FinTech Lecture 14 : Q & A

Slides I used for FinTech - Financial Innovation and the Internet 2022 Fall at Graduate School of Business and Finance, Waseda University on January 20, 2023.

Transcript

1. Sending money — generated by Stable Diffusion. FinTech — Financial Innovation and the Internet 2022 Fall Lecture 14 : Q & A Kenji Saito, Graduate School of Business and Finance, Waseda University Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.1/23
2. This class is recorded 7 out of 15 lectures will be online only. When online, Camera ON is recommended, but not required You do need to speak often anyway (we are going to have a lot of dialogue) We will use breakout rooms a lot, but those won’t be recorded unless you do it yourselves (need to be allowed) Keep your Zoom client updated! We might use latest features The recordings could be used for research on (online) learning Transcribed for use and anonymized Will let you know when the necessity arises Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.2/23
3. The lecture slides can be found at : https://speakerdeck.com/ks91 Recording and chat text will be posted at Moodle and Discord Trial automatic transcriptions will be posted at Discord Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.3/23
4. Schedule Lecture 1 9/30 Overview of FinTech (1) • Lecture 2 10/7 Overview of FinTech (2) • Lecture 3 10/14 Internet Technology and Governance (1) — online • Lecture 4 10/21 Internet Technology and Governance (2) • Lecture 5 10/28 The World of Apps (1) — online (close enough to Halloween) • Lecture 6 11/11 The World of Apps (2) — online • Lecture 7 11/18 Basics of Cryptography and Blockchain — online • Lecture 8 11/25 Blockchain • Lecture 9 12/2 Blockchain and Smart Contracts — online • Lecture 10 12/9 Smart Contracts — online • Lecture 11 12/16 Further Smart Contracts • Lecture 12 12/23 Cyber-Physical Society and Future of Finance • Lecture 13 1/13 FinTech Ideathon — online • Lecture 14 1/20 Q & A • Lecture 15 1/27 Presentations and Conclusions Online presence is possible but not recommended for non-online lectures for interactivity reasons Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.4/23
5. Last Time, We Did . . . World Café to Organize Your FinTech Business Idea Assignment Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.5/23
6. Today’s Topics Q & A and Discussion as the assignment review Assignment (your presentation material) Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.6/23
7. Q & A and Discussion Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.7/23
8. R-san’s Question What is the most disruptive application of blockchain technology in the financial industry and how do you think it will change the way we conduct financial transactions in the future? ⇒ In the short term, it has been remittance (of large volume) For example, it may have caused Japanese banks to rethink their remittance fees and even the existence of branches (if cryptocurrencies have paved the way for digital remittances) In the longer term, blockchain (or broadly censorship-resistant ledgers) could replace any registry office, which would contribute to the transformation of social structure, not just finance Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.8/23
9. J-san’s Question Just a comment to what we learned, proxy contracts are commonly used in the field of smart contract development In a sense, it seems that smart contracts are not completely immutable For a smart contract SC, usually there will be a proxy variable to store another smart contract PSC address, the variable could only be modified by the smart contract owner When you cann[call?] SC.methodA, the actual logic code is in PSC.methodA In order to fix bugs and upgrade functions, it seems that this is a good design, but it also brings danger to users Do you think this technique should be used universally? ⇒ Yes In fact, I think that such a mechanism should be in the smart contract platform itself Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.9/23
10. C-san’s Question This is a question about the class on cyber-physical society and the future of finance How do you think will the increasing use of automation and AI in financial services will affect the job market and skills required in finance? ⇒ In the short term, people will be expected to plan and make decisions at the top level, rather than being used by others In the longer term, the era of humans using other humans will come to an end, and the concept of jobs itself will disappear Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.10/23
11. J-san’s Question Could the law, in 30 years time, work only via smart contracts on the blockchain? ⇒ No Smart contracts merely attempt to ensure that the state of a particular program is consistent from any perspective of the distributed systems Many programs will operate outside its control, including programs that verify the above And even more so, smart contracts do not have any control over physical entities, including humans If control is forced, it will be by law There are attempts to make the law mechanically readable However, the law also needs to have a margin that allows for individual interpretation Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.11/23
12. D-san’s Question Assuming that cryptocurrencies continue to increase in importance (and value) into the future, how will this effect the policies of the world’s major central banks? Do you think that, eventually, cryptocurrency stability may become one of the policy objectives of central banks? ⇒ No (I think that the assumption is unrealistic) By the way, do central banks have as one of their policy goals the stability of other central bank money? The question of whether a central bank would make cryptocurrency stability a policy goal is asking the same thing Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.12/23
