Over the past 15 years, crypto has built an entire financial system from scratch; Big problem is “how to associate the crypto word with an asset in the real world”; People agree that crypto currencies are valuable or invaluable “arbitrarily”
Embargo: Mon 23 Jan 7pm
We would like to invite you to a lecture by Professor Raghavendra Rau on DeFi, Crypto, and NFTs in Business, on 23 Jan 2023.
Rau, Gresham Professor of Business, is currently the Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School.
In this lecture Rau will explore cryptographic technology from blockchains, to cryptocurrencies and non-fungible tokens. He will explain these technologies and the systems behind how they work; as well as how they can be applied to the world of business and at the risks (such as fraud) these innovations have brought with them. He will also look at how individuals can invest in them.
This lecture will build on Professor Rau’s previous lectures in the series The Tech Revolution in Finance.
Ownership and databases in finance
Rau will begin his lecture by discussing the concept of ownership and describe how ownership of a financial asset is essentially a database entry of some form. He will explain how in traditional finance, we rely on a centrally maintained database, for example by a bank. However, in practice this process is not always reliable. Banking databases rely on outdated programs and errors caused by them can leave trust in them fragile.
Rau will describes how crypto can offer an alternative to this where this system can function “without a centralized record keeper, but a whole bunch of strangers who are economically interested in keeping all the records safe.” Rau will show how crypto is an umbrella term which has come to be applied to a lot of different things from cryptocurrencies and blockchains.
Rau will describe how over the past 15 years, crypto has built a self-contained financial system. It has found new ways to do things that traditional finance has been doing for years. It has also found worse ways, heading down dead ends that traditional finance has abandoned.
Cryptocurrencies not like gold
“A lot of institutions thought that cryptocurrencies are good investments because they're uncorrelated to anything else. Something like gold, or something like that which maintains its value, even when everything else is going down. Unfortunately, that turns out not to be true. Crypto currencies seem to be more akin to meme stocks in the sense that people agree that value depends on fashion. And the arbitrary values assigned to crypto seem to be inversely correlated with the economic cycle”, Rau will say.
Future of Crypto
“So how can we sum up? What is the future of crypto? The big problem crypto faces is how to associate the crypto world with an asset in the real world. This is extremely difficult to solve and may even be potentially unsolvable. It's much easier to think of digital assets connected to each other through crypto. You can think of communities like the metaverse, which are entirely digital, and perhaps trust will migrate from the real world to a digital world. In that case, crypto might be useful, but at the moment, it is difficult to figure out how to use crypto in the real world.”
ENDS
Notes to Editors
You can sign up to watch the hybrid lecture online or in person; or email us for an embargoed transcript or speak to Professor Rau: l.graves@gresham.ac.uk / 07799 738 439
Read more on Professor Rau who is the Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School.
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