Unpacking Blockchain and Cryptocurrency: A Seminar Series for Finance Researchers

May 8, 2023

In the rapidly evolving digital economy, blockchain technology and cryptocurrencies offer new paradigms for the field of finance. This seminar series aims to illuminate the inner workings and the transformative potential of these disruptive technologies. The goal is to equip finance researchers with the knowledge needed to delve into their multifaceted applications and uncover untapped research opportunities.

Topics Covered

Fundementals of Blockchain Technology

To truly grasp the value and potential of blockchain technology, we must first understand its fundamental components. This session will delve into the core mechanics that underpin lockchain systems. We will introduce and explain the following key elements:

Digital Signatures: We will discuss the role of digital signatures in verifying the authenticity of data and ensuring the integrity of transactions on the blockchain.
One-Way Encryption: We’ll explore the concept of one-way encryption (also known as hashing), a crucial aspect of securing data on a blockchain. Attendees will learn how this cryptographic technique contributes to the immutability and security of the blockchain.
Hash Functions: We will delve into the specifics of hash functions and their importance in linking blocks together in the chain, contributing to the tamper-evident nature of the technology.

By the end of this seminar, attendees will have a foundational understanding of these concepts, paving the way for more in-depth discussions on the applications of blockchain technology in finance.

Understanding Proof-of-Work

Building on the foundational understanding of blockchain technology, this seminar will focus on the core process of mining, including the principles of the Proof of Work (PoW) consensus mechanism and the role miners play in the blockchain network.

Understanding Proof of Work: We will delve into the mechanics of PoW, a consensus algorithm used by many blockchain networks. This section will explain how the PoW system deters denial of service attacks and other service abuses by requiring some work from the service requester, usually in the form of processing time by a computer.
Role of Miners: Miners serve an essential function in blockchain networks. We will explore the tasks they perform, from validating and recording transactions to solving complex mathematical problems, and discuss how they maintain the security and validity of the network.
Hands-On Experience with a Blockchain Simulator: Attendees will get a chance to interact with a simple blockchain simulator. This experience will allow participants to visualize and understand the blockchain process, from guessing the correct nonce, generating the “correct” hash, to mining blocks. This exercise will underscore the practical workings of hash functions, transactions within blocks, and hash pointers, the “chains” that hold the system together.

By the end of this session, participants will have a firm understanding of PoW and the critical role miners play in securing blockchain networks, providing a solid foundation for the next seminars on the applications of blockchain in finance.

Working with Blockchain APIs

Blockchain data can provide insightful and invaluable information if you know how to extract and interpret it. This session will serve as a practical guide to retrieving data from the blockchain via APIs. We will cover the basics of using APIs to access blockchain data, discussing how they function and how they can be used to fetch relevant data from the blockchain network. By the end of this session, participants will have a practical understanding of how to interface with blockchain networks using APIs, providing a crucial skill for blockchain data analysis and research in the finance field.

The Economics of Bitcoin: A Deep Dive

With a solid understanding of blockchain technology and its mechanics, we now turn our attention to the pioneering application of blockchain - Bitcoin. This session will explore Bitcoin from an economic perspective, aiming to spur thought-provoking discussions and potential research topics for finance PhDs.

History of Bitcoin: We will recount the genesis of Bitcoin and its journey, exploring the significant events that have shaped its development and the context that led to its creation.
Valuing Bitcoin: A central question around any asset, including Bitcoin, revolves around its valuation. We’ll delve into what gives Bitcoin its value, discuss the various valuation models, and explore the factors influencing its price.
Arguments For and Against Bitcoin: We will lay out the major arguments for and against Bitcoin as an asset class, a currency, and a technological innovation, discussing its potential benefits and drawbacks from different viewpoints.
Shortcomings of Proof of Work: In light of our understanding of Proof of Work, we’ll also discuss its limitations, especially in the context of Bitcoin. These include issues like energy consumption, scalability, and potential centralization.
Research Perspectives: The session will conclude with a discussion aimed at stimulating new research ideas about Bitcoin and blockchain technology. Attendees will be encouraged to consider novel research topics leveraging their background in finance and economics and the knowledge gained about blockchain and Bitcoin in the seminar series.

By the end of this session, participants will have a comprehensive understanding of Bitcoin from an economic perspective and be well-prepared to explore unique research topics in this dynamic field.

The Economics of Ethereum and Consensus Mechanisms: A Comparative Analysis

This session will provide an economic exploration of Ethereum, the blockchain network behind the second-largest cryptocurrency by market capitalization. Simultaneously, we will also delve into the technological differences between Proof of Work (PoW) and Proof of Stake (PoS), particularly in the context of Ethereum's much-anticipated transition to PoS.

Understanding Ethereum: We will delve into the history, value proposition, and economic implications of Ethereum, discussing its similarities and differences to Bitcoin from an economic perspective.
Proof of Work vs. Proof of Stake: In this part of the seminar, we will contrast PoW and PoS consensus mechanisms, focusing on their strengths, weaknesses, and economic implications. This discussion will provide a valuable context for Ethereum’s transition to Ethereum 2.0, which involves shifting from PoW to PoS.
Economic Pros and Cons: We will discuss the potential economic advantages and drawbacks of Ethereum, with a focus on its unique features like smart contracts and decentralized applications (dApps).
Research Perspectives: Like the previous seminar, we will conclude by stimulating a thought-provoking discussion aimed at generating new research ideas in the field of blockchain technology and finance.

By the end of this session, participants will have a comprehensive understanding of Ethereum and the comparative economics of PoW and PoS consensus mechanisms, thus setting the stage for further exploration of blockchain applications in finance.

Deciphering Blockchain and Cryptocurrency Literature: A Review and Discussion

In the final seminar of this series, we will delve into the academic literature on blockchain and cryptocurrency published in top-tier finance journals. This session aims to provide attendees with a holistic understanding of the current state of research in the field, thereby sparking ideas for new research avenues.

Review of Relevant Literature: We will explore a range of studies from leading finance journals. The review will cover diverse topics such as blockchain technology, cryptocurrency valuation, consensus mechanisms, regulation, and more.
Analysis and Discussion: Following the review, we will facilitate a discussion on the methodologies, findings, and implications of these studies. This discussion will enable participants to critically analyze the existing literature and identify gaps in the research.
Identifying Future Research Opportunities: Finally, we will brainstorm potential research topics based on the gaps identified in the current literature. This will enable participants to conceptualize and plan their own research in the dynamic field of blockchain and cryptocurrencies.

By the end of this seminar, participants will have a thorough understanding of the current state of academic research in the field of blockchain and cryptocurrencies and be well-equipped to embark on their own research journeys.