FINA4125: Blockchain, Cryptocurrencies & their Applications in Finance

If you have been following the popular press you know about Bitcoin, Ethereum, NFTs, and possibly ICOs. You have heard about blockchain and distributed ledgers. You might not know that the number of cryptocurrencies is fast increasing and might soon be about 1000 of them. Depending on that day’s price, there might be a 100 cryptos with a notional market cap above one billion and about 15 above 10 billion. You will learn that cryptocurrencies are extremely volatile. Is it all hype or this the shape of our future? Will this be another Tulip craze? How will they effect regular commerce? Are they just digital gold? How will governments step in to regulate them? Will Governments issue their own Digicoins? In this course, we will not be able to answer all the above questions. However, you will gain a basic understanding of the new technology that is based on cryptography. We will discuss what it provides and where it is still lacking. We will revisit the role of money and what makes a currency successful. We will then examine the properties of cryptocurrencies and ask what it would take for them to be a store of value and/or a medium of exchange. To do this we will start with some fundamental concepts from cryptography that would allow you to understand the technology beyond some stretched analogies. We will discuss the economics of these currencies and the regulatory issues facing governments. We will then delve into the use cases: Primary markets (ICOs & venture capital), secondary markets and exchanges, smart contracts, and potentially settlement activities in clearing houses.

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