FUQINTRD 697: Innovation and Cryptoventures


 


Campbell R. Harvey
Professor, Fuqua School of Business, Duke University, Durham, NC USA

Fuqua Spring Term I, 2022

Course Description

My 2014-2015 course I&E 550 was the first course offered (in the world) focused exclusively on blockchain technology. In 2016, the course was moved to the Fuqua School of Business. Blockchain is a distributed ledger technology that provides proof of ownership and allows for the efficient, secure exchange of ownership. It is called blockchain because transactions are grouped together in blocks. Each block is cryptographically linked to the previous block. A public blockchain is usually transparent and distributed and anyone can put it on their computer. It is a peer to peer system. You don't need to trust your peers. Important property of blockchains is immutability: you can add to a blockchain but you cannot edit the past.   

The central topic of the course is understanding blockchain technology and its application to decentralized finance or DeFi. Blockchain is a distributed ledger technology with very special features such as immutability and a high level of security. The advantage of blockchain is that it provides a transactional or verification framework without the need for trust-ensuring central parties (e.g., banks). This reduces transaction costs and lowers the possibility of fraud. The work for the course consists primarily of readings and an entrepreneurial group project that is presented at the end of the course. In addition to discussing DeFi and other business applications of blockchain, the course covers some ground on key concepts from cryptography (hashing, digital signatures, public/private keys, ciphers, etc.). The course is interdisciplinary.

Who Am I?

To get to know me, go to my homepage and follow some of the links, for example my Media page or my most recent research papers. Follow me on Linkedin.

In addition to my job at Duke University, I am Partner and Senior Advisor at Research Affiliates, LLP, who overseas more than $180 billion in investment products and Investment Strategy Advisor to the Man Group, PLC. The Man Group is the third largest hedge fund group in the world.

Prerequisites

There are no prerequisites.

Class Schedule

We meet Tuesday-Friday at 10:30am ET and 1:45pm ET in HCA [The first class is by Zoom]. A full schedule of the class meetings is found in the Class Schedule. However, the schedule is fluid and depends on: 1) guest speaker schedules and 2) developments in the blockchain space.

Deliverables

There are many deliverables including a major innovation project. There is no final exam.

The group size is four (groups of five are not allowed) and ideally we draw students from diverse backgrounds. You will use the class Google sheet (see link below) to form your groups (all members within your enrolled section). At the end of the term, group members score the contributions of each member to avoid free-riding. The project is to analyze an existing venture or pitch a new venture idea linked to blockchain. I have front-ended the course with the basic concepts. It is essential that you start work as soon as possible. It is also necessary to meet with me as a group. Each group will present the last day of classes. You must turn in a 15 page pitch deck (16x9 aspect) as the main deliverable (you can include an appendix to the deck). You must carefully provide citations for all information/graphics on the slide page at the bottom of each slide in a smaller font (not at the end of the presentation and not in speaker's notes, there should be no speaker's notes). The in-class is shorter and will depend on the number of groups. The essential elements of a successful pitch are:

  1. Detail the problem you are solving;
  2. Demonstrate the problem is important;
  3. Show that blockchain is potential solution (that is, could the problem be solved more efficiently with existing centralized technology?);
  4. Outline your company's choice of blockchain technology (e.g., custom, public like Ethereum, Solana, permissioned, etc.);
  5. Provide enough technical detail to prove you understand how to implement the blockchain technology you choose (e.g., will you use an ERC-20 token and how will you interact with your blockchain? Is it Ethereum, Solana, etc.,?);
  6. Rough time-line (not applicable to all situations but relevant for the startups or early companies);
  7. Competitive analysis and major risks (this is particularly important, you need to be comprehensive on the competitors - how does your company compare to competitors, strengths, weaknesses? - you need to be critical);
  8. Does the project have the potential to scale? (i.e., apply the same or related idea in another market).
  9. Valuation (required)
    • If a new venture (that is, your unique idea for a start up), size of seed fund raise, how much equity you will yield and expected post
    • If an existing venture with current valuation (from past fund raises), how much would you value the company at? Think of a perspective of an institutional investor thinking of investing 5%. Here you might like the company but your value might be less than the current market value. I am looking for a recommendation which might be a negative recommendation. No discounted cash flow analysis is necessary. Make a judgment of the market size and potential penetration. From a hypothetical value, you can determine a reasonable price.
    • If an existing venture with no known valuation (or unreliable valuation, e.g., from seed or pre-seed), I need some judgement of the value and what you would be willing to pay for 5%.
    • Some groups have chosen companies that have been recently acquired by legacy companies. In this case, an interesting angle is that the legacy company has been approached with an offer that doubles their initial investment. This is a hypothetical but we will assume it is real for the presentation. You are in charge of making a recommendation to the legacy company's board as to whether to take the offer or hold.
    • If a non-profit, put yourself in the position of pitching for funding to a large funder like the Bill and Melinda Gates Foundation. Value here also includes intangible value to the community.

