Bitcoin
University of Austin Launches First Long-Term Bitcoin Endowment
The University of Austin, a new school opening later this year, has launched what it says is the first long-term endowment held in bitcoin, a unique involvement of the cryptocurrency in financing higher education.
The donation is being made in partnership with Unchained, an Austin-based bitcoin financial service whose founder and CEO, Joseph Kelly, donated the first two bitcoins to launch the campaign, equivalent to $138,000.
After securing your initial approval for launch from the Texas Higher Education Coordinating Board in November, the university plans to open this fall in the downtown Scarborough Building with 100 students. The private institution first announced plans to open in November 2021, presenting itself as a school against cancel culture and censorship and an innovative alternative to a national higher education model it claims to be broken.
The university seeks to challenge the norms of higher education, including establishing the endowment in bitcoin, a form of digital currency that can be sold and exchanged without a bank. The decentralized model requires that the majority of the Bitcoin network approve transactions, and transactions are stored in a digital ledger called a blockchain.
Chad Thevenot, senior vice president for advancement and communications at the University of Austin, said the new school is increasing its endowment resources and that this endowment will be part of a diversified portfolio with other stocks and assets to support the university’s future.
The new endowment will go toward general university funding but will be held in bitcoin for at least five years, he said.
The idea came about when he and Kelly, whose office is across from the university’s headquarters, met for coffee and lunch. When Thevenot heard Kelly’s pitch for the donation, he thought it was a great way to engage the bitcoin community.
“Bitcoin as an idea, as a phenomenon, captures the imagination of people at university; captures the imagination of our students,” he said. “In that sense, there is a natural escalation.”
The spirit of the University of Austin captivated Kelly, specifically how the university wants to help students become entrepreneurs. The partnership, he said, can “build a bridge between communities.”
“The more I heard about what they are trying to do in terms of really shining a light on areas of censorship or issues (in) the higher education system, a lot of people in the Bitcoin community that we serve would also benefit greatly. to hear that message or benefit from knowing that UATX exists,” he said. “And then, like me, you can get excited (and) contribute.”
Is cryptocurrency trustworthy?
Universities have been accepting cryptocurrency for years but normally liquidates it to avoid volatility in its value. But by keeping the endowment in bitcoin, the university will demonstrate that it believes in its value as an asset, Thevenot said.
“We’re not worried,” he said of the potential fluctuation in market value. “Every bitcoin we get costs more than $0. Because the alternative is zero bitcoin.”
David DeMatthews, an associate professor at the University of Texas College of Education who specializes in education policy, said using bitcoin as an endowment asset is new to him but not surprising since endowment portfolios typically consist of several different types of assets.
The $5 million is “not a substantial amount considering what it might cost to open a university, but it could be seen as a way to market bitcoin and other types of cryptocurrencies,” DeMatthews said.
Cesare Fracassi, a UT associate professor of finance who researches and teaches about cryptocurrencies, said endowment held in bitcoin offers the benefit of attracting donors interested in cryptocurrencies, but can face fluctuations in value over time, similar to other stocks. of technology.
“Investing in bitcoin is as volatile as investing in Tesla,” Fracassi said. But he added that donating bitcoins brings a tax advantage to donors over cash, similar to donating stocks and bonds to universities.
While the value of bitcoin has dropped significantly in the past, it has also increased significantly, said Shimon Lazarov, chief marketing officer at Unchained.
“Bitcoin has volatility, but it also has tremendous upside,” said Lazarov. “I think $5 million in five years could easily increase 10 or 20 times if you look at the past of bitcoin.”
What is the future of bitcoin in Texas?
Carla Reyes, an associate professor of law at Southern Methodist University specializing in blockchain technology and former chair of the Texas Work Group on Blockchain Matters, who sent a 84-page report of recommendations to the Legislature in 2022, said Texas is considered an important state in the sector, largely due to technology hubs like Austin.
Reyes said the university’s announcement is “really cool” and rare because the donation will be made in bitcoin.
“Universities are very risk averse and very cautious about accepting donations or even granting money in cryptocurrencies very broadly, and so I think it’s probably exceptional that they accept and make a commitment to hold it for five years,” he said. Reyes, adding that Unchained’s management of the donation must keep payments secure, which she thinks is often a concern among universities.
Reyes expects Texas to continue to innovate in blockchain technology and currencies because both the state and industry share “an entrepreneurial and innovative spirit,” and Texas lawmakers, industry professionals, and researchers are interested in seeing its progress. She hopes the announcement will encourage other universities to form similar partnerships.
“Tokens and cryptocurrencies have a bad reputation, which they don’t deserve,” said Reyes. “And I think if universities don’t look beyond that to the real value of the technology and don’t make the effort to figure out partnerships… they will (miss opportunities to) grant money.”
With bitcoin, Thevenot said, “we want to take that kind of risk and integrate into that kind of community in Austin.”
“It’s not just an asset,” he added. “It’s an ethos.”