1 00:00:00,000 --> 00:00:05,720 < Intro > 2 00:00:05,720 --> 00:00:08,189 – Welcome to another enlightening episode of Count Me In. 3 00:00:08,189 --> 00:00:09,800 Where we delve into the pressing issues 4 00:00:09,800 --> 00:00:12,920 shaping our world and the business landscape. 5 00:00:12,920 --> 00:00:15,720 Today, we have the privilege of hearing a wonderful conversation 6 00:00:15,720 --> 00:00:18,160 between our guest host, Kelly Richmond Pope, 7 00:00:18,160 --> 00:00:19,800 accounting professor and author, 8 00:00:19,800 --> 00:00:22,000 and Lamont Black, an Associate Professor 9 00:00:22,000 --> 00:00:24,640 of Finance at DePaul University. 10 00:00:24,640 --> 00:00:26,520 They discuss an issue that is at the forefront 11 00:00:26,520 --> 00:00:27,840 of finance innovation; 12 00:00:27,840 --> 00:00:30,770 cryptocurrencies and blockchain technology. 13 00:00:30,770 --> 00:00:33,230 Lamont brings his vast knowledge and expert insights 14 00:00:33,230 --> 00:00:35,480 to help demystify these complex topics 15 00:00:35,480 --> 00:00:38,640 and explain their relevance to the finance industry. 16 00:00:38,640 --> 00:00:40,550 So whether you're a CFO, a controller, 17 00:00:40,550 --> 00:00:43,820 a finance professional, or simply a curious listener, 18 00:00:43,820 --> 00:00:45,660 prepare for a deep dive exploration 19 00:00:45,660 --> 00:00:48,400 into the world of blockchain and cryptocurrencies. 20 00:00:48,400 --> 00:00:49,600 Let's get started. 21 00:00:49,600 --> 00:00:55,520 < Music > 22 00:00:55,520 --> 00:00:58,920 – So Lamont, thank you so much for joining me, today. 23 00:00:58,920 --> 00:01:03,440 And if you could start by just introducing who you are. 24 00:01:03,440 --> 00:01:06,680 – So I'm an associate professor of finance in the Driehaus 25 00:01:06,680 --> 00:01:08,920 College of Business at the DePaul University. 26 00:01:08,920 --> 00:01:11,240 So I'm one of your colleagues. 27 00:01:11,240 --> 00:01:12,320 –You are one of my colleagues. 28 00:01:12,320 --> 00:01:17,120 And, so, I want to welcome you to the IMA podcast series. 29 00:01:17,120 --> 00:01:21,120 And I have been working with the IMA, a little over a year. 30 00:01:21,120 --> 00:01:25,360 Working in research and thought leadership about ethics, 31 00:01:25,360 --> 00:01:29,480 corporate governance, risk, and you know my favorite love, fraud. 32 00:01:29,480 --> 00:01:33,860 And as we watch the news, read the news, 33 00:01:33,860 --> 00:01:36,189 what has just been in the news, 34 00:01:36,189 --> 00:01:38,869 so much, in the past, I'd say 18 months, 35 00:01:38,869 --> 00:01:44,240 is this really weird word called cryptocurrency. 36 00:01:44,240 --> 00:01:46,079 And when I came to you, originally, 37 00:01:46,079 --> 00:01:49,440 about trying to understand what in the world is cryptocurrency. 38 00:01:49,440 --> 00:01:52,540 What you shared with me was how important it was 39 00:01:52,540 --> 00:01:54,500 to understand blockchain. 40 00:01:54,500 --> 00:01:58,969 And what I want to do, today, is have you really break down 41 00:01:58,969 --> 00:02:02,080 the importance of understanding blockchain. 42 00:02:02,080 --> 00:02:05,920 Because what I think the world is getting a little scared about 43 00:02:05,920 --> 00:02:09,240 is when you keep hearing about cryptocurrency, 44 00:02:09,240 --> 00:02:12,160 these exchanges that are falling apart. 45 00:02:12,160 --> 00:02:14,569 And, I think, everybody is really skeptical 46 00:02:14,569 --> 00:02:17,200 of this concept of cryptocurrency. 47 00:02:17,200 --> 00:02:19,959 But what I know you feel is, though, 48 00:02:19,959 --> 00:02:21,200 people might be scared of that. 49 00:02:21,200 --> 00:02:24,560 But you still need to understand the soundness and the value 50 00:02:24,560 --> 00:02:27,720 of the underlying technology, which is called blockchain. 51 00:02:27,730 --> 00:02:31,360 So could you tell us a little bit about what blockchain is 52 00:02:31,360 --> 00:02:34,520 and why we need to know about it as managerial accountants? 