Cryptocurrencies January 21 2018 - Fuqua School of Businesscharvey/Teaching/897_2018/2_Crypto... · President Obama at SXSW: “everybody’s walking around with a Swiss bank account

Cryptocurrencies

Campbell R. HarveyDuke University and NBER

January 21, 2018

Innovation and Cryptoventures

Campbell R. Harvey 2018 2

Blockchain Opportunities

3Campbell R. Harvey 2018http://www.slideshare.net/RedChip/btcs‐201507

Long History of Digital Currency

4Campbell R. Harvey 2018

Long History of Digital Currency


Paypal started in 1998 as a software security company for handheld devices

Disruption 101


Disruption 101

7

1. Money transfer network is $500 billion per year2. Average fee=10%. Bitcoin 0.01%*3. Potential of $50b per year in hands of consumers4. “Western Union and Moneygram will be the Kodaks of this

decade”, Barry Silbert

See: http://www.mauldineconomics.com/lg/bitcoin

*Currently higher due to congestion. Lightning Network promises much lower fees.

Campbell R. Harvey 2018

Disruption 101

8Campbell R. Harvey 2018https://www.bloomberg.com/news/articles/2018‐01‐12/kodak‐ceo‐plans‐to‐seize‐blockchain‐moment‐and‐win‐over‐skeptics

Cryptocurrency: Coins vs. Tokens

• A coin has its own blockchain• A token is associated with an existing blockchain. For example, ERC20 is the token standard that is associated with the Ethereum blockchain.

• Initial offerings:– ICO = Initial Coin Offering– ITO = Initial Token Offering


https://theethereum.wiki/w/index.php/ERC20_Token_Standard

Cryptocurrency: Coins vs. Tokens

• Coinmarketcap.com lists 895 coins and 549 tokens

• Almost all the tokens associated with Ethereum blockchain. Largest is EOS

10Campbell R. Harvey 2018https://coinmarketcap.com/tokens/views/all/

https://eos.io/

Cryptocurrency: Diversity

Many variations• Method: Proof of Work, Proof of Stake,

– There are even variations within Proof of Work, for example the PoW is different for Bitcoin and Ethereum;

– Primecoin uses bitwin and Cunningham prime chains, e.g., Cunningham (double plus one) 2, 5, 11, 23, 47 [not 95 because not prime]

• Block size and speed of approval of transactions• Transparency and anonymity• Ability to handle smart contracts


https://theethereum.wiki/w/index.php/ERC20_Token_Standard

An Overview: Public Blockchains

Let’s initially focus on one of the first applications of blockchain: Bitcoin1. Peer to peer network2. Triple entry accounting with common ledger that everyone shares

called the blockchain3. Introduces a protocol (rules for validating transactions) on the

blockchain. Trust not required.4. Unit of account: bitcoin a cryptocurrency



The history of all transactions contained in ledger called the bitcoin blockchain• White paper October 2008. Genesis block January 3, 2009. • The miners solve computationally intensive problems to ensure the security of the bitcoin blockchain – the security is unprecedented.

• Reward is currently 12.5 BTC and is cut in half every four years. Reward ends (cap on money supply) May 7, 2140. Total supply will be 21 million.

• Miners also collect transaction fees. The plan is that these transaction fees will be enough compensation and no new bitcoin will be needed.



Bitcoin blockchain• Blocks added about every 10 minutes. Difficulty (roughly the number of leading zeros in winning hash) is adjusted as additional computing comes on to the network. Note Ethereum block time is about 15 seconds.

• Stack code is Turing incomplete. This means that do loops are not possible. This limits the ability of Bitcoin blockchain to do smart contracts. In contrast, Ethereum is Turing complete.

• Bitcoin blockchain about 150gb

14Campbell R. Harvey 2018https://blockchain.info/charts/blocks‐size https://en.wikipedia.org/wiki/Turing_completeness


There are significant barriers to entry to understanding bitcoin and other cryptocurrencies• These barriers to entry provide an opportunity for us that we will explore in this

course


Solution

Any new product has to answer two questions:1. What problem does this solve?2. Is the problem economically important?


