Christians colleges aren’t usually known for being on the cutting-edge of technology. But The King’s College, an evangelical college located in New York City, is leading the way by becoming the first accredited college in the United States to accept Bitcoin for tuition and other expenses:
“The King’s College seeks to transform society by preparing students for careers in which they help to shape and eventually to lead strategic public and private institutions. Allowing Bitcoin to be used to pay for a King’s education decreases our costs while simultaneously allowing our students to be a part of this exciting new technology,” said Dr. Gregory Alan Thornbury, President of The King’s College.
Coin.co CEO Brendan Diaz added, “Over the past year, the Coin.co team has led the effort to enable U.S. colleges, universities and other major institutions to accept Bitcoin without incurring any currency risk. Coin.co is proud to be working with The King’s College, and to be a part of pioneering the use of Bitcoin for education.”
Before commenting on their adoption of cryptocurrency for tuition, let me express my admiration for TKC. I’m a fan of the school’s president, Dr. Gregory Alan Thornbury, and our friend and Acton contributor Dr. Anthony Bradley, who is a professor of theology and ethics at the school. I applaud the college for being savvy enough to accept Bitcoins—and would advise students to be savvy enough not to pay their tuition with them.
The reason, as I’ve pointed out before, is that Bitcoins are no longer completely fungible.
Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. For example, since one ounce of gold is equivalent to any other ounce of gold, gold is fungible. Similarly, a $10 bill is not only interchangeable with another $10 bill, it’s also interchangeable with two $5s, ten $1s, and other combination that adds to 10. Fiat currency is completely fungible.
And from the seller’s side of an exchange—Office of the Bursar—so are bitcoins. If you owe me 1 bitcoin for tuition, I don’t care if you give me a bitcoin you acquired last year or one you acquired yesterday. To me, they are completely equal and thus completely fungible. But they would not be completely equal to you.
Say you bought bitcoin A for $10 last year and bitcoin B for $550 yesterday. Today, however, a bitcoin is worth $530. If you trade bitcoin A you had a capital gain of $520. But if you use bitcoin B, you’d have a capital loss of $30. Since you’d have to pay the capital gains tax if you use bitcoin A, you’d be better off using bitcoin B.
While such considerations may not be a hassle for those who have few bitcoins, rarely spend them, or refuse to pay taxes, they become onerous for those who have many bitcoins, uses them frequently in exchanges, and fear IRS audits. “If I have to figure out which particular Bitcoin in my wallet I want to spend and what the tax treatment will be, Bitcoin just doesn’t work as a commercial medium of exchange,” says Adam J. Levitin, a Georgetown Law professor and expert on finance and payments.
If students want to experience the novelty of paying tuition in bitcoin, they should covert their dollars to bitcoin on the same day they pay the tuition. It adds an unnecessary step to the tuition-paying process, but it saves you the hassle of having to calculate capital gains or losses before paying for your Econ 101 class.