53 00:02:34,640 --> 00:02:40,360 – Yes, so blockchain is the platform behind cryptocurrency. 54 00:02:40,360 --> 00:02:42,800 And blockchain is a technology, 55 00:02:42,800 --> 00:02:46,290 that, I think, everyone should be trying to understand. 56 00:02:46,290 --> 00:02:49,830 It's really a system of shared record keeping. 57 00:02:49,830 --> 00:02:52,210 So if you think about how we now live, 58 00:02:52,210 --> 00:02:57,360 in the information age, most of what we do is involving data. 59 00:02:57,360 --> 00:02:59,680 That data is being stored and shared 60 00:02:59,680 --> 00:03:01,520 using different systems, today. 61 00:03:01,520 --> 00:03:05,040 Whether that's on the cloud or other types of servers, 62 00:03:05,040 --> 00:03:09,390 and the blockchain is a way of sharing information. 63 00:03:09,390 --> 00:03:12,600 So that it's recorded on a shared ledger. 64 00:03:12,600 --> 00:03:14,520 So you can really think of blockchain 65 00:03:14,520 --> 00:03:16,520 as a system of accounting. 66 00:03:16,520 --> 00:03:18,819 And what makes it different is that 67 00:03:18,819 --> 00:03:23,880 rather than these ledgers being held in a private form. 68 00:03:23,880 --> 00:03:26,920 Different ledgers on different institutions 69 00:03:26,920 --> 00:03:28,880 that, then, have to communicate, 70 00:03:28,880 --> 00:03:32,120 blockchain cuts across all those silos. 71 00:03:32,120 --> 00:03:34,560 It's a way of recording information 72 00:03:34,560 --> 00:03:36,400 across an entire network. 73 00:03:36,400 --> 00:03:39,290 Sharing that information with the network, 74 00:03:39,290 --> 00:03:43,400 that makes it very secure, very transparent, and very efficient 75 00:03:43,400 --> 00:03:44,920 for sharing information. 76 00:03:44,920 --> 00:03:47,200 So as we move deeper and deeper 77 00:03:47,200 --> 00:03:50,040 into the digital economy and e-commerce. 78 00:03:50,040 --> 00:03:53,750 I think every organization should be trying to understand 79 00:03:53,750 --> 00:03:56,599 how do we store and share information on the internet. 80 00:03:56,599 --> 00:04:00,520 I think blockchain is likely that next platform. 81 00:04:00,520 --> 00:04:02,680 And, so, even in the world of accounting, 82 00:04:02,680 --> 00:04:05,520 this is where things are likely headed. 83 00:04:05,520 --> 00:04:11,040 – So that's a great explanation, and it really makes me feel 84 00:04:11,040 --> 00:04:14,220 a lot more comfortable in understanding that. 85 00:04:14,220 --> 00:04:16,930 Although, I hear all this craziness about cryptocurrency, 86 00:04:16,930 --> 00:04:20,640 and cryptocurrency is just where you shouldn't put your money. 87 00:04:20,640 --> 00:04:22,630 You've made me feel a lot more comfortable 88 00:04:22,630 --> 00:04:25,080 about why I need to understand blockchain. 89 00:04:25,080 --> 00:04:26,889 But let me digress, for a second, 90 00:04:26,889 --> 00:04:31,720 what in the world is going on with all that we hear about FTX, 91 00:04:31,720 --> 00:04:33,800 and the collapse of these exchanges? 92 00:04:33,800 --> 00:04:36,160 What is that conversation even about? 93 00:04:36,160 --> 00:04:37,780 And how does that affect 94 00:04:37,780 --> 00:04:41,240 or how should it affect our opinion of blockchain? 95 00:04:41,480 --> 00:04:45,400 – Yes, so cryptocurrency is the money 96 00:04:45,400 --> 00:04:48,539 that is transferred across public blockchains 97 00:04:48,539 --> 00:04:49,990 like Bitcoin and Ethereum. 98 00:04:49,990 --> 00:04:55,040 And, so, people can own Bitcoin and ethereum as digital assets, 99 00:04:55,040 --> 00:04:59,280 and crypto prices ran up, dramatically, during COVID. 100 00:04:59,280 --> 00:05:01,840 There are different arguments for why that occurred. 101 00:05:01,840 --> 00:05:05,800 But one of them would be the amount of monetary stimulus. 102 00:05:05,800 --> 00:05:10,960 As people had all these different sources of income coming in. 103 00:05:10,960 --> 00:05:12,860 Let's say through stimulus checks 104 00:05:12,860 --> 00:05:16,840 in the form of fiscal stimulus, that money flowing into the economy. 