Topics in Finance: Blockchain & Cryptoassets

Spring 2022, Wake Forest University

This course provides an introduction to cryptoassets. The course examines three broad topics therein: (1) bitcoin, (2) Decentralized Finance and (3) Central Bank Digital Currencies. The course opens with a discussion of bitcoin, the most prominent digital cryptoasset. We examine bitcoin from an economic perspective, highlighting technical details only as needed. Our discussion will involve a critical assessment of claims regarding bitcoin security and decentralization. We will also discuss the financial architecture that surrounds bitcoin trading. The course then transitions to a discussion of decentralized finance. Decentralized finance refers to an ecosystem of decentralized applications (dApps) that operate with aid of various cryptoassets. These dApps and their associated cryptoassets enable financial exchanges such as trading to occur without intermediation. We characterize the size and scope of this market and critically assess the long run economic viability of leading dApps. The course then concludes with a discussion of central bank digital currencies. We discuss several existing central bank digital currency projects and the potential economic significance of central bank digital currencies in the future.

Topics in Finance: Blockchain & Cryptocurrencies

Winter 2020, McGill University

This course constitutes an introduction to blockchain and cryptocurrencies. We use Bitcoin as a benchmark to study blockchain's structure and associated economic issues. Lectures will provide historical context, critically assess Bitcoin's economic value proposition and highlight economic limitations. We pay special attention to Proof-of-Work (PoW), Bitcoin's consensus protocol. We discuss both the need for a consensus protocol and whether PoW succeeds in satisfying that need. The course then transitions to a discussion of leading alternatives to Bitcoin. We focus upon two features of some leading Bitcoin alternatives: Proof-of-Stake (PoS) and smart contracts. We discuss PoS, a consensus protocol, conceptually and contrast PoS with PoW. We then discuss PoS more concretely through a discussion of a leading blockchain platform that employs it. Finally, we discuss smart contracts via a discussion of Ethereum, a prominent permissionless smart contract blockchain. Lectures discuss the economic value proposition offered by smart contracts but also stress practical limitations. For concreteness, we examine an existing smart contract on the Ethereum blockchain.