Risks & Rewards

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UNLOCKING THE MYSTERY OF CRYPTOCURRENCY AND FINDING ITS PLACE IN BUSINESS EDUCATION

BY CLAIRE CURRY

When rap artist Meek Mill announced he was going to release his next mixtape as a non-fungible token, Craig Lyttleton ’24 decided he was definitely going to buy it. He read up on NFTs — one-of-a-kind digital assets that can be bought and sold. While they are similar to collectibles, they have no tangible form.

Lyttleton, a computer science major and student-athlete, set himself up to make the purchase but, to his dismay, his favorite rap artist never released the album. Still intrigued by what he was learning about NFTs and cryptocurrency, Lyttleton decided to test the waters and invest in them.

“I figured I was already in to buy the album, so I might as well see what else I could do,” he says. “I saw a few videos and read a few articles and thought I knew it all, but I realized quickly that I made some bad investments.”

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Fortunately, he didn’t lose a lot — Lyttleton was careful to invest only as much as he could live without. But the experience inspired him to take a deeper dive and learn everything he could about digital assets.

“I took the perspective of trying to figure out as much as I could because the next time I reentered the market, I had to do it in a more informed way,” he explains. “So, I went in on the crypto side, the decentralized finance, the blockchain … I went down a rabbit hole.”

“ ... the next internet, the next Google, the next wave of opportunity and a shift in how we see things, such as interconnectivity and access to various financial services.”

– CRAIG LYTTLETON ’24

Not only has Lyttleton been educating himself in this increasingly popular area of finance and investing, but he’s also helping his peers at Susquehanna University learn about it as well. After doing research on student crypto clubs at other colleges, he reached out to faculty, and with their help, launched the CryptoHawks Club. Open to all, the club is already 50 members strong, with an established executive board and five faculty advisors, including Matthew Rousu, dean of the Sigmund Weis School of Business.

Lyttleton also credits his football coaches and teammates for their encouragement. “They’ve played a big role in the club’s success,” he says. “When I approached my head coach about wanting to start CryptoHawks, he immediately voiced his support and recommended that I speak to Dr. Rousu. Many of my teammates also wanted a space on campus to learn more about crypto, and they are now among our most active members.”

Throughout the spring semester, the club held five meetings and one seminar on topics including the basics of blockchain, cryptocurrency terms and digital investing concepts.

“I think a lot of people who are passionate about crypto and Web3 would point

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to the potential of it all,” says Lyttleton, who is also the club’s president. “This is kind of like the next internet, the next Google, the next wave of opportunity and a shift in how we see things, such as interconnectivity and access to various financial services. All of that sounds pretty cool to me.”

Lyttleton is quick to emphasize that the mission of the CryptoHawks Club is to help people learn about cryptocurrency, not to persuade anyone to invest in it or provide any sort of investment advice. “One of our goals is to address information objectively and help everyone reach their own conclusions.”

An interest that Lyttleton stumbled upon unexpectedly has since inspired him to assume a leadership role on campus, to dabble — albeit conservatively — in cryptocurrency investing, and to build his résumé and professional network in preparation for a future career in blockchain development and financial technology.

“I’ve found that there is a wealth of people who love this space and love collaborating with others to help it grow,” he said. “I’m excited to apply my passion to this and contribute to this innovative space.”

What exactly is crypto and why all the hype?

When you consider the history of bitcoin, a type of cryptocurrency, you can see why such investments might be attractive to risk-tolerant investors.

In 2008, bitcoin was launched mysteriously by an anonymous programmer under the pseudonym Satoshi Nokamato. Some consider it to be the first true execution of blockchain, the underlying concept behind digital currency and NFTs. In simple terms, blockchain is a “decentralized ledger” that uses cryptography, or codes based on complex mathematical algorithms, to record and permanently secure

information and transactions. Each block in the chain is secured and the codes are so random and complicated that the blockchain can’t be hacked. It’s also transparent, so everyone involved in a transaction can see the records.

Today, most cryptocurrencies use blockchain to record transactions. However, blockchain technology offers even broader potential to streamline many types of business transactions because of its ability to secure important data. Some of the possibilities include recording real estate transactions, protecting and securely sharing healthcare information, and copyrighting music, photography and literature by “tokenizing” artistic works in the form of NFTs.

Bitcoin didn’t actually have value until 2010 when someone traded 10,000 bitcoin for two Papa John’s pizzas. It hit $1 on Feb. 9, 2011, and ever since, its price has increased and fluctuated widely, spiking at an all-time high

Clarifying Crypto

CRYPTOCURRENCY CAN BE CONFUSING. HERE ARE SOME KEY WORDS AND PHRASES TO HELP BUILD A BASIC UNDERSTANDING.