105 00:05:16,870 --> 00:05:18,920 A lot of that ended up in crypto. 106 00:05:18,920 --> 00:05:22,979 And, so, Bitcoin almost reached $70,000 107 00:05:22,979 --> 00:05:26,710 for one Bitcoin by late 2021. 108 00:05:26,710 --> 00:05:31,160 And as we moved into this year and our economy started to slow, 109 00:05:31,190 --> 00:05:36,000 inflation started to rise, largely as an outcome of COVID, 110 00:05:36,000 --> 00:05:38,640 crypto prices started to collapse. 111 00:05:38,640 --> 00:05:41,190 Now, some people focus on the collapse 112 00:05:41,190 --> 00:05:44,889 of the crypto market as being something unique. 113 00:05:44,889 --> 00:05:47,270 But I just would point out that the stock market 114 00:05:47,270 --> 00:05:49,860 also entered bear market territory 115 00:05:49,860 --> 00:05:54,240 in the first half of this year, and in particular, tech stocks. 116 00:05:54,240 --> 00:05:56,740 So tech stocks are very risky. 117 00:05:56,740 --> 00:06:00,840 And, so, speculative assets during an economic slowdown, 118 00:06:00,840 --> 00:06:03,020 those prices tend to fall the most. 119 00:06:03,020 --> 00:06:06,440 I view crypto as a form of technology. 120 00:06:06,440 --> 00:06:08,120 It's the frontier of technology. 121 00:06:08,120 --> 00:06:10,340 So, to me, it's no surprise that 122 00:06:10,340 --> 00:06:13,720 as risky assets have sold off this year, 123 00:06:13,720 --> 00:06:16,360 crypto has gotten hit the hardest. 124 00:06:16,360 --> 00:06:18,720 Now, as it relates to the exchanges, 125 00:06:18,720 --> 00:06:21,400 that's really been the problem this year. 126 00:06:21,400 --> 00:06:26,640 Because most people when they buy crypto, they buy it on an exchange 127 00:06:26,640 --> 00:06:31,920 like Coinbase, here in the US, or FTX, which was an offshore exchange 128 00:06:31,920 --> 00:06:33,660 headquartered in the Bahamas. 129 00:06:33,660 --> 00:06:35,900 Now, many people wanted to jump 130 00:06:35,900 --> 00:06:39,569 on the crypto bandwagon, especially, as prices were rising. 131 00:06:39,569 --> 00:06:41,640 And, so, a lot of people 132 00:06:41,640 --> 00:06:45,310 were investing their money in exchanges like FTX. 133 00:06:45,310 --> 00:06:48,250 But one thing that people didn't fully appreciate, 134 00:06:48,250 --> 00:06:52,600 in this period of time, is when you own crypto on an exchange, 135 00:06:52,639 --> 00:06:55,389 you don't actually own the crypto itself. 136 00:06:55,389 --> 00:06:58,240 It's really being held on your behalf. 137 00:06:58,240 --> 00:07:02,280 And, so, FTX is what's called a centralized exchange. 138 00:07:02,280 --> 00:07:06,410 When a centralized exchange fails or goes bankrupt, 139 00:07:06,410 --> 00:07:07,849 you're going to lose your money. 140 00:07:07,849 --> 00:07:09,599 They're going to freeze those redemptions. 141 00:07:09,599 --> 00:07:11,120 You're not going to be able to get it back. 142 00:07:11,120 --> 00:07:14,040 And, so, now, I think a lot of the fear 143 00:07:14,040 --> 00:07:18,780 around cryptocurrency is not just in the price volatility, 144 00:07:18,780 --> 00:07:21,229 it's also the fact that you could lose everything. 145 00:07:21,229 --> 00:07:24,900 And, so, I think crypto does have a PR problem, now, 146 00:07:24,900 --> 00:07:27,560 of people just being hesitant 147 00:07:27,560 --> 00:07:30,200 and confused about where all this is headed. 148 00:07:30,440 --> 00:07:31,880 – Well, and I think what's interesting, 149 00:07:31,880 --> 00:07:35,480 about our conversation, is as managerial accountants, 150 00:07:35,480 --> 00:07:38,780 as CFOs, as controllers, as finance professionals. 151 00:07:38,780 --> 00:07:44,040 We could be interacting with clients and or in an organization 152 00:07:44,040 --> 00:07:48,320 that either embraces blockchain or accepts cryptocurrency. 153 00:07:48,320 --> 00:07:50,160 At the way that they handle transactions. 