Solution

Consumers• Transact without worrying about security practices of every merchant; no need for bank account; enables microtransactions; enables transfers of funds with minimal fees; worldwide use; ability to choose from full transparency to anonymity; immune to inflation;

17Material drawn from Jameson Lopp, The Multifaceted Nature of Bitcoin


Solution

Merchants• Saves on merchant transactions fees; gives customers an alternative way to transact; saves on need for security infrastructure; impossible to counterfeit; perfect transparency of all transactions

• Example, Gasoline sales in US about $500 billion in 2015 means $17.5 billion in credit card fees (assuming 50% of payments by credit card)



Solution

Family• Send remittances at minimal cost around the world



Solution

People in risky countries• Provides an alternative method to transact when a country is hit with hyperinflation

20Campbell R. Harvey 2018http://krieger.jhu.edu/iae/economics/Venezuela_Enters_the_Record_Book.pdf

Solution

People in less developed countries• Enables electronic transactions in areas that are not served by banks; also possible to save and store value; microtransactions

• You do not need a bank account. There are 2 billion unbanked persons.



SolutionVenture Capital: Blockchain2009 ‐ 2011: $0 2012: $2.13M 2013: $95.05M 2014: $361.53M2015: $490.48M2016: $601.15M*2017: $554.45M**Surge in Internal VC as companies make large internal investments


http://www.coindesk.com/bitcoin‐venture‐capital/

Solution


Overstock’s t0 is first to transact stock on a blockchain

However, they spent more than $5 million in legal fees dealing with SEC and FINRA.

https://www.wired.com/2016/12/overstock‐com‐issues‐stock‐via‐bitcoin‐blockchain/

Solution

Blockchain and beyond• New way to verify ownership• New applications to financial instruments• New ways to codify contracts, smart contracts (“if”, “then” statements)

• Internet of Things• Mesh networks/decentralized storage• Supply chains• New way to vote



One Main Challenge is Lack of Understanding

25

President Obama at SXSW:“everybody’s walking around with a Swiss bank account in their pocket.”

This is a fundamental misperception.

http://fortune.com/2016/03/15/apple‐iphone‐swiss‐bank/ Campbell R. Harvey 2018

One Main Challenge is Lack of Understanding

26

President Obama, at SXSW:“everybody’s walking around with a Swiss bank account in their pocket.”

This is more accurate!

http://fortune.com/2016/03/15/apple‐iphone‐swiss‐bank/ Campbell R. Harvey 2018

Challenges

1. Cryptocurrencies are mainly used for criminal activity.2. A lack of security plagues all cryptocurrencies.3. Bubble because no fundamental value.4. Mining is a waste of energy.5. Cryptocurrencies are too small today to be an important economic

force.6. Cryptocurrencies are currently too risky to serve as a store of value.7. The concentration in holdings perpetuates economic inequality.8. Cryptocurrencies are just another currency.


Cryptocurrencies: Cryptocurrencies mainly used for criminal activity

• Silk Road: Amazon of black market – priced in bitcoin


Cryptocurrencies: …are mainly used for criminal activity

• Silk Road: Amazon of black market – priced in bitcoin


Cryptocurrencies:

Issues with cash – crime and tax evasion.

30

* https://www.federalreserve.gov/paymentsystems/coin_currcircvalue.htm


79% in $100 bills

Cryptocurrencies:

Issues with cash – crime and tax evasion.• November 8, 2016 India scraps 85% of its currency (1000 and 500 rupee notes)

• Not the first time they have done this (1946, 1978)

31Campbell R. Harvey 2018http://www.wsj.com/articles/indias‐demonetization‐debacle‐1481851086

Cryptocurrencies:

Issues with cash – crime and tax evasion.• November 8, 2016 India scraps 85% of its currency (1000 and 500 rupee notes)

• Not the first time they have done this (1946, 1978)

32Campbell R. Harvey 2018http://www.wsj.com/articles/indias‐demonetization‐debacle‐1481851086

Raghuram Rajan, Former RBI Governor, at the AEA/AFA Joint Luncheon, January 5, 2018

Cryptocurrencies:

Issues with cash – crime and tax evasion.• December 15, 2016 Venezuela scraps 100 bolivar bill

33Campbell R. Harvey 2018http://www.wsj.com/articles/venezuelans‐protest‐over‐worthless‐cash‐1481935897

Cryptocurrencies:

• Calls for digitizing $100 and $50 bills – but do you prevent perfect counterfeiting?

