Two students at the Massachusetts Institute of Technology (MIT) have raised $500,000 for a bold new project to create a Bitcoin "ecosystem" at the heart of one of America's most prestigious university's.

All 4,528 of MIT's undergraduates will receive $100 worth of Bitcoin this Autumn.

Founder of MIT's Bitcoin club Dan Elitzer and computer science student Jeremy Rubin raised the money from around 25 donors many of whom are MIT alumni.

Around half of the money was donated by Alexander Morcos, co-founder of Hudson River Trading. Plans for the project range from working with professors and researchers to examine how students will use the digital currency, to boosting academic progress and entrepreneurial activity in the field cryptocurrency.

Rubin and Elitzer are hopeful the project will help MIT maintain its reputation as a leading educational institution at the cutting edge of emerging technologies and establish the university as a hub for Bitcoin related research.

The team have high hopes about the future accessibility and usage of digital currencies.

“Giving students access to cryptocurrencies is analogous to providing them with internet access at the dawn of the internet era,” said Rubin.

The organisers of the project have no idea how MIT freshman will spend their free Bitcoin but will be using the time between now and next semester to develop a friendly environment around campus for the world's favourite digital currency.

The MIT Bitcoin club is preparing to work with local businesses to help them set up appropriate payment systems.

Rubin and Elitzer have also enlisted the help of the MIT Society of Women Engineers, the College Cryptocurrency Network and the MIT Bitcoin club to organise a Bitcoin expo to be held on 3 May. Speakers will include chief scientist and board member of the Bitcoin foundation Sean Neville and co-founder of Circle Internet Financial Alan Reiner.

With the money raised and preparations for the experiment underway, Elitzer issued a challenge to MIT's undergrads to be: