The word most often associated with Bitcoin — the controversial digital currency that has confounded central banks and regulators around the world since launching in 2009 — is volatility. Its value is erratic (roughly seven times more volatile than the stock market), its governance decentralized, its legal status murky, and the true identity of its inventor shrouded in mystery.
So this fall, to help students navigate the notoriously dicey legal and economic landscape of software-based payment systems, NYU debuted a course in “The Law and Business of Bitcoin and Other Cryptocurrencies,” making it one of only a handful of U.S. universities to do so.
“This is a very high-risk venture, and I wake up every day checking the price and half expecting it to fall off the cliff,” says David Yermack, a professor at NYU’s Stern School of Business who, along with NYU law professor Geoffrey Miller, teaches the course. The pair both signed up for an extra teaching load, says Yermack, so that if Bitcoin abruptly crashed, they could scrap the course on short notice. “Even though it took six months to plan and authorize the course, the whole topic area is so
volatile and dicey, who knows?” he continues. “Will we offer this next year? It’s anybody’s guess.”
Students, too, have been wondering how practical a course on Bitcoin is when the currency seems to be constantly teetering on the edge of calamity. But even if Bitcoin does die
tomorrow, the technology and theory behind digital currencies has forever changed the way the world views age-old concepts like money
and property ownership.
“[Bitcoin] reimagines money, which is something that everybody is interested in at some level,” says Yermack. “And it’s the first currency ever that really wasn’t connected to a government or some kind of sovereign authority. It’s made people think about possibilities for commerce and business and daily life that probably never occurred to them before.”
Bitcoin, he adds, “has a lot of issues that make it unsuitable for a long-term role as a world currency,” such as a lack of centralized leadership and accountability. “But I think aspects of the technology behind Bitcoin are probably going
to be discussed for a long time to come.”
According to Yermack, what Bitcoin has
essentially done is replace the Federal Reserve with a computer code. The system allows users to store currency in “digital wallets” and
complete transactions anonymously without the interference of banks, middlemen, or, for the most part, regulations.
While the majority of the class consists of law students interested in the real-world legal ramifications of such a system, others have simply been captured by the strangeness of it all.
(Yermack says several philosophy majors have enrolled.) Bitcoin’s alleged creator, Satoshi Nakamoto, is said to be an alias for either a person
or group of people whose true identity is still
unknown. The currency has been used for a number of nefarious activities, ranging from money laundering to drug trafficking. It’s as
if the storyline has been lifted straight from an ’80s cyberpunk novel.
“I do think the narrative behind it is
intriguing,” says Yermack. “There are so many colorful characters connected with Bitcoin. Everyone from the Winklevoss twins to these entrepreneurs who are sinking hundreds of millions of dollars into things that look pretty dubious.”
Despite all the legal quandaries and
media buzz the currency has produced in recent years, the lifespan of Bitcoin, as well as Yermack’s class, remains to be seen.
“Who knows where this will be” in the future, Yermack admits. But in the meantime, he says, “there’s no shortage of material to fill a university course with.”