In 2016, when NYU Stern launched a comprehensive fintech elective program that included a blockchain and cryptocurrencies course, the whole class could have been accommodated on a couple of benches: there were only a dozen students.
In 2017, interest in the topic had picked up so much that even a large classroom would have looked crowded: there were now 100 students. Stern realized that the course had become so popular that it would have to allot a big hall. “We are moving it to our largest auditorium with capacity for 350 students,” David Yermack, Stern’s Professor of Finance, told FT.
Stern was among the first b-schools to recognize the growing importance that blockchain and cryptocurrencies had for the financial services industry and their possible disruption to other sectors. Universities are now teaching the context of how blockchain technology came about, its mechanics, and how innovations and commercializations are taking place.
But much before universities and b-schools became alert to the impact of “fintech,” or financial technology, large banks and other financial institutions had started eyeing it, but were being held back by worries over regulation and their own legacy IT systems. Then, a number of start-ups using blockchain technology more effectively began to cause serious disruption in the financial sector.
Today, all the big financial institutions in the world are looking to blockchain to reduce administrative expenditure, speed up settlements, and increase revenue through innovative products and services created by the new digital ledger. Fintech enthusiasts believe that blockchain will cut costs for cross-border transfers, remittances, and corporate payments, reduce administrative costs, speed up settlements, and provide revenue opportunities through innovative products and services.
A cryptocurrency is a digital or virtual currency that is secured by cryptography, making it difficult to counterfeit, explains Investopedia. A cryptocurrency is not issued by a central authority, and it is immune to government interference. However, its anonymity makes it ideal for use for illegal activities, such as money laundering.
Cryptocurrencies facilitate smooth transfer of funds, with minimal processing fees that are much less than fees charged by financial institutions. Bitcoin was the first cryptocurrency to become popular. It was introduced in 2009 by an individual or group under the pseudonym Satoshi Nakamoto. Bitcoin’s acceptability led to the launch of many competing cryptocurrencies, such as litecoin and namecoin. [Read this primer – What is bitcoin and how does it work?]
The foundation of bitcoin is the digital ledger blockchain, which stores all transactions ever made. The blockchain data structure uses cryptography to allow participants to securely manipulate the ledger without a principal authority, explains Business Because. It is only minimally exposed to hacking, and can be copied on all computers using the bitcoin software. The technology is known as distributed database, which can be run from many computers and does not need a central authority, says an FT article.
However, over 40 bitcoin thefts, some of them of bitcoins worth over $ 1 million, have been reported. Another worry is that a bitcoin balance can be wiped out by a computer crash if a backup copy of the balance has not been created. Moreover, bitcoin value and the rate at which it can be exchanged for another cryptocurrency can fluctuate widely based on supply and demand, Investopedia points out.
A 2017 study by the Cambridge Centre for Alternative Finance (CCAF), part of the Judge Business School, University of Cambridge, says the number of unique active users of cryptocurrency wallets is estimated to be between 2.9 million and 5.8 million. Over 2,000 people are supposedly working full-time in the cryptocurrency industry.
Institutions such as banks, insurers, exchanges, and governments are anxious to know how blockchain will be used by their rivals and how they can use it themselves. Although blockchain came into being with bitcoin, the collapse of the then biggest bitcoin exchange Mt. Gox and disappearance of $500 million have taken away some of the attractiveness of cryptocurrency. However blockchain’s uses survived beyond bitcoin, and is now being considered as a ledger for cryptocurrencies other than bitcoin.
Blockchain’s potential for international clearing and settlements has drawn the attention of investment banks such as Goldman Sachs and JPMorgan Chase. According to Accenture’s estimate, blockchain will cut financial costs by $20 billion annually by 2021.
Wall Street has grown more and more interested in the technology, although a few VIP bankers have expressed doubts over the staying power of bitcoin, the price of which crossed $11,000 in 2017, reports cnbc.com.
A cryptocurrency craze seems to have taken hold of b-schools. Fintech courses, ranging from blockchain and crowdfunding to peer-to-peer lending and robo-wealth-managers, are in demand among students. Of course, blockchain is at the top of their must-learn lists.
So much so that the Professor of Finance at Fuqua Campbell Harvey is receiving teaching requests from b-schools all over the world. “I expect more schools will follow suit, as there has been a tremendous increase in student demand,” he says.
None of the top b-schools want to be caught napping, and have introduced courses to produce graduates well-versed in fintech. Duke Fuqua has launched an “Innovation and Cryptoventures” course aimed at students who want to create their own blockchain startups. MIT Sloan has developed an intensive three-day course for MBAs. Stanford is preparing to launch a comprehensive course taught by a former federal prosecutor at the Justice Department who often focused on digital currencies and financial fraud.
At the Harvard Business School, students have started the Blockchain, Bitcoin, and Cryptocurrency Club to facilitate education and explore applications. Wharton School, which is planning to broaden its blockchain course, has launched a Blockchain Club with 300 members, hosting guest speakers and organizing meetings.
B-schools courses are trying to find out how entrepreneurs can innovate with blockchain and commercialize it. Berkeley Haas is preparing to offer a course in blockchain software, for which it will select 60 students from business, engineering, and law, who can find new applications of blockchain tech. USC Marshall has introduced a course that focuses on possible business models that may disrupt current businesses.
In the UK, Cambridge’s introduction of a blockchain course followed US universities’ shift of focus from bitcoin to blockchain. FT reports that CCAF was likely the first institution in the UK to teach the subject following a demand from employees of global banks.
Below is a table of some of the top B-Schools, as per Financial Times’ Global MBA Rankings 2018, that have incorporated Fintech, Blockchains, and their derivatives, in their curriculums, workshops, student clubs, and more. Though not an exhaustive list, it clearly indicates the turn of attention to the field.
|Business School||Course/Program Name|
|Stanford Business School||Cryptocurrency (Course)|
|University of Pennsylvania-Wharton||Financial Tech (Course)|
|Harvard Business School||Blockchain, Bitcoin & CryptocurrencyClub|
|INSEAD (Digital@INSEAD)||Fintech & Digital Disruption in the Financial Sector (Program)|
|Chicago Booth||Fintech (Student Group)|
|Columbia Business School||Fintech: Consumer Financial Services (Course)|
|MIT||Blockchain Courses – Digital Currency Initiative|
|Berkeley Haas||Blockchain at Berkeley (Student Club)|
|IESE Business School||Fintech Club|
|Kellogg School of Management||Fintech@Kellogg (Programming)|
|University of Cambridge Judge||Fintech Entrepreneurship specialist pathway (Launchpad)|
|Oxford Saïd||Oxford Blockchain Strategy Programme|
|Yale SOM||Fintech course (MGT 843) & Fintech Student Club (More info)|
|Dartmouth Tuck||Blockchain/Distributed Trust (Center for Digital Strategies)|
|Cornell Johnson||Fintech Intensive (NYC Intensives)|
|National University of Singapore||BBA Course in Fintech Management (Course)
Bachelor of Computing Information with Fintech Specialisation (More Info)
|NYU Stern||Courses in Fintech|
|USC Marshall||The Disruption – Fintech Revolution Course|
|Duke Fuqua||Innovation and Cryptoventures (Course)|
|ESADE||Fintech Open Programme|
|IMD||Digital Finance Course|
|UCLA Anderson||Blockchain Business Applications (Course)|
|Michigan Ross||Fintech Innovations (Course)|
|Indian School of Business||Blockchain workshops and roundtables (More Info)
ISB Fintech Summit (Annual Industry Event)
|Virginia Darden||Darden Fintech Club|
The demand for fintech/blockchain and cryptocurrency courses is fueled by lucrative jobs commanding starting annual salaries of $250,000. Stern’s Yermack says there is a huge requirement for professionals trained in blockchain and cryptocurrencies.
Firms are looking to employ people who understand blockchain disruption and can use it to their organizations’ best advantage. Many executives grasp the value proposition for blockchain, but company heads are yet to fully understand the technology, according to an Accenture report. Not only they, but their executives down the hierarchy and other employees will need to be taught technology nuances.
Many b-school students are turning their eyes away from traditional roles in private equity and hedge funds to blockchain and cryptocurrencies. But some are trying to blend the two, reports cnbc.com. A Wharton MBA student, John Pennington, who earlier worked for a global investment bank, points out that technology and finance are not mutually exclusive. Professionals in the traditional financial business can benefit hugely by adopting technologies such as blockchain, Pennington says.
B-school professors such as Mitch Weiss, who teaches the entrepreneurship class at HBS, are including blockchain in their classes. “We take our task to educate leaders who will make a difference in the world seriously, and I think it is safe to say that blockchain leadership is going to be a big part of that,” Weiss says.
Professionals who have explored blockchain have gained substantially. Data from Upwork, the online freelancing job site, show that in the third quarter of 2017, blockchain was the second fastest-growing skill among 5,000 skills on the platform. According to Upwork data, freelancer billings for blockchain grew 2,652 percent in this period compared with last year.
Besides university and b-school courses, online courses in blockchain tech and cryptocurrencies are available. Some of them are available free as massive open online courses (MOOCs).
Blockchain technology allows encrypted data on anything from money and medical records to be shared by companies, people, and institutions. This protects data from fraud and updates the parties involved instantaneously.
Although blockchain is still in an early stage of development, it has the potential to disrupt many sectors. “This is because it is transparent, indelible, and tamper-proof, and is jointly run by several parties,” says an FT article.
Naturally, big companies that have moved away from bitcoin fearing fraud and criminality are now keen to explore the underlying blockchain technology for many uses. Financial services and technology professionals are eager to receive an education in blockchain technology.
The demand for expertise in blockchain technology is huge and far outstripping supply. “I’m pretty sure every university will have a blockchain course in five years. More institutions would like to teach it now, but it’s a question of having a professor around to do it,” Yermack says.
“There’s a knowledge and skills gap,” agrees Robert Farrokhnia, who teaches fintech at the Columbia Business School. “Everyone is having a hard time keeping up, and they’re tech people,” he adds.
Pioneering cryptocurrency academics are also going to have a hard time keeping up. “If you strive to be at the cutting edge of technology, you have to refresh your syllabus regularly,” Farrokhnia says.
Raghu Rao of the CAFC, which is evolving a number of fintech electives, says b-schools will have to respond to the speed and scale of fintech disruption. “You’ll definitely see a few more courses.”
At least some of these will need big auditoriums, if blockchain endures and cryptocurrencies thrive.
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References: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12