June 26, 2019 | 75° F

RutgersBit offers instructive seminars and education for students to cash in on cryptocurrency

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Bitcoin is one of many recently popularized cryptocurrencies that have integrated themselves into the marketplace. It is a decentralized currency and does not flow from a physical banking system — sparking concern by some over its reliability.

Bitcoin is a word that often gets thrown around in business and computing circles, but for many it can be a confusing and strange concept. With the digital currency’s total value currently at $134 billion and a flurry of social media attention toward it, many people are asking “what is Bitcoin?”

Bitcoin is an online currency that allows individuals to exchange money completely online and pseudonymous, according to the Bitcoin website. People download a “Bitcoin wallet," an application that stores their coins — or fractions of it — and can only be accessed with a created password or pin.

Once someone has a Bitcoin wallet, they can purchase and sell Bitcoin. This can be done between individuals, on public exchange pages or through the few Bitcoin ATMs that exist. Many online sites accept Bitcoin as payments, and the entire process is self-regulating and digital, meaning the currency is not tied to any physical anchors or resources.

The concept for Bitcoin was introduced in a paper published in November 2008, according to the paper. It stated that the goal of the technology was to create a decentralized digital currency, that is, one that does not rely on a physical financial institution like a bank, capable of being secure and anonymous. 

This was accomplished by what is called “peer-to-peer” networking, a system where individual computers communicate with one another to form a platform for transaction instead of relying on a third party or centralized institution, according to the paper.

Arthur Guarino, an assistant professor in the Rutgers Business School, has studied Bitcoin and other "blockchain" digital currencies.

“When you’re talking about cryptocurrency, it is generally currency that's traded on the web," Guarino said. "When you’re talking about Bitcoins, it's about units — units that each have a certain value in the market that they're in. It's digital currency created and managed through the system of advanced encryption techniques.”

He said one of the risks of Bitcoin and other cryptocurrencies is that, unlike most common investments, there is nothing physical that backs up the asset. These digital currencies fluctuate in value often and without much predictability, making them a potentially lucrative but volatile investment.

“There aren’t any physical coins," Guarino said. “They really don’t exist. But rather there are account balances that are recorded on a type of public ledger that exists in the cloud, and how they’re verified is by huge amounts of computing power.”

The professor said there is little oversight and regulation to the Bitcoin system. 

It is secure and difficult to manipulate, but involves high-return, high-risk trading that people can easily lose a lot of money on, he said. 

“Blockchain” is a computational database system that is essentially a ledger, according to a 2015 article by The Economist. Blockchain technology, in the way Bitcoin uses it, is hosted publicly over the internet and is copied onto thousands of computers that use it.

When someone wants to exchange currency with someone else, both their computers will request to change the blockchain, according to the article. After security and regulatory methods verify that everything is in order, the transaction is made securely and a new “block” is added to the blockchain, permanently altering it and becoming like a public record. 

Guarino said he thinks that as Bitcoin becomes more mainstream, governments and other institutions will attempt to better understand or even regulate the market. Some major companies like Microsoft have even begun accepting Bitcoin as payment for select services, and it appears to be more and more accepted in the world of finance. 

As Bitcoin becomes more popular it also begins to make its way into educational institutions, either through clubs, seminars or other interest projects. At Rutgers, RutgersBit seeks to be a starting point and educational tool for students looking to invest in and learn about cryptocurrency.

Christian Buren, president of RutgersBit and a Rutgers Business School first-year, said the club focuses on the business and investment aspects of Bitcoin and cryptocurrency. This makes it a good foundation for students who are interested in it but do not know how to begin.

“RutgersBit is a go-to place for people interested in cryptocurrency and blockchain, even if they have no background whatsoever," he said. "If they're a dance major at Mason Gross (School of the Arts) and happen to hear about Bitcoin from a friend and think ‘oh that’s interesting,’ show up for a meeting one night. If you don't like it, you can be on your way. With the guest speakers that we have lined up, the professors and the professionals holding these seminars, things are going to be very interesting.” 

While some students rush to learn about and join the Bitcoin frenzy, Guarino said that risk is the biggest thing people need to be aware of when it comes to dealing with cryptocurrency. It is a very volatile and hard-to-predict investment that requires a fair amount of knowledge to participate in effectively. 

Those interested in investing should be very cautious and research the matter before choosing to spend money on it, he said.

“Don’t invest more than what you’re able to lose,” Guarino said. "If you overextend yourself, if you invest everything you’ve got into cryptocurrency, there's a possibility you could lose it all, too. That’s something you have to keep in mind, 'How much can I invest? How much can I afford to lose?'"

Andrew Petryna

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