The largest private university on the Mediterranean island of Cyprus said last week it will start accepting the digital currency bitcoin as an alternative way to pay tuition fees.
The University of Nicosia said the move to accept bitcoin is meant to help foreign students in countries where traditional banking transactions are either difficult or costly.
Unlike dollars or euros, bitcoins exist entirely in cyberspace. Created five years ago by an anonymous computer programmer or group of programmers, bitcoin is a digital currency that advocates say is counterfeit-proof and unencumbered by any one country’s central regulatory authority. Because the bitcoin system provides anonymity and transactions are difficult to trace, it is commonly used on internet gambling sites or online black markets like “Silk Road,” which the FBI shut down in October.
Bitcoin’s value is determined by supply and demand. The bitcoin software is designed to produce a total of 21 million bitcoins. Once that total is reached—which experts expect will happen in the year 2040—the limited supply will push the value of bitcoin even higher. Critics believe the digital currency is too prone to price swings against other currencies to be useful. In the past year, the bitcoin’s value has swung from $13 to more than $900.
Acquiring bitcoin currency requires exchanging money via bank account transfer or in-person with cash. Each bitcoin can be stored as a string of unique code, and can be broken into one hundred million units for transactions.
A growing number of businesses worldwide, including restaurants, medical clinics, and even churches, have started accepting bitcoins. The currency can be spent online or in person using a mobile app that interfaces with the participating merchant’s software.
Virgin Galactic, the spaceflight company run by British billionaire Sir Richard Branson, just recently accepted its first bitcoin payment for a seat on its future flights, which are scheduled to begin in 2015.
“Virgin Galactic is a company looking into the future; so is bitcoin,” Branson wrote in a blog post. “So it makes sense we would offer bitcoin as a way to pay for your journey to space. A lot of the people who have joined bitcoin are tech-minded people, as are many of our current future astronauts.”
The University of Nicosia’s chief financial officer, Christos Vlachos, said the institution is the first university in the world to take bitcoin payments. The university also plans to offer a new master’s degree in digital currency, a field Vlachos says is the monetary equivalent of the internet in its infancy.
“It's the gold of tomorrow,” Vlachos said.