• Answer: Use a blockchain


Cryptocurrencies: A lack of security plagues cryptocurrencies• Mt. Gox

– On February 24, 2014, the site shut down with 850,000 bitcoins “missing”– Bitstamp closes (temporarily) January 4, 2015


Cryptocurrencies: A lack of security plagues cryptocurrencies

• But Mt. Gox was a third party.• With any new technology, there will be good companies entering and bad companies entering.

• Bitstamp experience was different



• Actually, it is the opposite. There is a historically unprecedented amount of security for bitcoin

• The hash rate is not out of control. It is a result of the incentive structure and it makes the bitcoin blockchain more secure.


Dr. Sarah Meiklejohn, UCL“The hash rate is out of control” (November 11, 2016)


• Not all cryptocurrencies are the same• Bitcoin has the strongest blockchain• Securities determined by hashing power for Proof of Work blockchains

38

The current hash rate of Bitcoin is 13 billion gigahashes per second. https://blockchain.info/charts/hash‐rate


Cryptocurrencies: Mining is a waste of energy

• People perceived mining as a waste of energy• Bitcoin mining farms locating in areas with underutilized energy such as Iceland





• Mining ensures that the blockchain is secure

• It eliminates the possibility of a breach such as Target losing 40 million credit cards.


Cryptocurrencies: Cryptocurrencies are too small today to be an important economic force

• Bitcoin is very small

42

The $10bn birth of the trusted deletion industryIzabella Kaminska | Jul 31 17:47 | 6 comments |Share

Nobody has been more annoyed by Alibaba’s potential upcoming valuation of Snapchat at $10bn than the Bitcoin community, since its own “world changing” technology currently has a market value of no more than $7bn.* [UPDATE: $500 billion]


Cryptocurrencies: Cryptocurrencies are too small today to be an important economic force

• Currently running about $1.5T annualized trade volume (on chain) See: https://blockchain.info/charts/estimated‐transaction‐volume‐usd

• Global credit card volume running about $10T• Bitcoin can currently handle 7 transactions per second whereas Visa can handle 50,000

• But what counts is not necessarily the size today .. but the size tomorrow. The next layer (L2) is ready to go, called Lightning Network.

43

https://www.nilsonreport.com/upload/issues/1109_6392.pdf Also see https://www.worldpaymentsreport.com/download


Cryptocurrencies: Cryptocurrencies are currently too risky to serve as a store of value

• Bitcoin as a transaction method will not be viable until the volatility is decreased. Currently, it fails as a store of value.


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

BTC S&P500 Gold USD

Annualized Volatility Comparisons

2011‐2017 2014‐2017

BTC S&P500 Gold USD

2011‐2017 100.0% 13.5% 16.3% 7.5%

2014‐2017 73.8% 12.1% 13.6% 8.0%


• Holding for one week: 95% confidence interval is– Bitcoin: +/‐ 25%[from 2011]; S&P500 is ‐4.3% to +4.3%

• Worst S&P daily return since 1957 is Oct. 19, 1987 at ‐20.47%– Over last 6 years, bitcoin has had 8 days with less than ‐20.47% return

• Second worst daily return since 1957 is Oct 15, 2008 at ‐9.03% – Over last 6 years, bitcoin has had 67 days with less than ‐9.03% return (15 alone in 2017 and 2018).


Cryptocurrencies: Bitcoin is currently too risky to serve as a store of value


Innovation & CryptoventuresFirst offered!



Daily BTC=BTSP 1/19/2016 - 3/2/2018 (GMT)BarOHLC, BTC=BTSP, Trade Price1/23/2018, 10,810.00, 10,994.56, 9,927.54, 10,330.00, -478.99, (-4.43%)

Price

Auto

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

10,330.00

F M A M J J A S O N D J F M A M J J A S O N D J F MQ1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18



Annualized bitcoin return volatility (1 year moving window)

Illiquidity causing high volatility story not supported by data over the past two years

0%

20%

40%

60%

80%

100%

120%

140%

160%

9/17/2012 9/17/2013 9/17/2014 9/17/2015 9/17/2016 9/17/2017



Annualized bitcoin return volatility (90‐day moving window)

0%

20%

40%

60%

80%

100%

120%

140%

1/1/20

16

2/1/20

16

3/1/20

16

4/1/20

16

5/1/20

16

6/1/20

16

7/1/20

16

8/1/20

16

9/1/20

16

10/1/201

6

11/1/201

6

12/1/201

6

1/1/20

17

2/1/20

17

3/1/20

17

4/1/20

17

5/1/20

17

6/1/20

17

7/1/20

17

8/1/20

17

9/1/20

17

10/1/201

7

11/1/201

7

12/1/201

7

1/1/20

18


• But volatility is only one dimension of risk – do cryptocurrencies provide hedging benefits?


