Ep. 229: Lamont Black - Navigating the Digital Finance Future: Crypto & Blockchain

Unlock the mystifying world of cryptocurrencies and blockchain in
this enlightening episode of Count Me In. Join our guest host
Kelly Richmond Pope, accounting Professor and author, as she
speaks with Lamont Black, an Associate Professor of Finance at
DePaul University.  They navigate us through the
complexities of blockchain technology, its relevance to
accounting and financial services, and the turbulent landscape of
cryptocurrency exchanges. Lamont takes a deep dive into how
blockchain serves as the foundation of cryptocurrencies,
elaborates on its inherent security and transparency, and paints
a picture of its significant role in the future of digital
commerce. We will also unpack the rise and fall of crypto prices,
the risks involved, and how to safely engage with cryptocurrency
exchanges. No matter whether you're a finance professional
grappling with the challenges of a rapidly digitizing economy, or
a curious listener wanting to unravel the world of
cryptocurrency, this episode is an invaluable resource.


Connect with Lamont and Kelly:


https://www.linkedin.com/in/lamontblack/

https://www.linkedin.com/in/kelly-richmond-pope-cpa-83689a5/




Full Episode Transcript:
Adam:            Welcome
to another enlightening episode of Count Me In. Where we delve
into the pressing issues shaping our world and the business
landscape. Today, we have the privilege of hearing a wonderful
conversation between our guest host, Kelly Richmond Pope,
accounting professor and author, and Lamont Black, an Associate
Professor of Finance at DePaul University. They discuss an issue
that is at the forefront of finance innovation; cryptocurrencies
and blockchain technology.


 


Lamont brings his vast knowledge and expert insights to help
demystify these complex topics and explain their relevance to the
finance industry. So whether you're a CFO, a controller, a
finance professional, or simply a curious listener, prepare for a
deep dive exploration into the world of blockchain and
cryptocurrencies. Let's get started.


 


Kelly:           
  So Lamont, thank you so much for joining me,
today. And if you could start by just introducing who you are.


 


Lamont:         So I'm
an associate professor of finance in the Driehaus College of
Business at the DePaul University. So I'm one of your colleagues.


 


Kelly:           
  You are one of my colleagues. And, so, I want to
welcome you to the IMA podcast series. And I have been working
with the IMA, a little over a year. Working in research and
thought leadership about ethics, corporate governance, risk, and
you know my favorite love, fraud. And as we watch the news, read
the news, what has just been in the news, so much, in the past,
I'd say 18 months, is this really weird word called
cryptocurrency. 


 


And when I came to you, originally, about trying to understand
what in the world is cryptocurrency. What you shared with me was
how important it was to understand blockchain. And what I want to
do, today, is have you really break down the importance of
understanding blockchain. Because what I think the world is
getting a little scared about is when you keep hearing about
cryptocurrency, these exchanges that are falling apart. And, I
think, everybody is really skeptical of this concept of
cryptocurrency.


 


But what I know you feel is, though, people might be scared of
that. But you still need to understand the soundness and the
value of the underlying technology, which is called blockchain.
So could you tell us a little bit about what blockchain is and
why we need to know about it as managerial accountants?


 


Lamont:         Yes, so
blockchain is the platform behind cryptocurrency. And blockchain
is a technology, that, I think, everyone should be trying to
understand. It's really a system of shared record keeping. So if
you think about how we now live, in the information age, most of
what we do is involving data. That data is being stored and
shared using different systems, today. Whether that's on the
cloud or other types of servers, and the blockchain is a way of
sharing information. So that it's recorded on a shared
ledger. 


So you can really think of blockchain as a system of accounting.
And what makes it different is that rather than these ledgers
being held in a private form. Different ledgers on different
institutions that, then, have to communicate, blockchain cuts
across all those silos. It's a way of recording information
across an entire network. Sharing that information with the
network, that makes it very secure, very transparent, and very
efficient for sharing information. 


 


So as we move deeper and deeper into the digital economy and
e-commerce. I think every organization should be trying to
understand how do we store and share information on the internet.
I think blockchain is likely that next platform. And, so, even in
the world of accounting, this is where things are likely headed.


 


Kelly:           
  So that's a great explanation, and it really
makes me feel a lot more comfortable in understanding that.
Although, I hear all this craziness about cryptocurrency, and
cryptocurrency is just where you shouldn't put your money. You've
made me feel a lot more comfortable about why I need to
understand blockchain. But let me digress, for a second, what in
the world is going on with all that we hear about FTX, and the
collapse of these exchanges? What is that conversation even
about? And how does that affect or how should it affect our
opinion of blockchain?


 


Lamont:         Yes, so
cryptocurrency is the money that is transferred across public
blockchains like Bitcoin and Ethereum. And, so, people can own
Bitcoin and Ethereum as digital assets, and crypto prices ran up,
dramatically, during COVID. There are different arguments for why
that occurred. 


 


But one of them would be the amount of monetary stimulus. As
people had all these different sources of income coming in. Let's
say through stimulus checks in the form of fiscal stimulus, that
money flowing into the economy. A lot of that ended up in crypto.
And, so, Bitcoin almost reached $70,000 for one Bitcoin by late
2021. And as we moved into this year and our economy started to
slow, inflation started to rise, largely as an outcome of COVID,
crypto prices started to collapse. 


 


Now, some people focus on the collapse of the crypto market as
being something unique. But I just would point out that the stock
market also entered bear market territory in the first half of
this year, and in particular, tech stocks. So tech stocks are
very risky. And, so, speculative assets during an economic
slowdown, those prices tend to fall the most. 


 


I view crypto as a form of technology. It's the frontier of
technology. So, to me, it's no surprise that as risky assets have
sold off this year, crypto has gotten hit the hardest. Now, as it
relates to the exchanges, that's really been the problem this
year. Because most people when they buy crypto, they buy it on an
exchange like Coinbase, here in the US, or FTX, which was an
offshore exchange headquartered in the Bahamas. 


 


No...