■ block Groups of data within a blockchain that are made up of transaction records as users buy or sell coins. Each block can hold only a certain amount of information. Once it reaches that limit, a new block is formed to continue the chain.

■ blockchain A "decentralized ledger” that uses cryptography to record and permanently secure information and transactions. They are also transparent, so everyone involved in a transaction can see the records.

■ decentralization The principle of distributing power away from a central point. Blockchains are traditionally decentralized because they require majority approval from all users to operate and make changes, rather than a central authority (e.g., The Federal Reserve System).

■ NFTs Or non-fungible tokens, are a type of currency that’s digital and decentralized. They are unique cryptographic tokens that exist on a blockchain and cannot be replicated.

■ wallet A place to store your cryptocurrency holdings. Wallets may be hot (online, software-based) or cold (offline, usually on a device).

■ WEB 3 An idea for a new iteration of the internet driven by the cryptocurrency-related technology blockchain, which can store data and software code that can self-execute under certain conditions. Also referred to as Web 3.0 and web3.

Associated Press Stylebook (2022) Haar, R. (2022, May) Cryptocurrency Terms to Know Before You Invest:

A Beginner’s Guide. NextAdvisor

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north of $68,000 and dropping and rising by tens of thousands — sometimes daily and weekly. As of this writing, one bitcoin is worth $20,021.

Since bitcoin and other even earlier forms of cryptocurrency hit the scene, many new cryptocurrencies have emerged. In fact, there are about 4,500 today, including the popular ethereum and cardano and “memecoins” like dogecoin and shiba inu.

While some people are funding their IRAs with cryptocurrency — and roughly 59.1 million Americans own some form of it, according to a 2021 Finder survey — the number of people investing in it is still fewer than one in four. Those who don’t invest say it’s because of cryptocurrency’s volatility, lack of sufficient regulation or that they simply don’t understand it enough to take the risk.

Education is key

In terms of business, cryptocurrency and blockchain technology are already

changing the landscape. To ensure that Susquehanna’s business students are well prepared to enter tomorrow’s workforce, the Sigmund Weis School of Business has modified the curriculum to include issues related to cryptocurrency and the impact of blockchain across many different areas of business, according to Dean Rousu.

“We’re integrating it into the coursework and staying ahead of it,” he says. “For example, if you’re an accountant, how do you treat the purchase and sale of cryptocurrency as an asset? Legally, that’s a major issue. Then there’s the question of how firms can use the blockchain to track products. For example, for a company selling lettuce, the blockchain would make it easier to trace products if there were an outbreak of food poisoning.”

This fall, the business school is launching a new course, FinTech, Institutions and Cryptocurrencies. It will overview financial markets, institutions and technology, and cover

how emerging technologies are used in the financial services industry and how they impact the delivery of financial products and services, such as insurance, investment advising and wealth management. Students will also manage a simulated cryptocurrency portfolio, getting a firsthand look at how such investments work.

Proceed with caution

While cryptocurrency, NFTs and blockchain technology have already attracted a fan base, there are many who express concerns around sustainability, security and valuation.

Some cryptocurrencies, such as bitcoin, use vast amounts of energy for computing power and have a high carbon footprint. Other cryptocurrencies are more sustainable.

There is also no central authority or regulatory body overseeing them. In fact, there are even entire countries, such as China, Nepal and Nigeria, that

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“You can make money in the cryptocurrency market. Can you become a billionaire overnight? Nothing’s that easy.”

– CHARLES BARLEY JR. ’99

have completely banned or tightly restricted cryptocurrency-related activities.

“What really backs the value of cryptocurrency? I would say that, unlike the FDIC — which backs our major financial institutions — nothing much, as it is just unregulated bits and bytes,” says Charles Barley Jr. ’99, a security and privacy principal at the global professional services firm RSM US LLP.

“While the companies themselves that govern the financial asset classes have the ability to be valued as companies, the valuation of cryptocurrency could disappear overnight if they have a security breach.”

Barley said that for some, investing in cryptocurrency can be considered analogous to day trading, which became popular in the late 1990s and early 2000s.

“The cryptocurrency model is similar in terms of the open consumer-driven trading model. You can find thousands of videos telling you how to get rich quick. And they’re not incorrect," Barley adds. "You can make money in the cryptocurrency market. Can you become a billionaire overnight? Nothing’s that easy.”

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