepted currency.
The PNC Center for Financial Services Innovation on campus is “supporting” CMU Coin work, Mr. Vir Singh said, though he didn’t elaborate on specific financials.
Experts from across campus will work on specific aspects of the new cryptocurrency, be it design, algorithms or technology protocols, Mr. Vir Singh said. Students will help develop the technology. Also new courses will focus on developing and deploying CMU Coin.
The university already offers a barrage of courses related to all things crypto.
The School of Computer Science offers “Cryptocurrencies, Blockchains and Smart Contracts,” which has been around since at least fall 2016; Cryptocurrencies, Blockchains and Applications” in the College of Engineering has been teaching at the intersection of tech and public policy since at least spring 2017; and Mr. Vir Singh co-taught a course on crypto at Tepper.
Cornell, Duke, Massachusetts Institute of Technology and the University of Maryland also offer similar courses. Some of them are developing their own cryptocurrencies, Mr. Krishnan said, but those efforts are more technology driven, whereas CMU hopes to also closely study policy and consumer behavior.
To test any theory related to crypto, and to potentially influence policy, CMU must build out the underlying tech, called blockchain.
At its core, blockchain is a digital ledger that records transactions, Christopher Wilmer, an assistant professor at the University of Pittsburgh’s Swanson School of Engineering, explained.
It could be used for a number of purposes, he said at a recent event at East Liberty accelerator AlphaLab Gear during a panel hosted by Pittsburgh TiE, an organization dedicated to fostering entrepreneurship. It could improve storage and tracking of records in health care, stocks and intellectual property like patents, he said.
The technology needs to vastly improve to ever be practical, Mr. Vir Singh contends. It’s costly and time-consuming to verify transactions.
Last December, he said, Bitcoin transactions exceeded $70 each to execute and it took about an hour to confirm that exchange of funds.
Credit card giant Visa and Mastercard can confirm 5,000 transactions per second, Mr. Vir Singh said.
Bitcoin, for its part, also consumes a vast amount of energy in each transaction. Mr. Wilmer said that if Bitcoin were a country, it would be in 44th place by electricity usage.
While Bitcoin and Ethereum, the two most popular cryptocurrencies, often are lauded by enthusiasts for anonymous transactions, CMU Coin will focus on privacy, not anonymity.
Mr. Vir Singh points to illegal activities like the drug trade, which harnessed Bitcoin to make anonymous transactions, particularly on the now-defunct Silk Road online black market. While much of that stigma has dissipated, it’s a lesson in how such transactions can prevent regulatory buy-in.
“The [federal government] needs to develop a clear set of rules and policies, which is necessary for the growth and adoption of cryptocurrencies,” he said. “Until then, we may not see cryptocurrencies becoming the norm in our transactions.”
Courtney Linder: clinder@post-gazette.com or 412-263-1707. Twitter: @LinderPG.
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First Published: May 18, 2018, 9:48 p.m.