Guest Column: September 2021

A professional headshot of a blonde woman with her hair in a ponytail and wearing a white tank top.


Why you’re hearing so much about cryptocurrency these days

Kathryn Carlisle
Senior Managing Director,
Blockchain Center of Excellence
Sam M. Walton College of Business
University of Arkansas

THE FIRST THING to know is that anything can be “money.” This is why cryptocurrency is such a fascinating topic, especially in the beginning. Because it’s really a philosophical topic, about what we as a society believe has value. The reason we believe the U.S. dollar has value is that it has “the full faith and backing” of the U.S. government. But what does that really mean? It’s a belief. Money hasn’t looked like one thing consistently over time. If we go back 500 years, we were trading beads and cattle.

I teach a course called Introduction to Cryptocurrency at the Walton College of Business, and I have a Master’s Degree in Digital Currency from the University of Nicosia, in Cyprus. But why I wanted to get such a degree is complicated. I graduated from the University of Arkansas with a dual degree in International Business (Accounting emphasis) and Spanish Language. Early on in my career, I went to work for Heifer International, based in Little Rock. They do economic development and community development in emerging economies. They particularly work to help low-income, small-holder farmers.

I was working with Heifer in a finance position, and at the same time—this was about 2013 or 2014—I was dating a technology nerd whom I’m now married to. Just as a kind of hobby, he and I were interested in Bitcoin from the perspective of its being a global currency that’s actually software. At first, we started learning about cryptocurrency by simply owning some, and being incentivized enough to read about it whenever we saw an article on Bitcoin. The more I learned, the more convinced I became that Bitcoin, with the security of its underlying blockchain architecture, could be a huge benefit to the work that Heifer International was doing. More about that in a minute.

(FYI, you’ll see me capitalizing Bitcoin and Blockchain in some instances, and other times I’m putting them in lower case. The rule is, we use cap-B Blockchain/Bitcoin to refer to the network, and lower-case b blockchain/bitcoin to refer to the actual unit of account or infrastructure.)

So as I was developing my interest in Bitcoin, I was also applying to various universities for a Master’s degree program. During that process I ran across this distance-learning program in Digital Currency from the University of Nicosia. Considering the cost and the commitment of time, I decided to go with the Digital Currency degree, which just seemed more interesting and cutting edge than anything else I was considering. It was a very structured, two-year Master’s program that was started by Andreas Antonopoulos, the British-Greek tech entrepreneur, author, and Bitcoin advocate, who also teaches in the program. I started work on that degree while I was still working at Heifer. My classmates and I were logging on from all over the world.

About this same time, Heifer International launched Heifer Labs as a sandbox to explore implementing new types of technology, including financial technology, to help these poor farmers in emerging countries. That’s where I first saw the value of Bitcoin, the first digital currency. Bitcoin is a cryptocurrency, but it is enabled by the blockchain, which is a peer-to-peer decentralized distributed ledger technology that makes the records of any digital asset transparent and unchangeable and works without involving any third-party intermediary. Blockchain, which makes processes more secure, efficient, and cost effective, was essentially created with the birth of Bitcoin and is the underlying architecture that makes cryptocurrency possible. Think of it as the HTTPS layer, the Internet, and cryptocurrency is just the application, like the Gmail on top of your Internet. Heifer is really leading the way in implementing this technology for social impact. And to this day, when we see reports coming out about global adoption of digital currency, it’s happening in those emerging economies first, because the need is there. Established economies in the U.S. and Europe tend to take our stable currencies for granted.


AT THE WALTON College of Business, the Blockchain Center of Excellence was launched in 2018 within the Information Systems Department. Blockchain can also enhance things like food safety and traceability, and the mission of the Blockchain Center of Excellence is to make the Sam M. Walton College of Business a premiere academic leader in research and education of blockchain-enabled technologies and digital ecosystems. We believe that future professionals with Blockchain skills and knowledge will transform businesses and society into more efficient, sustainable, and profitable networks.

In my Introduction to Cryptocurrency course, I teach that anything can be money if (a) a society believes it is, and (b) it performs the three general functions of money well. It either needs to be a good medium of exchange, a unit of account, or a store of value. No form of money performs all three of those perfectly. It’s always about trade-offs. Bitcoin, specifically, is seen as akin to gold as a long-term store of value, while other currencies and altcoins have been created because other users might want their money to have a stronger medium-of-exchange function.