154 00:07:50,160 --> 00:07:52,320 And, so, it's really important for us 155 00:07:52,320 --> 00:07:54,640 to understand some of these nuances. 156 00:07:54,640 --> 00:07:57,280 And my question to you is this 157 00:07:57,280 --> 00:08:02,720 how do I know what exchange I should engage with 158 00:08:02,720 --> 00:08:06,120 if I do want to purchase cryptocurrency? 159 00:08:06,120 --> 00:08:09,680 Because I do have to use an exchange, correct? 160 00:08:09,680 --> 00:08:11,320 That's the only way. 161 00:08:11,320 --> 00:08:15,539 – Yes, it's the only way to enter the crypto ecosystem. 162 00:08:15,539 --> 00:08:20,480 So if you think of cryptocurrency as a currency, a form of money, 163 00:08:20,480 --> 00:08:22,680 then, it's like a foreign currency. 164 00:08:22,680 --> 00:08:25,480 If you want to buy euros with dollars, 165 00:08:25,480 --> 00:08:27,979 or if you want to bring the euros back into dollars, 166 00:08:27,979 --> 00:08:29,400 there's an exchange rate. 167 00:08:29,400 --> 00:08:32,600 And, so, the price of crypto is really an exchange rate 168 00:08:32,600 --> 00:08:35,200 between dollars and crypto. 169 00:08:35,200 --> 00:08:40,440 And the U.S. money, the dollar, is a fiat currency. 170 00:08:40,440 --> 00:08:43,240 And there's a long history behind that term 171 00:08:43,240 --> 00:08:47,240 but it, basically, means that we are no longer on the gold standard. 172 00:08:47,240 --> 00:08:50,640 So the U.S. dollar is not backed by anything physical. 173 00:08:50,640 --> 00:08:52,920 It is a fiat currency. 174 00:08:52,920 --> 00:08:55,550 But in order to buy crypto, you have to go through 175 00:08:55,550 --> 00:08:57,640 something called a fiat on-ramp. 176 00:08:57,640 --> 00:09:00,800 Because you're basically buying crypto with U.S. dollars. 177 00:09:00,800 --> 00:09:02,880 You can't do that just anywhere. 178 00:09:02,880 --> 00:09:05,779 You have to go through one of these exchanges, 179 00:09:05,779 --> 00:09:08,990 which is why that's the starting point for most people. 180 00:09:08,990 --> 00:09:11,400 But one key point that I would like to highlight is 181 00:09:11,400 --> 00:09:14,640 you don't have to keep your funds on that exchange. 182 00:09:14,640 --> 00:09:19,720 And, so, the exchange that I typically use to buy crypto is Coinbase. 183 00:09:19,720 --> 00:09:23,520 Because Coinbase is a U.S.-headquartered institution. 184 00:09:23,520 --> 00:09:26,600 It's publicly traded on the U.S. stock market. 185 00:09:26,600 --> 00:09:28,960 Highly regulated by the SEC. 186 00:09:28,960 --> 00:09:35,360 And, so, it's, relative to FTX, a little bit safer but not totally safe. 187 00:09:35,360 --> 00:09:38,120 There could be a run on Coinbase as well. 188 00:09:38,120 --> 00:09:40,339 But once you own crypto on Coinbase, 189 00:09:40,339 --> 00:09:42,810 you then have several options. 190 00:09:42,810 --> 00:09:47,480 You could move that money into something called a digital wallet. 191 00:09:47,480 --> 00:09:50,089 And what makes a digital wallet different 192 00:09:50,089 --> 00:09:53,720 from an exchange is that you, then, own the crypto. 193 00:09:53,720 --> 00:09:56,620 You manage what's called the private key. 194 00:09:56,620 --> 00:10:00,440 There's no risk of bankruptcy for some type of exchange 195 00:10:00,440 --> 00:10:03,000 because it's like money in your wallet. 196 00:10:03,000 --> 00:10:06,020 Just like U.S. dollars in a physical wallet, 197 00:10:06,020 --> 00:10:08,560 this is crypto in a digital wallet. 198 00:10:08,560 --> 00:10:10,180 You own it, you manage it, 199 00:10:10,180 --> 00:10:13,160 and so it protects you from some of those types of risks. 200 00:10:13,280 --> 00:10:14,630 – For the first time, in my life, 201 00:10:14,630 --> 00:10:17,600 I understand everything you're saying. 202 00:10:17,600 --> 00:10:20,240 – That's great. 203 00:10:20,240 --> 00:10:25,560 – But you know what how you described the exchange 204 00:10:25,560 --> 00:10:29,740 is making transactions on your behalf versus the digital wallet. 205 00:10:29,740 --> 00:10:33,320 I understand it because I actually own some crypto. 