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Understanding the buzz behind Bitcoin, cryptocurrency and fintech

When bitcoin's price peaked at nearly $18,000 in December 2017, it generated a buzz among DePaul's faculty and students, who are exploring ways to learn more about finance-related technologies and cryptocurrency.

Lamont Black, assistant professor of finance in Driehaus College of Business, and Massimo Di Pierro, professor of data analysis and scientific computing in the College of Computing and Digital Media, talk about this topic and how they are addressing it in the classroom.

Let's start with the basics. What are bitcoin, blockchain and initial coin offerings (ICOs)?

Black: Bitcoin is a peer-to-peer digital currency. It's not backed by banks or hard currency. It's not electronic transactions like those tied to bank accounts. I see it as an evolution from physical coins and paper to pure digital currency. Blockchain is the encryption technology that makes peer-to-peer digital currency possible. It's an electronic shared ledger of transactions. You can think of an ICO as a form of crowdfunding.

Di Pierro: We should also distinguish cryptocurrencies from the enabling technologies like distributed computing, encryption and blockchain.

How has the popularity of fintech and cryptocurrency affected what you teach?

Di Pierro: All of my classes in computational finance are related to fintech in a broad sense. I talk about blockchain and how it relates to financial transactions and I have given assignments for students to use machine learning to predict ether cryptocurrency prices. The technologies we cover in class can be applied to cryptocurrencies but are not specific to cryptocurrencies.

Black: A few years ago, I addressed cryptocurrency at the very end of my class when I talked about the future of finance. Now, I'm starting to talk about it on day one and throughout the quarter. When I'm talking about derivatives, I'm also talking about bitcoin futures. There is an entire session on bitcoin in my Finance 320 Money and Banking class for undergraduates and Finance 513 Money and Capital Markets graduate class. Each quarter, there is a larger portion of students working on cryptocurrency for their term projects.

What is driving the interest?

Black: A lot of the energy and momentum in my experience is coming from students. I have students from the entrepreneurship program who are interested in doing ICOs to fund their startups. There's a lot of demand from people who are trying to understand it.

There's talk of a bitcoin bubble. Is there any staying power among all the available cryptocurrencies?

Di Pierro: In my view, cryptocurrencies have failed so far to deliver on the promise of an inflation-proof, non-government controlled currency. They are highly volatile and most of the currency is concentrated in the hands of a few players and a few countries. But, the underlying technologies supporting cryptocurrencies have an increasing role to play in society as it provides a system for establishing trust in a distributed data environment. That's where I see the real value.

Lamont Black and Massimo Di Pierro are among the hundreds of DePaul faculty who offer their expertise to members of the news media through the DePaul Experts Guide. Are you a faculty member interested in speaking with the media? Learn more about the guide in Newsline.​​​​