Level of Study
Objectives and Content
The course introduces students to recent advances in the fintech area, and will focus on key concepts and theoretical underpinnings of financial intermediation, blockchain, and cryptocurrencies.
The primary focus of this course is on blockchain technology and cryptocurrencies, which are perhaps the most significant innovations in the fintech area in recent years. Blockchain has disrupted traditional financial services by introducing decentralized, peer-to-peer forms of financing that affect banks, stock exchanges, venture capitalists, private equity firms, and other financial intermediaries. It is now widely speculated that these incumbents will gradually disappear in coming decades as new blockchain-based financing methods such as initial coin offerings (ICO) have the potential to replace legacy fundraising.
We will begin by formulating the basics of financial intermediation, the economic role played by banks and other financial intermediaries, and the benefits and drawbacks of their services. We will then study the advent of trustless, decentralized cryptocurrencies beginning with Bitcoin in 2009, and its extension into various financing innovations (such as ICOs) and investment products. We will explore whether cryptocurrencies can truly function as alternative forms of money, and how they pose a threat to incumbent financial intermediaries and even to central banks and regulators. We will then study ICOs, understand how their tokenized architecture aligns growth incentives and ensures competition, the investment risk and return associated with ICOs, and regulatory responses to this recent innovation.
A student who has completed the course should have the following learning outcomes:
- has basic knowledge of financial intermediation and related theories.
- has basic understanding of the role of banks and other intermediaries in traditional financial markets.
- has knowledge of how firms raise external finance, why they go public, and how they raise capital in public markets.
- has basic knowledge of smart contracts and tokens, and understand their network effects.
- has basic knowledge of wallets and how to use them to transact in crypto-currencies and tokens.
The student can:
- explain the benefits and drawbacks of traditional financial intermediation.
- describe recent trends and innovation in financial intermediation.
- explain the difference between reintermediation and disintermediation.
- develop an overview of blockchain technology and how trust is achieved in decentralized networks.
- explain the motives and objectives for the introduction of Bitcoin and blockchain technology.
- explain the relationship and differences between cryptocurrencies and fiat money.
- explain the role of mining pools and decentralized exchanges in cryptocurrency.
- create a simple smart contract (token) on the Ethereum blockchain.
- explain the role of information intermediaries in ICO and cryptocurrency markets.
- understands the crucial role played by financial intermediaries in firms¿ going public decision.
- understands the relationship between intermediation and blockchain/cryptocurrencies.
- understands the mechanisms through which tokenization and blockchain can potentially disrupt the market power of incumbent businesses.
- understands the pros and cons of initial coin offerings (ICO), and explain the factors contributing to their phenomenal growth in recent years.
- understands the various mechanisms through which regulatory authorities of different countries have attempted to regulate cryptocurrencies and ICOs.
- understands the treatment of cryptocurrencies and ICOs by regulatory authorities in the EU.
Recommended Previous Knowledge
Recommended taken third academic year at bachelor level
Access to the Course
Teaching and learning methods
The course consist of a mix of regular lectures and seminars, and emphasizes strongly students being active throughout the course, both individual and in groups.
Compulsory Assignments and Attendance
One compulsory assignment.
Approved compulsory requirements do not have time limits.
Forms of Assessment
Portfolio assessment. The grade awarded will be:
- 50% based on a case study assignment written in group at the maximum of 5000 words and
- 50% based on an 4 hours written exam
Examination Support Material
Mathematical Formula Collection of K Sydsæter, A. Strøm and P. Berck or Mathematical Formulas for Economists of B Luderer, V. Nollau and K. Vetters and calculator. The following simple, non-programmable calculators without graphical display are allowed to be used for written tests:
All models of the type:
- Casio FX-82, Casio FX-82ES PLUS or Casio FX-82EX
- Hewlett-Packard HP30
- Texas Instruments TI-30
Assessment in teaching semester. New written exam the following semester only for students who have a valid document of absence.
The reading list will be ready by June 1 for the Autumn semester and December 1 for the Spring semester.
All the courses at the Department of Economics are evaluated at the end of each semester.
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For written exams, please note that the start time may change from 09:00 to 15:00 or vice versa until 14 days prior to the exam. The exam location will be published 14 days prior to the exam. Candidates must check their room allocation on Studentweb 3 days prior to the exam.
Type of assessment: Portfolio assessment
- Withdrawal deadline
Exam part: Group assignment
Exam part: Written exam
- 15.05.2020, 09:00
- 4 hours