Finance 898: Innovation and Cryptoventures


Campbell R. Harvey
Professor, Fuqua School of Business, Duke University, Durham, NC USA
Research Associate, National Bureau of Economic Research, Cambridge, MA USA
Investment Strategy Advisor, Man Group PLC, London, UK

Fuqua Spring Term I, 2016

Course Description

My 2015 course was the first course offered anywhere in the world focused on blockchain technology. The 2016 builds on the 2015 course. Blockchain is a transparent ledger that provides proof of ownership and allows for the efficient exchange of ownership in a way that is historically unprecedented in terms of security. It is called blockchain because transactions are grouped together in 10 minute blocks. The blockchain is transparent and decentralized and anyone can put it on their computer. It requires no trust. However, you cannot change any entry in the blockchain.

In the most popular version of the blockchain, the blocks are “mined”. The miner takes about 10 minutes of transactions and adds an arbitrary number called a “nonce” (also known as the "magic number") and applies a cryptographic hashing function (one-way encryption). The nonce is varied because the miner is looking for a very rare resulting hash – currently one with 17 leading zeros. [Think of having five decks of cards. You shuffle and draw the first 5 cards. You are looking for five consecutive ace of spades. You would have to do this many times to get the desired five cards.] Currently, it takes the network 10 minutes to find this “solution” with 400 million gigahashes being tried every second.

The blockchain is secure because to win a new block the admission price is about $500 million of specialized hardware (this would get you 50% of the network hashing power). Hence, it is off limits to almost all hackers. Furthermore, it is not possible to rewrite history. Changing history involves undoing hashes by brute force which is on the order of difficulty of 2255 – approximately the number of atoms in the known universe.

The security is very important. For example, the Internet of Things will not take off because of security issues. Currently someone can hack into your house and turn your thermostat up to 100 degrees – or even worse, hack your car while you are driving (or being driven by a self-driving car). Blockchain makes this not possible. This is exactly why IBM (leader in IoT) has a team of 30 researchers dedicated to blockchain research. Every major financial institution has teams working on blockchain. On September 15, a consortia of nine of the largest banks in the world (including Goldman, JP Morgan, CS and UBS) announced they were pushing ahead to develop common blockchain standards. On September 29, 2015, 13 additional banks joined the initiative inclucing Bank of America, Morgan Stanley and Deutsche Bank.

In my opinion, this is an extremely disruptive technology and has its place in any leading business school’s curriculum.

This is not simply a course exploring transactions in bitcoin. The idea of the course is to understand a disruptive technology and to assess its implications on how business is conducted in the future. Much of our focus is on blockchain technology and the many ventures that have already begun to capitalize this innovation. This network, which includes the blockchain, provides a secure way to verify ownership of anything. The security is established by the massive computing power necessary to add to the blockchain. Think of the blockchain as a secure repository of common knowledge. A wide range of items can be attached to the blockchain from ownership of a car or access to cloud computing to medical records. Indeed, it is possible to create algorithmic contracts within this network. This leads to the possibility of disruptions not just in finance (stocks, bonds, etc.) but also in law (simple contracts) and other fields. It is even possible to create what is known as a distributed autonomous corporation – essentially an autonomous computer program that employs people and conducts business as a corporation would.

The course is available to Fuqua students as well as Law students, graduate students, and advanced undergraduates (with the expectation that undergraduate students will demonstrate a strong set of technical skills). Permission of the instructor is required for enrollment of all non-Fuqua students.

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.

In addition to my job at Duke University, I am Investment Strategy Advisor to the Man Group, PLC. The Man Group is the second largest hedge fund group in the world.


There are no prerequisites.

Class Schedule

We meet Tuesday-Friday at 15:00 in Formica Classroom. A full schedule of the class meetings is found in the Class Schedule tab of Sakai.


The course work consists of assignments, company analysis as well as an entrepreneurial project. There will be two encryption assignments. The first assignment is due before the second class [10% of grade]. There is an individual assignment on a company of interest. [20% of grade.] Finally, and most importantly, most of the course grade is determined by a entrepreneurial group project that is presented at the end of the course. [70% of grade.] The ideal group size is four and ideally we draw students from diverse backgrounds. I have not yet decided how we will form the groups. At the end of the term, group members score the contributions of each member to avoid free-riding. The project is to pitch a new venture idea linked to blockchain. Each group comes up with an idea and hopefully the distribution of expertise within the group makes the ideas very high quality.

Outside Class Contact

E-mail me at At odd hours, you can text me at 919-271-8156 (if I am not available, I simply set to DND, so don't hesitate to text) You can also call me. Again, when I am busy or sleeping, my phone is on do not disturb.

NDAs and Other Legal

NDAs may be required for outside presentations.


There are no required texts in Finance 898. There is an extensive reading list below.

Pre-Class Preparation

If you do not have a bitcoin wallet, you must get one. I recommend Coinbase app (founded by a Duke grad). You do not have to add any money to the account. Then send me a request for $10 ( There is an airplane icon in top right. Type in $10. Hit request. Add my email.

Read whatever you can on bitcoin and blockchain to start with. It is easy to find material and some of that material is listed below. You should look at the original Satoshi Nakamoto paper (it is a great paper but somewhat of a challenge to read if you have no background in computer science). There are now plenty of sites that have introductions to bitcoin and I have listed some useful videos. For example, take the time to view at least one of these videos, such as How Bitcoin Works Under the Hood. You should also be checking the reddit/bitcoin discussion. The course is very short and it is crucial that we get up to speed as quickly as possible.

Guest Appearances

We will have a number of guest appearances. We will frequently engage guests by video conference.

Class Topics

See the class schedule tab. The schedule is somewhat fluid in that I may spend longer on some topics and spillover to the next class. I might add or delete topics. I will also be interested in your input for topics.

Key Materials

Introductory Materials and Videos


Useful Resources

Books (Crypto):

Books (General Interest):






Other Resources

Protocol definitions, history, general information:

Data, Statistics, Network Status and Adoption Trends:

Cryptocurrency Storage:
Select Web Hosted Wallets

Select client side software Hardware Wallet

Blockchain innovation: