Using recommendations from University of Cincinnati students, the cryptocurrency fund grew from $50,000 to over $120,000 in less than 15 months.
As part of the economics course “Economic Applications of Blockchain,” UC students are challenged to investigate the feasibility of investing in cryptocurrencies in UC-owned funds. Kautz-Uble Economic Institute.
When classes began in the 2017-18 school year, students created investment strategies for virtual funds. The virtual investment became a reality during the 2022-23 academic year when donations provided the actual investment funds.
Some students begin the class as experienced cryptocurrency traders, while others have minimal knowledge of the subject. But at the end of the semester, their collective input is used to invest real money to support students in the future through scholarships, study abroad, and professional development.
“On a superficial level, it seems like a terrible idea,” Robert Schron, a college junior from Cleveland, Ohio, said of investing in cryptocurrencies. “But the more we learn about it, the better the idea becomes.”
active learning
This course is taught by: michael jonesPhD, Karl H. Lindner Assistant Professor and Director, Department of Economics, College of Business Cryptoeconomics Lab in UC Digital Futures.
Jones said that financial literacy is important for improving financial decision-making and increasing financial empowerment, and that understanding cryptocurrencies enables financial decision-making. own challenges It is separate from the financial sector as a whole. The decentralized nature of cryptocurrencies contributes to challenges, including fewer laws and regulations compared to the traditional financial sector and misunderstandings about who controls digital assets.
During the class, Jones talked about cryptocurrencies, the technology that supports them, the legal environment, future trends, and the legal implications of blockchain, the immutable digital ledger of economic transactions that records not just financial transactions, but anything of value. Teaching students about the environment.
“College students, a lot of them don’t have great financial literacy,” Jones says. “They don’t always make great financial decisions. This is a tool that can help them gain a deeper understanding of how to manage their finances.”
Wanting to give students real-world experience, Dan Kautz, co-founder and co-owner of real estate development and management organization K&S Companies, and Woody, principal of Bartlett Wealth Management and UC Foundation board member. Mr. Uible is a fund that invests in virtual currencies.
Students in the fall 2022 class will make the first proposals on how to invest the funds, with initial investments occurring in early 2023. Last fall, a new class made their own proposals, and some of the funds were reallocated based on their input.
“Working with real-world examples and having real-world impact is probably my favorite part of the class,” said Darrick Page, a fourth-year student from Cincinnati. Ta.
The majority of the institute’s funds are invested in Bitcoin, which is considered the largest and relatively stable cryptocurrency by market capitalization. The fund also invests in lesser-known cryptocurrencies.
When the initial investment was made, Bitcoin was worth less than $20,000. Its value rose to more than $73,000 in March 2024.
“It’s kind of crazy,” said Erica Bowling, a junior from Westerville, Ohio. “But I also think it was inevitable in a way because the industry as a whole is growing as cryptocurrencies are starting to become more popular.”
Opportunity for everyone
Whether they attended the course as experienced crypto traders or had only basic knowledge of the subject, students in the class said they enjoyed the experience and learned a lot.
Lilly Elfer, a college senior from Cincinnati, is dealing with Bitcoin and Sam Bankman Freed, the founder of cryptocurrency exchange FTX, who was convicted of orchestrating a multibillion-dollar fraud. I had heard about the conviction. More than that, she didn’t know much about her subject until she enrolled in the class. She says, “When I joined the company, I didn’t know what was going on and I was so scared that I was going to fail and that I was going to fall behind.” She majored in business economics and majored in marketing. said Elfer, who is minoring in the subject. “But I couldn’t be more grateful to my amazing professors who made it so easy.”
Fellow students Boring and Page also began the class with limited knowledge, as Schron had previously invested in cryptocurrencies.
Schron said that as someone who started the class with more experience than many of his classmates, he had a lot to learn, including how cryptocurrencies are developed and how they are priced. Ta.
Professor Jones also encouraged Schron to research lesser-known cryptocurrencies when researching investment projects.
“He kept telling me to think outside the box and keep looking for other cryptocurrencies that weren’t as popular,” says the double major in economics and finance, with a minor in crypto economics. said Schron, who is majoring in the field. “That’s how I found some work that I added to my portfolio. It was definitely beneficial for me.”
As part of the coursework, the class visited the Cryptoeconomics Laboratory at UC Digital Futures, where they were able to see: mining riga computer that solves complex mathematical formulas to find cryptocurrencies.
In addition, finance and cryptocurrency experts spoke to students during the semester and shared their positive predictions and potential concerns with students.
Experts also participate in vetting students’ investment recommendations. Before making the purchase, his three-person committee reviewed the investment plan, and Mr. Jones worked with the university. investment office Additional guidance required.
“This project was really interesting to see how the experts took our input and applied it to the fund,” said Boling, an economics and real estate major. “It was fun to watch.”
take your own advice
The first $50,000 and all proceeds from UC’s crypto investments will be held in the fund for at least three years until 2026.
After three years, Jones plans to treat the fund like an endowment. Approximately 5% of the funds will be used to support students through scholarships, study abroad programs, and professional development. The rest will continue to be invested and hopefully continue to grow and be able to withdraw more in the future to continue supporting our students.
“Setting yourself up for future success and knowing that the rewards aren’t always instantaneous, but the long-term rewards are sometimes great, is the key to life,” said Page, a business economics major. It’s a very good lesson for us.”
Students in this class also use the information they learn to manage their personal finances.
Schron, who has been investing since high school, made a few changes to his portfolio that paid off.
Page opened her portfolio in October, midway through the semester.
“This project definitely helped expand my own wallet and portfolio,” he said. “I took some of my own recommendations and my team’s recommendations, and it definitely worked in my favor.”
Mr. Boring hasn’t invested yet, but he would like to.
“I think I will definitely invest in it in the future,” she said. “Now that I know some of the different options, I’m going to have a slightly more diversified portfolio.”
Although Elfer is grateful for everything he has learned, he has no plans to invest in cryptocurrencies.
“Personally, it’s not something I would go out of my way to buy or be interested in,” she says. “But I was really interested in this class. I learned how people invest and how they make money, and it was a very informative class.”
Even as a professor, Jones said he learned a lot during his classes, including from his students. Their opinions are often very insightful, he said, but sometimes they can sound a little crazy.
Still, some crazy-sounding ideas end up being quite sensible. Before investment funds existed, students in the class proposed investing all their hypothetical funds in Dogecoin, which was created as a joke but gradually gained acceptance.
“Frankly, their advice might not have been bad,” Jones said. “Going back to 2020, if we had an endowment and had put all $50,000 into Dogecoin as recommended by our students, it would have been worth over $4 million. Sometimes the craziest ideas aren’t so crazy.”