Cryptocurrencies: Investment, Money, or Gamble? (B)

by: Ilan Alon, Antonio Candia, Fabio Moreno

Publication Date: October 7, 2019
Length: 18 pages
Product ID#: 6-682-173

Core Disciplines: Accounting/Finance, Entrepreneurship & Innovation, Ethics, International Business, Strategy & Management

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Teaching Note

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This two-part case series (A and B) puts students into the role of Juan Perez, an investment analyst who works for Suprabanco, a fictional multilateral lending institution headquartered in Bogotá, Colombia. The case opens in 2018, when a risk assessment determined that Venezuela might struggle to repay a Suprabanco loan because it was denominated in US dollars. At the same time, the bank wondered if cryptocurrencies had the potential to increase returns and diversify a portfolio.

So, Suprabanco assigned Perez two tasks: 1) Investigate the viability of increasing returns by adding cryptocurrencies to a portfolio of investments and, 2) Determine if cryptocurrencies could be an alternative to the US dollar in case the Venezuelan loan situation deteriorated.

Case (A) examines cryptocurrencies in general and focuses specifically on bitcoin, including its origins, requirements (technology, community, and liquidity), regulatory environment, and competitors. Case (B) examines the Venezuelan Petro, a sovereign-issued cryptocurrency designed to overcome hyperinflation and US sanctions that locked the country out of international financial markets. Both cases describe decisions facing Perez as an investment analyst and introduce the reader to cryptocurrency opportunities and challenges, blockchain technology, and ethical dilemmas.

Teaching Objectives

After reading and discussing the material, students should:

  • Understand cryptocurrencies as a new form of blockchain technology.
  • Evaluate cryptocurrencies as a form of money and investment.
  • Analyze the ethical dilemmas associated with the Venezuelan Petro cryptocurrency.