Nathan Dong, PhD, CFA 

Department of Finance, Carroll School of Management, Boston College 

FinTech and Cryptocurrencies (MFIN6650) 

Open to both undergrad and graudate students

Course Description 

This course focuses on understanding the design of cryptocurrencies and blockchains and its investment implications. We first discuss the technical underpinnings of blockchain and review key concepts such as decentralization and consensus algorithms. We then examine cryptocurrencies as an asset and review the dynamics of crypto markets. Finally, we discuss the use and limit of arbitrage and hedging in Bitcoin futures and options.

Prerequisites 

• Investment

• Some knowledge in Derivatives and Python coding is helpful.

Course Objectives 

Upon successful completion of this course, students will be able to

• understand the fundamental aspects of cryptocurrency

  • The origins of money

  • The fundamental drivers behind the creation of cryptocurrency

  • The types and sizes of exchanges for crypto transactions

• understand technical underpinnings of blockchain

  • Decentralization, consensus algorithms, and forks

  • Business use cases, such as smart contract, payment, lending and credit rating

  • Business investment in FinTech, such as(VC in decentralized finance

  • The limitation and improvement of blockchain such as permissioned vs. permissionless

• understand the risk and returns of cryptocurrencies

  • The nature of cryptocurrencies: currency or asset

  • Law of one price

  • How to exploit irrationality via predictive trading strategies

  • Measure of risk, return and correlation with other assets

  • Do you get compensated for idiosyncratic risks in crypto markets

  • Regulatory oversight being pursued for cryptocurrencies

  • Impact of including cryptocurrencies in a portfolio of traditional assets

• understand the use of derivatives in crypto markets

  • Design features of Bitcoin futures/options contract on CME

  • Effectiveness in headging with Bitcoin futures/options

  • Arbitrage in spot, futures and options markets

Requirements 

• Attendance and participation

• In-class quizzes

• Homework assignments

• Individual research project

• Mid-term and final exams

Optional Textbooks 

• Understand Bitcoin: Cryptography, Engineering and Economics (P. Franco), Wiley.

• Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction (A. Narayanan, J. Bonneau, E. Felten, A. Miller and S. Goldfeder), Princeton University Press. 

• Blockchain: A Practical Guide to Developing Business, Law, and Technology Solutions (J. Bambara and P. Allen), McGraw Hill.

• Cryptoassets: The Innovative Investors Guide to Bitcoin and Beyond (C. Burniske and J. Tatar), McGraw-Hill.

• Crytoassets: The Guide to Bitcoin, Blockchain, and Cryptocurrency for Investment Professionals (M. Hougan and D. Lawant), CFA Institute

Software Installation 

Download and install Anaconda Individual Edition ⇗ 

To start IDLE in MacBook's Terminal: 

conda activate

python3 -m idlelib

To start IDLE in PC's Anaconda Prompt: 

python -m idlelib

Course Schedule 

1. Introduction to Bitcoin and review of banking and money

2. Ledger, key and address

3. Transactions and blockchain

4. Blockchain consensus and Bitcoin mining

5. Business use cases and DeFi

6. ICOs, NFTs, and tokenized assets

7. Crypto markets, market making and predictive trading

8. Mid-term Exam

9. Risk, returns and valuation

10. Law of one price in crypto markets

11. Crypto assets in a portfolio

12. Bitcoin derivatives and hedging

13. Regulatory oversights

14. Final exam