No correlation with S&P or Gold


• But volatility is only one dimension of risk – do cryptocurrencies provide hedging benefits?


No correlation with S&P or Gold

Cryptocurrencies: Concentration: 0.01% own nearly 40% of bitcoin

52Campbell R. Harvey 2018https://bitinfocharts.com/top‐100‐richest‐bitcoin‐addresses.html

Cryptocurrencies: Bitcoin is just another currency

Ajay Banga, CEO Mastercard• “The world is not short of currencies, so what is this currency solving for?” February 17, 2014

Fuqua Tech Conference, November 2017


Cryptocurrencies: Trading

Purposes of money:Primary• Unit of Account: A way to compare the value of various goods and services• Medium of Exchange: Allows for non‐barter transactions.

Secondary• Store of Value: Allows value to be retained – even if partially – rather than

complete decay (e.g. storing food). • Transfer of Value: Ease of transfer of value and to defer value.

Original vision of bitcoin was for a technology that would make transactions more efficient (the transfer of value motive)



Three ways to obtain an existing cryptocurrency• Win a block. • Receive a gift or be paid for goods or services• Buy on an exchange

– Currently 109 exchanges that trade bitcoin

You can also obtain cryptocurrency through an Initial Coin Offering (ICO). New currency can also be obtained via a hard fork.




https://www.coinhills.com/market/exchange/rank‐for/btc/


Beware of exchanges• Largely unregulated. This is the reason that the SEC has blocked the formation of ETFs based on “physical bitcoin”

• Exchange often holds your keys and they pool all the keys – acting like a bank

• The advantage is that transactions can happen on the exchange in an “off chain” way. This is what Coinbase.com does. Their exchange is GDAX

• The exchanges are a centralizing force*

57Campbell R. Harvey 2018*In the future, exchanges may become more distributed. An atomic swap is a cross chain transaction.https://www.cryptocompare.com/coins/guides/what‐are‐atomic‐swaps/


Beware of exchanges: Bitfinex• Approximately 10% of all bitcoin trading; registered in BVI• History of multiple hacks: May 2015 1,500 BTC stolen; 2016 119,756 BTC stolen – customers forced to take a 36% haircut on deposits;

• Bitfinex does not use fiat currency wire transfers – it uses a cryptocurrency called Tether (USDT)



Beware of exchanges: Bitfinex• Tether is supposedly backed 1:1 with USD; capitalization is $1.6 billion



Beware of exchanges: Bitfinex• Tether hacked in November 2017 for $30 million.• Once you have a tether, the value is stable and you can use that on many different exchanges to quickly trade (wire transfers could take days)

• If you receive a tether, one dollar is deposited in your vault

60Campbell R. Harvey 2018https://www.coindesk.com/tether‐claims‐30‐million‐stable‐token‐stolen‐attacker/


Beware of exchanges: Bitfinex• Supply of tether has increased dramatically

61Campbell R. Harvey 2018https://qz.com/1149772/the‐murky‐relationship‐between‐bitfinex‐and‐tether‐is‐raising‐suspicions/


Beware of exchanges: Bitfinex• Tether based in British Virgin Islands• How do we know that the dollar deposits match the outstanding tether?

• November 21, 2017 Nathaniel Popper of NYT breaks story that Bitfinex and Tether are operated by the same people. This was revealed in the Paradise Papers. Why is this an issue?

62Campbell R. Harvey 2018https://www.nytimes.com/2017/11/21/technology/bitcoin‐bitfinex‐tether.html


Beware of exchanges: Bitfinex• First, Bitfinex was not transparent about its relationship with Tether• Second, read the fine print for tether

63Campbell R. Harvey 2018https://www.nytimes.com/2017/11/21/technology/bitcoin‐bitfinex‐tether.html


Beware of exchanges: Bitfinex• Third, if not fully collateralized, it is possible that Bitfinex is creating money that could artificially increase the price of cryptocurrencies like bitcoin. “Bitfinex appears to be creating Tether coins out of thin air and then using them to buy Bitcoin and push the price up.”


https://tether.to/wp‐content/uploads/2017/09/Final‐Tether‐Consulting‐Report‐9‐15‐17_Redacted.pdf


Beware of exchanges: Bitconnect• Begins in January 2017• Launches with Bitconnect Coin (BCC). You needed to send bitcoin to the exchange and they would convert it to BCC

• With the BCC, you were guaranteed “up to 120% return per year” and users were earning interest by holding their coin for “helping maintain the security of the network”


https://cointelegraph.com/news/bitconnect‐ponzi‐scheme‐no‐sympathy‐from‐crypto‐community


Beware of exchanges: Bitconnect





Coin rises to $437.31




Coin rises to $437.31




Social media campaign attacks Bitconnect




Blows up January 17, 2018

https://twitter.com/3PSboyd/status/954140748135383040


Beware of exchanges: Bitconnect• January 17, 2018 exchange closes following warnings from Texas and North Carolina regulators. Drops 87%.


https://cointelegraph.com/news/bitconnect‐closes‐virtually‐its‐entire‐operation‐bcc‐token‐drops‐87




Current price = $18




https://bitconnect.co/system‐news/95/bitconnect‐update‐regarding‐the‐changes‐to‐lending‐and‐exchange‐functions/




https://bitconnect.co/system‐news/95/bitconnect‐update‐regarding‐the‐changes‐to‐lending‐and‐exchange‐functions/




https://youtu.be/kbR1SXIje1U




https://www.reddit.com/r/Bitconnect/


Not all tokens associated with exchanges are fraudulent.• Supports about 50 coins• Extremely low fees


https://en.bitcoin.it/wiki/Comparison_of_exchanges

Cryptocurrencies: Valuation

Very challenging• Most assets valuations are fairly narrow• For example, to value the stock you need a forecast of future cash flows and a sense of the risk (discount rate). There could be disagreement – but the range of disagreement is usually narrow

• For fiat currency (which is closer to cryptos given there is no official collateral), we usually look at the relative expected real GDP growth in two countries and the relative expected inflation. Again, there is disagreement but range is narrow.

• For cryptocurrency, the disagreement is extreme. Many believe the value is zero. Others might believe the value is $1 million.



Many “theories”• Scarcity. The idea is that just because something is scarce it must have value. Bitcoin can be thought of as algorithmic scarcity (given the supply of bitcoin is capped at 21 million). To me, this theory only makes sense if there is a usefulness for the asset.



Many “theories”• Quantity theory of money. It is claimed that “There is a fixed supply of tokens. As demand for the token increases, so must the price”. However, this is problematic because it ignores the velocity.

• The key equation is MV=PQ. Let PQ be Total Transaction Volume. SoAverage Network Value = (Total Transaction Value)/Velocity.

However, velocity is very high with cryptocurrencies. This high velocity means that the Average Network Value should be small.

80Campbell R. Harvey 2018https://multicoin.capital/2017/12/08/understanding‐token‐velocity/


Many “theories”• Replacement for Gold. Many similarities to gold:

– No centralized supply– Costly to mine– World currency

• Also, there are some advantages to cryptos:– Easy to transport– Cheap to store– Not susceptible to a supply shock

• However, gold has direct usefulness (jewelry, technology, dental)81Campbell R. Harvey 2018


Many “theories”• Mining cost benefit equilibrium. This mixes some of the other theories. The idea is that people will not mine bitcoin unless it is profitable to do so. So the cost of the marginal miner is the floor for coin price.

• If price drops, then mining decreases as it is not worth buying a mining machine and paying the electrical cost

• However, in contrast to gold, decreases in hash power simply cause the difficulty to decrease (it does not impact the coinbase supply)



Many “theories”• Bubble mentality. A bubble is an asset that has value because people believe that it has value.

• Large speculative demand for cryptocurrencies is typical of bubble behavior.

• “As investors join the bandwagon, they create their own truth – for a while.” Warren Buffett

• Important. Bursting of a bubble does not necessarily take you to zero. Consider history of bubbles like the housing bubble, tech bubble, …



Many “theories”• Relative value. The idea is that you fit a regression model to the price of the crypto versus other cryptos.

• The model delivers a fitted price. If the fitted price is greater than the market price, then the crypto is relatively “under valued”

• The key word is relative. It is possible that both are over valued or both are undervalued


Cryptocurrencies: National

Central bankers have finally come to the realization that they must create their own cryptocurrencies, like Fedcoin. It is obvious that “paper” money will be a historical relic – in the near future. The advantages of a crypto are substantial:• Technology makes it far more difficult for criminal activity. 79% of all US

currency is held in $100 bills – yet the average person does not carry a $100 bill nor do retailers accept them.