13. L-san’s Question How can FinTech establish an all-round connection with the physical economy? When the virtual economy starts to deeply integrate with the physical economy, and fintech establish a complete connection with physical economy, what kind of new form of fintech can achieve deep integration with the physical economy and can bring the development of fintech to a brand new stage of development? ⇒ I don’t know if I understand your question correctly, but . . . The real question is whether the monetary economy is precisely tied to the real economy Which it isn’t If we are to consider accurately representing the real economy, must we not abandon money? Instead, we might measure the amount of resources in terms of joules or time, for example, which digital technology can surely help Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.13/23
14. R-san’s Question What are some recommended next steps for further learning, career paths, and areas of research in the field of FinTech now that we’ve covered the fundamentals? ⇒ For example, how banks can be creatively dismantled seems like a topic worth pursuing If finance is to support corporate activities, we need to consider how DX will transform the corporate entity and how it will be supported in the near future If you are going to work in the financial area, it is inevitable that you will be involved in major changes, which will be exciting, depending on your point of view Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.14/23
15. N-san’s Question Is it feasible to have a shared database of personal information on a blockchain? Problem: Having a digital passport would make id verification a smoother process and reduce the number of fake identification documents However, a shared database that is used by all the countries would likely not have one single governing entity Therefore, it is reasonable to assume that a blockchain of such a database is somewhat decentralized How safe is it to store passport information on a decentralized blockchain? ⇒ It would not be safe to put passport information on blockchain Rather, the blockchain should carry evidence (in the form of cryptographic digests) to verify the authenticity of passport information Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.15/23
16. W-san’s Question Due to the conflict between the decentralized concept of blockchain and the current reverse globalization situation, nationalism and isolationism are rising, and high regulations might come What do you think will be the end of cryptocurrencies (not the technology itself)? ⇒ Today’s cryptocurrencies have sustainability challenges The blockchain’s native currency must maintain a high price level without any basis anyway, or the blockchain itself will not be secure And because it does not adjust supply to demand, the price goes up when it is bought and down when it is sold Cryptocurrencies implemented with smart contracts can be a motivation to destroy the foundation when dealing with greater value than the native currency Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.16/23
17. H-san’s Question According to fintech on aviation industry from the past 2 weeks, does it really matter whether should blockchain(decentralized) be implemented, considering cost and difficulties, or is it better with other centralized fintech solutions? ⇒ Use of blockchain (or alike) should not be an objective In any case, it will be necessary to have an exchange of genuine information among entities with different jurisdictions, so the question is how to ensure that this is implemented Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.17/23
18. T-san’s Question Once a program (ex. Smart contract) released to a platform like ethereum, my understanding that the program cannot be changed due to their system specification How should the application be changed when a system bug or security defect found after releasing the application to the production platform environment? ⇒ Please see first J-san’s question (p.9) Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.18/23
19. L-san’s Question In the first session of the course, you mentioned that it’s been more than 22 years since you started your research in the field of P2P (Peer-to-Peer) and digital currency, which even nowadays, not many people have a deep understanding of So, my question is how did you start your interest in this field back to 22 years ago? Or, in other words, what were the contributing factors for you to decide on your research field back then? ⇒ I’ve had the feeling since I was a first grader that money is a strange being This feeling has since been replaced by the thought that I could create my own monetary system after I became able to use digital technology So when I became a doctoral student under Prof. Jun Murai, this was the first topic I chose Murai-san also suggested that I should work on P2P as well, which happened to be the right topic if I wanted my monetary system to be sustainable Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.19/23
20. V-san’s Question How can blockchain technology be used to create a decentralized and secure platform for digital asset lending and borrowing, while addressing the issues of counterparty risk, fraud and regulatory compliance? ⇒ The first two are exactly why the blockchain was created The third may be the same, because they wanted to be free from regulations For lending, flash loan, or loan and repayment within one transaction, may be a concrete answer, while leaving the question of whether this makes any sense in light of the original purpose of finance Flash loan sounds more financial engineering than FinTech Financial engineering : how to devise ways to make a profit within the given rules FinTech : how do we blow up the foundation itself? Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.20/23
21. Assignment Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.21/23
22. Assignment 8. “Your Presentation Material” Upload a presentation file you will be using for the next class It will be a two-minute pitch, and therefore . . . It must contain just one page (include your name) Deadline and how to submit Janurary 26, 2023 at 17:59 JST From Moodle (mandatory) Optionally, you can also post to #assignments channel at Discord Preferred file format is PDF Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.22/23
23. See You Next Week at the Classroom! Get ready for your presentations Take good care of yourselves Lecture 14 : Q & A — FinTech — Financial Innovation and the Internet 2022 Fall — 2023-01-20 – p.23/23