206 00:10:33,320 --> 00:10:35,410 Yes, I'm the accountant that owns some crypto. 207 00:10:35,410 --> 00:10:38,760 And let me tell you a little bit about the way Lamont and I met, first. 208 00:10:38,760 --> 00:10:42,440 Because, yes, we are colleagues at DePaul University in Chicago, 209 00:10:42,440 --> 00:10:45,760 but we also were in a movie together. 210 00:10:45,760 --> 00:10:50,370 And we were in a movie about a fast-appreciating asset, 211 00:10:50,370 --> 00:10:52,640 at that time, called HEX. 212 00:10:52,640 --> 00:10:55,300 And, so, there was this production company 213 00:10:55,300 --> 00:10:56,709 that was doing a documentary 214 00:10:56,709 --> 00:11:00,160 about this gentleman by the name of Richard Hart. 215 00:11:00,160 --> 00:11:03,490 And Lamont and I actually flew out 216 00:11:03,490 --> 00:11:08,000 to the south of Spain to interview, 217 00:11:08,000 --> 00:11:09,520 can you believe we did this Lamont? 218 00:11:09,520 --> 00:11:13,200 Interview Richard Hart at this undisclosed mansion 219 00:11:13,200 --> 00:11:16,760 on the cliff of a mountain, on the side of a mountain. 220 00:11:16,760 --> 00:11:22,230 And I was completely skeptical of everything crypto. 221 00:11:22,230 --> 00:11:25,800 I didn't have the understanding that, of course, you had Lamont. 222 00:11:25,800 --> 00:11:29,040 But it was fascinating to watch you go back and forth. 223 00:11:29,040 --> 00:11:33,880 You were a finance superhero 224 00:11:33,880 --> 00:11:35,400 going back and forth with this gentleman, 225 00:11:35,400 --> 00:11:38,339 about this cryptocurrency that he created. 226 00:11:38,339 --> 00:11:42,720 So my question to you is this; when we did this project, together, 227 00:11:42,720 --> 00:11:44,480 and all that you know about blockchain, 228 00:11:44,480 --> 00:11:45,839 all that you know about crypto. 229 00:11:45,839 --> 00:11:50,800 And then there's this new created currency that this gentleman started, 230 00:11:50,800 --> 00:11:52,920 what was your opinion of that experience? 231 00:11:52,920 --> 00:11:55,400 What was your opinion of HEX, at the time? 232 00:11:55,400 --> 00:11:58,060 – Well, that was a pretty crazy experience. 233 00:11:58,060 --> 00:12:01,579 But it was great working with you on that. 234 00:12:01,579 --> 00:12:04,170 So I think what's hard for a lot of people, 235 00:12:04,170 --> 00:12:07,020 with cryptocurrency, is that there are so many of them. 236 00:12:07,020 --> 00:12:10,000 So I think everyone's now heard of Bitcoin. 237 00:12:10,000 --> 00:12:13,960 Most people have now heard of Ethereum or Ether. 238 00:12:13,960 --> 00:12:16,280 Those are the two largest cryptocurrencies. 239 00:12:16,280 --> 00:12:20,200 But if you go to a site like coinmarketcap.com 240 00:12:20,200 --> 00:12:24,960 you can see that there are now over 10,000 cryptocurrencies. 241 00:12:24,960 --> 00:12:28,920 And, so, people wonder, "Well, where should I invest?" 242 00:12:28,920 --> 00:12:30,280 "What's right, what's wrong?" 243 00:12:30,280 --> 00:12:32,680 "What's legit? What's a scam?" 244 00:12:32,680 --> 00:12:34,880 And I would acknowledge that there are a lot 245 00:12:34,880 --> 00:12:37,769 of cryptocurrencies that are a scam. 246 00:12:37,769 --> 00:12:41,640 That's why I don't encourage people to just follow hot tips. 247 00:12:41,660 --> 00:12:43,480 You should never be looking 248 00:12:43,480 --> 00:12:46,200 for some crypto that no one's ever heard of, 249 00:12:46,200 --> 00:12:51,640 but you think is going to pump for 100 X over five days or whatever. 250 00:12:51,660 --> 00:12:56,200 You should just focus on the core ones like Bitcoin and Ethereum. 251 00:12:56,200 --> 00:12:58,330 But this documentary, we worked on, 252 00:12:58,330 --> 00:13:02,240 was for a particular cryptocurrency called HEX. 253 00:13:02,240 --> 00:13:07,400 Which is really an application, a project, built on Ethereum. 