The Wall Street – The University of Austin, a new institution that will open later this year, has announced the creation of what it claims to be the first long-term bitcoin endowment, marking a first for the use of cryptocurrencies in funding higher education.
In collaboration with Unchained, an Austin-based BTC banking business, the endowment is being managed. Joseph Kelly, the creator and CEO of Unchained, gave the first two bitcoins, or $138,000.
With the initial approval from the Texas Higher Education Coordinating Board to launch in November, the university plans to operate in the downtown Scarborough Building this autumn with one hundred students.
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When the private university first announced its plans to open in November 2021, it positioned itself as a cutting-edge alternative to the broken higher education system in the nation and as a university that rejects censorship and cancel culture.
As part of its efforts to challenge preconceptions about higher education, the institution established an endowment in bitcoin, a digital currency that can be purchased, sold, and traded without the need for a bank.
Transactions are recorded on a blockchain, a digital ledger, and approved by the majority of the bitcoin network in accordance with the decentralized principle.
What’s it worth?
Senior vice president for promotion and communications at the University of Austin, Chad Thevenot stated that the school is increasing the resources allocated to its endowment and that it would be a component of a diversified portfolio to support the universitys future along with other equities and assets.
According to him, the new endowment will be held in bitcoin for at least five years and used for general university funding.
He got the idea from lunch with Kelly, whose office is across the street from the university’s main building. Thevenot believed Kelly’s endowment idea was an excellent way to interact with the bitcoin community when he heard it.
“Bitcoin as an idea, as a phenomenon, captures the imagination of people at university; it captures the imagination of our students,” he stated. “In that sense, there’s a natural lineup.
Kelly was enthralled with the University of Austin’s atmosphere, particularly with regard to its goal of assisting students in becoming entrepreneurs. He claimed that the collaboration may “build a bridge between the communities.
“The more I heard about what they’re trying to do in terms of really holding up the light to areas of censorship or issues (in the) higher educational system, a lot of people in the bitcoin community that we serve would also really benefit from hearing that message or benefit from knowing that UATX exists,” he stated. “And then, like me, might get excited (and) contribute.”
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Are cryptocurrencies trustworthy?
While universities have long accepted cryptocurrencies, they usually liquidate them to minimize value fluctuations. However, Thevenot stated that by maintaining the endowment in bitcoin, the university will show that it recognizes its worth as an asset.
He responded, “We’re not worried,” in reference to possible market value fluctuations. “Each bitcoin we receive is worth more than $0. since there is no bitcoin as an alternative.”
Noteworthy information
Although he is unfamiliar with the usage of bitcoin as an endowment asset David DeMatthews, an associate professor at the University of Texas College of Education who specializes in education policy, said it is not unusual because endowment portfolios usually include a variety of various asset types.
The sum of five million dollars is “not a substantial amount, considering what it might cost to open a university, but could be viewed as a way of marketing bitcoin and other types of cryptocurrencies,” DeMatthews stated.
The endowment housed in bitcoin has the advantage of drawing in contributors who are interested in cryptocurrencies, but Cesare Fracassi, an associate professor of finance at UT who studies and teaches about cryptocurrencies, noted that it may see value changes over time akin to other tech stocks.
Investing in bitcoin is as volatile as investing in Tesla, Fracassi stated. However he also noted that like donating stocks and bonds to colleges, providing bitcoin provides a tax advantage for donors over cash.
The chief marketing officer of Unchained, Shimon Lazarov, stated that although the value of BTC has historically decreased dramatically, it has also increased tremendously.
“Bitcoin has volatility, but it also has tremendous upside,” Lazarov stated. “I think $5 million in five years can definitely easily 10x or 20x, if you look at the past of BTC.”
What’s the future of bitcoin in Texas?
Texas is regarded as a top state in the industry, according to Carla Reyes, an associate professor of law at Southern Methodist University who specializes in blockchain technology.
Reyes was also the previous chair of the Texas Work Group on Blockchain Matters, which sent an 84-page report of recommendations to the Legislature in 2022. Because the endowment would be housed in bitcoin, Reyes noted that the university’s statement is “very cool” and unique.
Universities are very risk averse and very wary of accepting donations or even grant money in cryptocurrencies very broadly so I think it is probably exceptional for them to accept it and make a commitment to hold it for five years, Reyes stated.
She also mentioned that Unchained’s endowment management should ensure the payments are secure, something that she believes is a common worry among universities.
Because the state and the sector have “an entrepreneurial, innovative spirit,” and because lawmakers, business professionals, and researchers in Texas are keen in seeing it advance, Reyes anticipates that Texas will continue to innovate in technology and blockchain currencies.
She hopes that other universities will be inspired to develop similar relationships by the announcement.
Reyes stated that tokens and cryptocurrencies get a bad rap, one they don’t deserve. “And I think if the universities don’t look past that to the real value of the technology and do the diligence to figure out partnerships … they’ll (miss opportunities for) grant money.
In regards to bitcoin, Thevenot stated, “we want to take this kind of risk and be integrated with those kinds of communities in Austin.” He went on, “It’s not just an asset.” “It’s an ethos.”
Bitcoin’s Impact on Student Loans
Bitcoin, the pioneering cryptocurrency, has made its presence felt in the realm of student loans. Here’s how it intersects with higher education financing:
- University of Austin’s Bold Move: The University of Austin, a new private institution, has launched the first long-term endowment held in Bitcoin. Partnering with Unchained, an Austin-based BTC financial service, the university received an initial donation of two Bitcoins (equivalent to $138,000) to kickstart this groundbreaking campaign.
- Diversified Portfolio: The endowment will be part of a diversified portfolio alongside other assets to support the university’s future. While it contributes to general funding, it will remain in Bitcoin for at least five years.
- Student Engagement: Chad Thevenot, the senior vice president for advancement and communications, believes that BTC resonates with students’ imagination and entrepreneurial spirit. The partnership aims to build a bridge between the Bitcoin community and the university.
- Student Loans and Bitcoin: Beyond endowments, some students have used borrowed funds to invest in BTC , hoping for substantial gains. However, this approach carries risks due to Bitcoin’s volatility Additionally, services like Brawker and Tuition.io offer ways to use Bitcoin to reduce student debt
How can students use Bitcoin to pay off their debt?
Students interested in using Bitcoin to pay off their debt have a couple of options:
- Sell Bitcoin to Repay Loans: If you already hold Bitcoin you can sell it and use the proceeds to repay your student loans. However keep in mind that Bitcoin’s value can be volatile, so timing your sale is crucial.
- DeFi Loans Based on Crypto Assets: Decentralized finance (DeFi) platforms offer an innovative solution You can obtain a loan backed by your crypto holdings without needing a good credit score. DeFi loans often have better interest rates and flexible repayment periods. Plus, you won’t miss out on potential price gains or incur capital gains taxes by selling your crypto
Disclaimer: Remember to research thoroughly and consider professional advice before making any financial decisions.
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What does BTC mean?
(BTC) is a cryptocurrency (a virtual currency) designed to act as money and a form of payment outside the control of any one person, group, or entity. This removes the need for trusted third-party involvement (e.g., a mint or bank) in financial transactions.
Why are BTCs so popular?
Different currencies have different appeals, but the popularity of cryptocurrencies largely stems from their decentralized nature: They can be transferred relatively quickly and anonymously, even across borders, without the need for a bank that could block the transaction or charge a fee.
