FUQINTRD 697: Innovation and Cryptoventures
Fuqua Spring Term I, 2019
My Spring 2015 course I&E 550 was the first course offered anywhere in the world focused on blockchain technology. In 2016, the course was offered by the Fuqua School of Business for the first time. 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 requires no trust. However, you cannot change any entry in the blockchain. It is immutable.
In the most popular version of the public blockchain - the bitcoin blockchain, the blocks are “mined”. The miner takes a group of transactions and adds an arbitrary number called a "nonce" (also known as the "magic number") and applies a cryptographic hashing function (one-way function). The nonce is varied because the miner is looking for a very rare resulting hash – currently one with 18 leading zeros. [Think of having five decks of cards. You shuffle and draw the first five cards. You are looking for five consecutive aces of spades. You would have to shuffle many times to get the desired five cards.] It takes the network about 10 minutes to find this “solution” with 35 billion gigahashes being tried every second.
The bitcoin blockchain is secure because to win a new block the admission price is about $3 billion 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 highly unlikely anyone can rewrite history. Changing history involves working backwards through the bitcoin blockchain, changing blocks and finding new hashes. No one has the computing power to pull this off.
The security is very important. For example, questions over security constrain the widespread adoption of the Internet of Things. 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 extremely unlikely. This is exactly why IBM (a leader in IoT) has a team researchers dedicated to blockchain research. Every major financial institution has teams working on blockchain.
In my opinion, this is an extremely disruptive technology and has its place in every leading business school’s curriculum. However, Duke is the only school offering a course like mine.
This is not simply a course about bitcoin. The focus of the course is blockchain. Bitcoin uses a particular type of blockchain technology. 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 blockchain, provides a secure way to verify ownership of anything. The security is established by the massive computing power necessary to add to a 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 usually 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.
In addition to my job at Duke University, I am Partner and Senior Advisor at Research Affiliates, LLP, who overseas more than $200 billion in investment products and Investment Strategy Advisor to the Man Group, PLC. The Man Group is the largest listed hedge fund group in the world.
There are no prerequisites.
We meet Tuesday-Friday at 12:30, and 15:00 in McClendon Auditorium. 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.
The course work mainly consists an entrepreneurial project. There are seven deliverables. There is no final exam.
There is also 10% individual participation grade. This will depend on items such as attendance (which is manditory) as well as class participation.
The group size is four and ideally we draw students from diverse backgrounds. You will use a Google sheet 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 pitch a new venture idea linked to blockchain. I have front-ended the course with the basic concept. 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 as the main deliverable. The in-class elevator slide limit is 8 slides (no building). The essential elements of a successful pitch are: 1. Detail the problem; 2. Demonstrate the problem is important; 3. Show that blockchain is potential solution; 4. Outline your choice of blockchain technology (e.g., permissioned vs. non-permissioned, public vs. private); 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?); 6. Rough time-line; 7. Competitive analysis and major risks; 8. Size of seed fund raise; perhaps a guess on what you need in Series A; ICO or no ICO? 9. Does the project have the potential to scale? (i.e., apply the same or related idea in another market).
E-mail me at email@example.com. 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. During the six weeks of teachingl, I am focused on teaching.
NDAs may be required for outside presentations.
There are no required texts in FUQINTRD 697. There is an extensive recommended reading list below. I expect everyone to go through some of the introductory material before the first class.
Bring laptop to each class with sounds on mute. We may use it at the beginning of class. It needs to be closed during class. Laptop needs to have Chrome installed. We will be installing program called MetaMask. Do not install until you get detailed instructions from me (we will do this together in the first class).
There are two components to the manditory pre-assignment. The preassignment is available here.
For the first part of the preassignment, if you do not have a cryptocurrency wallet, you must get one and you should get the Coinbase.com app (co-founded by a 2010 Duke grad). You do not have to add any money to the account. Add the email address associated with your Coinbase.com account to the class Google sheet and I will send you $1 worth of bitcoin (you can later easily move between bitcoin, bitcoin cash, ethereum, litecoin or USD within your Coinbase wallet).
The preassignment is due January 18, 2018 at 11:59pm.
The second part of the preassignment is modeled after Assignment #1 in Duke CS 101 (the introductory undergrad course in computer science that has no computer science prerequisites). The goal of the assignment is to give you a simple introduction to the main concepts in computer science. If you have a background in computer science, there is an alternative preassignment.
We will have a number of guest appearances. The speakers are complex to organize (especially with two sections) and almost all will be done via video conference. There may be some speakers that I will present on Wednesday afternoons.
See the class schedule tab. 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 a lots of questions. I might add or delete topics. I am alsointerested in your input for topics.
I have provided an extensive list of resources below. I have merged my list of resources along with the excellent resources of Jameson Lopp (who has helped me with the course since the beginning and is CTO as Casa - a startup founded by another Duke grad). 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).
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.
You will also have access to a shared Google sheet that has the lastest news that I have found relevant. You can also contribute to this sheet.