Beyond the conversations about the three functions, there are the questions of whether a currency has “good properties of money”: Is it durable? Is it portable? Is it divisible? These characteristics help us think about what are good and not-so-good frameworks for transactions. Take the U.S. dollar, for example: If every state had a different dollar and a different exchange rate, our currency probably wouldn’t be as strong. But with a unified network, we know that we can go anywhere else in the country and the same form of payment will be accepted. In cryptocurrency, Bitcoin has the longest blockchain and largest adoption. The more people that are on a network, the more valuable its currency is. Therefore, Bitcoin is strong because its network of believers is strong.

Until Bitcoin was created, in 2008, we had never solved what’s known as the “double-spending problem” on the Internet—that is, the concern specific to digital cash and cryptocurrency projects that someone might be able to spend their funds more than once. It was a concern particular to systems in which other parties and networks, such as outside computers, were involved. But along came Bitcoin’s blockchain with a timestamped, peer-to-peer database utilizing cryptography as well as consensus algorithms…and the problem was solved.

With that solution comes this revolution in the technology of money that we’re reading about today. Earlier this month, The New York Times ran a piece that began this way: “The development of Bitcoin and thousands of other cryptocurrencies in a little over a decade has changed the definition of money — and spawned a parallel universe of alternative financial services, allowing crypto businesses to move into traditional banking territory.”

Indeed, there are thousands of examples out there these days. Anyone can copy this code and make tweaks and adjustments and create their own coin, essentially. But just because you’ve created your “JohnDoecoin” doesn’t mean you can suddenly declare yourself a millionaire. The value of your own cryptocurrency is only as strong as the network of people who believe in it.

This is why we’re reading so much about cryptocurrency in connection with sports stars and teams. It’s attractive for athletes and celebrities because, when we talk about those network effects, if you have influence over a network, it can increase the value of the project that you’re working on. And the influence works for both the cryptocurrency and the stars, which is why cryptocurrency exchange FTX has enlisted NFL star Tom Brady and NBA star Stephen Curry as faces for the exchange. Curry will promote the viability of cryptocurrencies to new audiences in his role as FTX’s “global ambassador,” a title that comes with an equity position in FTX Trading Limited.

A popular offshoot of the whole cryptocurrency phenomenon is what’s called NFTs, or “non-fungible tokens.” These are scarce cryptographic tokens used for different unique features or purposes, such as loyalty points or as a reward token. NFTs are another way for people to monetize their brands. Sports trading cards are an area that has changed as a result of this new technology. Instead of the old cardboard baseball cards you used to keep in a shoebox, they’re now being made in digital form as NFTs.

The bottom line is that blockchain technology has added a transaction layer to the Internet, and cryptocurrency is just one application—the payment application. The other applications can be applied to anything that transacts value. Today, the ability to monetize anything—content, music files, information, art—is open to secure direct payment, peer to peer, on the Internet.


I’M OFTEN ASKED who my students are. While the Blockchain Center of Excellence falls within the Information Systems Department, this is an incredibly cross-disciplinary topic, relevant in any industry in which value is exchanged, which means everyone. I actually have students from all different backgrounds in the Walton College, but especially in finance, information systems, supply chain, and accounting.

As I explain to my students, the first step in getting your first bitcoin is to create an online digital wallet for yourself to hold your cryptocurrency. Then you could have someone give you some bitcoin as a gift, or you could pay someone $50 in traditional dollars in exchange for $50 worth of bitcoin, or you could earn some bitcoin by producing a product or service. Those are probably the most popular ways for someone to purchase crypto for the first time.

You may be wondering if Bitcoin and other cryptocurrency has to be backed up with a reserve asset, like gold. It does not. Cryptocurrency is simply a digital form of money. We use electronic numbers in our bank account right now to symbolize what we do or do not own. That’s not physical money, either. Cryptocurrency is just a software that conducts all of the traditional banking and payment processes automatically, and it’s managed by a global network of computers instead of one central institution.

The fact that we think that money is something static is really just our narrow focus at this point in time. Money, and especially things like Bitcoin, have value because an economy of people believes that it does. The value is really coming from the benefits that electronic money, or digital money, can provide. In a peer-to-peer system, it’s a lot cheaper, because you’re not paying those middlemen. It’s a lot faster and more efficient than doing a three- to five-day ACH transfer. And, finally, it’s more secure.

When we talk about the security of cryptocurrency, we’re referring to the mathematics and cryptography that’s involved in any actual transaction, but we’re also speaking of the inherent security of the cryptocurrency network itself. These are people who don’t know one another, so the wider that that information is distributed on these decentralized and unrelated computer nodes, the harder it is to hack. Anyone in the network can see the same copy of whatever that information ledger looks like. And the harder it is to hack, the more sustainable it becomes.