Class Google sheet/Slack channel/Email communication

You will be interacting with a class 10:30 Section Google sheet and 12:45 Section Google sheet as well as a Slack channel. Here is the Slack signup link.  Expect frequent communication from me for the next six weeks. Emails will originate from Canvas.

Group meetings

All groups must meet with me at least once to discuss the innovation project. I have a Google calendar sheet (that is shared across all three of my classes).

Outside Class Contact

The best way to get me is with a DM on Slack. My e-mail me is cam.harvey@duke.edu. Given I have approximately 250 students, you should utilize the TAs (there are five TAs). Their names and emails are in the class Google sheet.

NDAs and Other Legal

NDAs may be required for outside presentations.

Texts

There are no required texts in FUQINTRD 697. However, I will draw from my book, DeFi and the Future of Finance There is an extensive recommended reading list below. I expect everyone to go through some of the introductory material before the first class.

Attendance

Mandatory.

Electronics

You should bring your mobile device to class (but it must be on silent). You can also use laptops. Laptop needs to have Chrome installed. We will be installing program called MetaMask on mobile devices and desktop/laptops as part of the preassignment. During class, only programs, tabs, that should be open are the ones relevant to the class (e.g., Outlook should not be open). Laptops must also be on silent mode

Pre-Class Assignment

Part of the preassignment involves setting up a cryptocurrency wallet as well as other tasks and it is mandatory. We will use MetaMask (even if you have your own wallet say in Coinbase I need you to set up a MetaMask). The pre-assignment gives instructions on how to set up the wallet on mobile devices as well as desktop. MetaMask wallet does not require private information. The preassignment is live as of December 28, 2021.

The preassignment is due January 13, 2022 at 11:59pm.

Guest Appearances

We will have a small number of guest appearances. The speakers are difficult to organize and all will be done via video conference. Given my historical experience, some speakers need to reschedule at the last minute. Keep that in mind. One of the speakers (a very high profile speaker) will appear at 12:45pm so that he can hit both classes. That day, the 10:30am class will begin at 11:30am and the  1:45pm class will begin at 12:45.

Class Topics

See the class schedule Important: the schedule is somewhat fluid in that I may spend longer on some topics and spillover to the next class. I prefer to not rush through a topic if there are questions. I might add or delete topics. I am also interested in your input for topics.

Crypto Key Resources

Here is a short list with the most important resources:

 

Supplementary Crypto Resources

I have provided an extensive list of resources below. I have merged my list of resources along with the excellent resources of Jameson Lopp. There are now plenty of sites that have introductions to cryptocurrency and I have listed some useful videos. You should take the time to view at least one of these videos. You should also be checking the Reddit discussions. The course is very short and it is crucial that we get up to speed as quickly as possible. Also, the below list is heavily skewed towards bitcoin (which was the first major application of blockchain technology).

Getting Started


Video Presentations


On-Line Courses


Blockchain


Books-Blockchain/DeFi


Books-General Interest


News


Discussion Forums


Ethereum Resources


Personalities


Podcasts


Documentaries


Blogs


Twitter


The History of Bitcoin


Buying Cryptocurrency


Visualizations


Mining


Block Explorers


Developer Tools


Deep Dive Technical Resources


Security


Privacy


Running a Node


Merchant Adoption


Advanced Trading


Realtime Exchange Data


Miscellaneos Statistics


Transaction Fee Estimator


Tax Accounting


Lightning Network


Bitcoin Forks


Legal


Cryptography


Legal and Regulatory Resources

Duke Law has an excellent set of resources focused on Blockchain and Fintech. The resources include Twitter feeds, websites, blogs, podcasts, news articles, government/regulatory/legal documents, white papers, videos, and data.. The basic categories include: learning bitcoin/cryptocurrencies, blockchain, cybersecurity, data, fintech and the financial industry, initial coin offerings, marketplace lending/P2P lending, payments, RegTech, regulatory agencies and central banks, robo-advisers, smart contracts, and fintech groups.