254 00:13:07,400 --> 00:13:09,900 And, so, what's also important to understand 255 00:13:09,900 --> 00:13:14,160 with cryptocurrency is you have your native tokens 256 00:13:14,160 --> 00:13:19,720 that trade on the blockchain itself, like Bitcoin or Ether on Ethereum. 257 00:13:19,720 --> 00:13:22,920 But HEX is a project built on Ethereum 258 00:13:22,920 --> 00:13:27,640 that can create its own token, on top of the Ether token. 259 00:13:27,640 --> 00:13:30,480 And that project, the documentary, 260 00:13:30,480 --> 00:13:34,000 was really about is this project legitimate or not? 261 00:13:34,000 --> 00:13:36,240 And we were brought in, as the skeptics, 262 00:13:36,240 --> 00:13:38,920 to try and ask some hard questions. 263 00:13:38,920 --> 00:13:41,000 And I think we ended up in a place 264 00:13:41,000 --> 00:13:43,790 where we were not fully convinced that 265 00:13:43,790 --> 00:13:45,959 this was the future of cryptocurrency. 266 00:13:45,959 --> 00:13:49,160 I'm a big fan of this space. 267 00:13:49,160 --> 00:13:52,370 I do think cryptocurrency has a lot of potential still. 268 00:13:52,370 --> 00:13:55,000 But for some of these individual projects, 269 00:13:55,000 --> 00:13:57,120 there are still a lot of question marks. 270 00:13:57,200 --> 00:13:58,120 – Now, when you go in 271 00:13:58,120 --> 00:14:01,280 and you do your consulting with organizations. 272 00:14:01,280 --> 00:14:04,880 What do you find to be the questions 273 00:14:04,880 --> 00:14:09,400 that the employee population may have or the executives may have? 274 00:14:09,760 --> 00:14:12,470 – Yes, so I'm in the finance department, 275 00:14:12,470 --> 00:14:14,160 in the financial services area. 276 00:14:14,160 --> 00:14:16,880 And, so, a lot of the firms that I work with 277 00:14:16,880 --> 00:14:20,880 are financial institutions, banks, credit unions. 278 00:14:20,880 --> 00:14:23,280 Trying to understand what does this mean 279 00:14:23,280 --> 00:14:25,960 for the future of money and banking, 280 00:14:25,960 --> 00:14:28,440 which is actually how I got into this space. 281 00:14:28,440 --> 00:14:30,800 So, as a quick background, 282 00:14:30,800 --> 00:14:33,400 I'm a former economist from The Federal Reserve. 283 00:14:33,400 --> 00:14:35,690 I was there through the financial crisis. 284 00:14:35,690 --> 00:14:40,840 And, so, my background is very much in risk and regulation. 285 00:14:40,840 --> 00:14:43,160 But when I left The Fed to join DePaul 286 00:14:43,160 --> 00:14:47,080 and started teaching money and banking back in 2013. 287 00:14:47,080 --> 00:14:50,770 It was my students who started asking me about Bitcoin. 288 00:14:50,770 --> 00:14:55,040 And that started a whole journey, for me, about is Bitcoin money? 289 00:14:55,040 --> 00:14:56,640 And I'm now convinced that 290 00:14:56,640 --> 00:15:01,120 it is an important chapter in the evolution of money. 291 00:15:01,120 --> 00:15:03,880 Whether Bitcoin itself will become 292 00:15:03,880 --> 00:15:07,320 a common means of payment, it's still yet to be seen. 293 00:15:07,320 --> 00:15:11,560 But money is digitizing and assets are digitizing, 294 00:15:11,560 --> 00:15:13,720 I think everyone would agree with that. 295 00:15:13,720 --> 00:15:15,920 And, so, the financial institutions that I work with 296 00:15:15,920 --> 00:15:19,960 are often inviting me in to speak to their board of directors, 297 00:15:19,960 --> 00:15:21,730 to speak to the leadership team. 298 00:15:21,730 --> 00:15:25,880 To talk about strategy and really strategic risk. 299 00:15:25,880 --> 00:15:29,760 Could this emerging ecosystem of crypto and blockchain, 300 00:15:29,760 --> 00:15:33,500 potentially, disrupt traditional financial services? 301 00:15:33,500 --> 00:15:38,680 If people start using blockchain as a peer-to-peer payment system, 302 00:15:38,680 --> 00:15:41,680 that could disintermediate banks and credits 303 00:15:41,680 --> 00:15:44,880 from the payment network and the payment system. 304 00:15:44,880 --> 00:15:49,440 To the extent that people are now able to get loans on a blockchain. 