• Crypto eliminates counterfeiting.• Crypto allows for the efficient collection of taxes. You eliminate the “I prefer

to take cash” tax evasion. It is also straightforward to implement both a Value Added Tax (VAT) and a Border Adjustment Tax (BAT). Efficient implementation of these types of taxes combined with the decrease in evasion, would make it possible to substantially cut income and corporate taxes.



Central bank cryptocurrency:• Crypto allows for many people that are unbanked to become banked.

There are two billion unbanked in the world and, as a result, they have trouble accessing the modern world such as internet transactions.

• Crypto eliminates all of the costs associated with printing, distributing and securing, paper currency.

• Crypto allows monetary authorities to implement negative interest rates. Today, negative rates are hard to implement because why would anyone buy a bond with a negative interest rate when you can hold paper cash with a 0% interest rate.

• Crypto retains all of the flexibility of the current system such as central banks deciding how much currency needs to be “printed”.



Central bank cryptocurrency:• Sweden http://www.newsbtc.com/2017/10/16/sweden‐cryptocurrency‐technology‐cashless/

• Canada https://www.coindesk.com/bank‐canada‐demos‐blockchain‐based‐digital‐dollar/

• India https://economictimes.indiatimes.com/news/economy/policy/another‐experiment‐with‐currency‐rbi‐is‐looking‐at‐its‐own‐bitcoin/articleshow/60710700.cms

• Singapore http://www.trustnodes.com/2017/10/08/phase‐two‐tokenizing‐singaporean‐dollar‐ethereum‐blockchain‐completed‐monetary‐authority‐singapore

• Israel http://mashable.com/2017/12/27/israel‐cryptocurrency/#rhDwvLfMuOqn

• China https://futurism.com/china‐becomes‐first‐countrchina‐becomes‐first‐country‐in‐the‐world‐to‐test‐a‐national‐cryptocurrencyy‐to‐test‐national‐cryptocurrency/

• Russia https://www.coindesk.com/official‐russia‐to‐introduce‐cryptocurrency‐regulation‐bill‐next‐week/


Cryptocurrencies: Digitization of Other Assets

In principle, any asset can be tokenized• RMG is a collaboration between the Royal Mint Group and the Chicago Mercantile Exchange

• Each RMG is backed by one gram of gold held in the Royal Mint’s vault


Cryptocurrencies: Digitization of Other Assets

In principle, any asset can be tokenized• RMG has the volatility of gold (about 15% per annum)• Direct competitor to an ETF – fees are lower for RMG• Ability to hold very small quantities and use gold to pay for regular transactions

• Why not consider other assets? https://dinardirham.com/blog/overview‐commodity‐backed‐blockchain‐assets/


Cryptocurrencies: Education

• Challenges: Nobel Laureate #1

90

DECEMBER 28, 2013, 2:35 PM

Bitcoin Is EvilCampbell R. Harvey 2018


• Challenges: Nobel Laureate #2


Speaking of mind‐bending, economics professor Cam Harvey of Duke University did a presentation this afternoon on the blockchain, which is the foundation of Bitcoin. I have been friends with Cam for many years, but it has been an online friendship. He was the first to do research and analysis of the inverted yield curve, and I’ve learned a great deal from talking and writing with him.

Cam came over when the day session finished, and we began to talk about some aspects of blockchaintechnology. Harry Markowitz, the Nobel Prize laureate who created Modern Portfolio Theory, walked over; and after a few minutes he began to challenge Cam on the mathematical impossibility of what he thought Cam was talking about. It was fascinating watching these two genius professors talk about math and ideas, and eventually Harry got a handle on the process Cam was describing.

But I will confess a small pleasure at watching one of the greatest mathematical economists of our time wrestle with the concept of the blockchain. I have to tell you it took me a while to get my head around the concept, too, and it took Harry only five minutes.


• It is important for educators to open the black box and to show students and the general public how blockchains work



Documents

Cryptocurrencies January 21 2018 - Fuqua School of Businesscharvey/Teaching/897_2018/2_Crypto... · President Obama at SXSW: “everybody’s walking around with a Swiss bank account