305 00:15:49,440 --> 00:15:54,440 So decentralized finance, or DeFi, is an entire financial system 306 00:15:54,440 --> 00:15:57,240 that's being built on the blockchain network. 307 00:15:57,240 --> 00:16:00,280 And, so, banks and credit unions are looking at this, 308 00:16:00,280 --> 00:16:03,320 trying to figure out do they have a role to play 309 00:16:03,320 --> 00:16:05,160 in the future of this technology? 310 00:16:05,160 --> 00:16:07,640 Because the original vision for crypto 311 00:16:07,640 --> 00:16:12,440 was replacing banks, even money without governments. 312 00:16:12,440 --> 00:16:15,529 But with the importance of regulation, 313 00:16:15,529 --> 00:16:18,800 with the importance of ethics and society. 314 00:16:18,800 --> 00:16:22,160 What we're likely going to see is an integration 315 00:16:22,160 --> 00:16:26,139 between traditional finance and decentralized finance. 316 00:16:26,139 --> 00:16:28,800 And banks and credit unions are going to have a very important role 317 00:16:28,830 --> 00:16:31,120 to play at that intersection. 318 00:16:31,320 --> 00:16:34,120 – Interesting, well, Lamont, this has been great. 319 00:16:34,120 --> 00:16:39,280 What I'm also excited about is we are working on a paper, together, 320 00:16:39,280 --> 00:16:41,010 in conjunction with, of course, the IMA, 321 00:16:41,010 --> 00:16:44,870 about the management, the risk of blockchain 322 00:16:44,870 --> 00:16:46,370 and what managerial accountants 323 00:16:46,370 --> 00:16:49,779 and finance professionals need to know about this space. 324 00:16:49,779 --> 00:16:54,520 So I hope that everyone that listens to our conversation, today, 325 00:16:54,520 --> 00:16:58,160 also reads the paper that we write because it's eye-opening. 326 00:16:58,160 --> 00:17:00,220 I know that I've learned so much 327 00:17:00,220 --> 00:17:02,720 from working with you and listening to you. 328 00:17:02,720 --> 00:17:07,100 I did purchase a little snippet of HEX 329 00:17:07,100 --> 00:17:09,240 when we were doing that project, of course, 330 00:17:09,240 --> 00:17:11,860 it is almost worthless at this point. 331 00:17:11,860 --> 00:17:16,680 So I don't know that I am a big cryptocurrency cheerleader, yet. 332 00:17:16,680 --> 00:17:19,750 But I do have a respect for blockchain 333 00:17:19,750 --> 00:17:24,120 and understand that it is something that we need to know. 334 00:17:24,120 --> 00:17:27,280 Like you said, I don't know where we'll be five, 10 years from now, 335 00:17:27,290 --> 00:17:30,400 but I do want to make sure that I am current. 336 00:17:30,400 --> 00:17:34,200 And this sounds like it could be a big change. 337 00:17:34,200 --> 00:17:37,880 Something that you said in one of the answers to the questions, 338 00:17:37,880 --> 00:17:44,160 is you talked about the idea that blockchain is this decentralized, 339 00:17:44,160 --> 00:17:47,120 peer-to-peer type process. 340 00:17:47,120 --> 00:17:49,800 And I want to focus on the word decentralized. 341 00:17:49,800 --> 00:17:52,040 Because one thing that you said, 342 00:17:52,040 --> 00:17:54,110 when you talked about it being decentralized, 343 00:17:54,110 --> 00:17:58,760 is you then said that you used Coinbase. 344 00:17:58,760 --> 00:18:03,920 Which Coinbase was highly regulated, had oversight by the SEC. 345 00:18:03,920 --> 00:18:08,140 And, so, what I took from your comments 346 00:18:08,140 --> 00:18:11,160 is the point of this integration piece 347 00:18:11,160 --> 00:18:14,800 is probably what makes most people feel confident, 348 00:18:14,800 --> 00:18:16,400 more confident and more secure. 349 00:18:16,400 --> 00:18:21,480 Because there are pros and cons about something that's decentralized. 350 00:18:21,480 --> 00:18:26,730 The pro is you don't have this third-party intermediary. 351 00:18:26,730 --> 00:18:30,120 But the con is you don't have the regulatory body 352 00:18:30,120 --> 00:18:34,780 that may give a sense of security and integrity to the data 353 00:18:34,780 --> 00:18:37,560 that a lot of us, especially accountants, are used to filling. 354 00:18:37,560 --> 00:18:41,760 So I like how you talked about this idea of the integration 355 00:18:41,760 --> 00:18:44,640 of the two as opposed to the replacement of one. 356 00:18:44,640 --> 00:18:46,680 And that resonated with me 357 00:18:46,680 --> 00:18:50,120 because for people like me who are ultra-conservative, 358 00:18:50,120 --> 00:18:52,280 especially, when it comes to money. 359 00:18:52,280 --> 00:18:54,880 I think the integration and appreciating the integration 360 00:18:54,880 --> 00:18:58,840 of how this technology can impact business transactions, 361 00:18:58,840 --> 00:19:01,360 in the future, is really important to understand. 362 00:19:01,360 --> 00:19:04,590 So I'm rambling a little bit, 363 00:19:04,590 --> 00:19:07,400 but I finally understand what you're talking about. 364 00:19:07,400 --> 00:19:10,520 I'm not a cheerleader like you, yet, but maybe one day. 365 00:19:10,520 --> 00:19:11,960 Maybe one day. 366 00:19:11,960 --> 00:19:15,049 So, any lasting thoughts that you want to say 367 00:19:15,049 --> 00:19:17,160 before we end our talk, today? 368 00:19:17,240 --> 00:19:20,680 – Well, first of all, I'm very excited to work on this paper with you, Kelly. 369 00:19:20,680 --> 00:19:24,000 Because I think I'm coming at it from the perspective of finance. 370 00:19:24,000 --> 00:19:26,530 You're coming at it from the perspective of accounting. 371 00:19:26,530 --> 00:19:29,400 So in terms of managerial accounting, 372 00:19:29,400 --> 00:19:31,360 we're going to bring those two perspectives. 373 00:19:31,360 --> 00:19:34,840 Help people understand the implications of this technology, 374 00:19:34,840 --> 00:19:39,169 and help remove some of the fear and hesitation around this. 375 00:19:39,169 --> 00:19:42,840 Because, like you said, crypto has very much gotten some 376 00:19:42,840 --> 00:19:45,560 bad press, recently, because of FTX. 377 00:19:45,560 --> 00:19:51,429 But I want to help people understand blockchain and crypto are related. 378 00:19:51,429 --> 00:19:54,640 We don't, necessarily, have to pull these two entirely apart. 379 00:19:54,640 --> 00:19:57,240 And, so, in this article, we're going to talk about 380 00:19:57,240 --> 00:19:59,880 public blockchains like Ethereum. 381 00:19:59,880 --> 00:20:02,280 How can you use that for business 382 00:20:02,280 --> 00:20:03,960 use cases and things like that. 383 00:20:03,960 --> 00:20:08,160 So this will be a unique take on blockchain, relative to some 384 00:20:08,160 --> 00:20:10,670 of the other things that are out there in the accounting space. 385 00:20:10,670 --> 00:20:13,640 So I think we're going to have a lot of value to bring to the profession. 386 00:20:13,680 --> 00:20:16,800 – Well, thank you so much for the time, Lamont, this is great. 387 00:20:16,800 --> 00:20:18,720 And, listen, we have a movie premiere 388 00:20:18,720 --> 00:20:20,210 coming up one of these days soon. 389 00:20:20,210 --> 00:20:22,400 So we need to walk the red carpet, 390 00:20:22,400 --> 00:20:24,280 bring our families to the red carpet, 391 00:20:24,280 --> 00:20:26,480 talking about this crypto movie we did together. 392 00:20:26,480 --> 00:20:28,480 So I can't wait for that day. 393 00:20:28,480 --> 00:20:29,840 – I'm looking forward to it, too. 394 00:20:29,840 --> 00:20:32,640 – Thanks so much for the time, today, I really appreciate it. 395 00:20:32,640 --> 00:20:33,760 – Thank you, Kelly. 396 00:20:33,760 --> 00:20:36,000 < Outro > 397 00:20:36,000 --> 00:20:38,799 – This has been Count Me In, IMA's podcast, 398 00:20:38,799 --> 00:20:41,640 providing you with the latest perspectives of thought leaders 399 00:20:41,640 --> 00:20:43,659 from the accounting and finance profession. 400 00:20:43,659 --> 00:20:46,070 If you like what you heard and you'd like to be counted in 401 00:20:46,070 --> 00:20:48,600 for more relevant accounting and finance education, 402 00:20:48,600 --> 00:20:54,360 visit IMA's website site at www.imanet.org.