Exploring the Future of Finance: A Q&A with Cryptocurrency Researcher Dr. David Enke
April 1, 2025 – Missouri University of Science and Technology, Rolla, MO — As the financial landscape evolves and embraces innovative technologies, cryptocurrencies have emerged as a formidable presence in global finance. These digital currencies, especially Bitcoin, are reshaping conventional economic paradigms and creating exciting new investment opportunities. To gain insights into the future of finance, we spoke with Dr. David Enke, the interim associate dean of the Kummer College and a Curators’ Distinguished Teaching Professor of Engineering Management and Systems Engineering at Missouri S&T.
Dr. Enke’s research focuses on applying artificial intelligence (AI) to forecast the price and volatility of traded assets, with an emphasis on Bitcoin.
Understanding Cryptocurrencies and Blockchain Technology
Dr. Enke explained that cryptocurrencies are digital currencies secured through cryptography, distinguishing themselves from traditional fiat currencies issued by governments. Unlike these conventional forms of money, cryptocurrencies operate on decentralized networks where transactions are verified and recorded on a blockchain—an immutable ledger maintained across multiple computers. This decentralized nature prevents alterations by any single authority, effectively mitigating risks of counterfeiting and double spending.
The Unique Position of Bitcoin
Bitcoin stands out in the cryptocurrency realm as it was designed to function as both a store of value and a medium of exchange. Enke notes that many investors regard Bitcoin as "digital gold," as it offers a hedge against inflation—a pressing concern in many economies with unstable currencies. Significantly, Bitcoin’s supply is capped at 21 million coins, with over 19.8 million already mined, making it a scarce asset. This scarcity contributes to its value proposition compared to fiat currencies, which can be devalued through government printing.
Current Economic Impact
Dr. Enke highlighted Bitcoin’s dual role in contemporary finance: not only does it serve as a hedge against inflation, but it also grants individuals greater control over their finances by eliminating intermediary financial institutions during transactions. This aspect holds particular importance for those without access to traditional banking services, allowing for cheaper and faster cross-border transactions.
The recent introduction of Bitcoin Exchange-Traded Funds (ETFs) signifies its maturation as an asset class, offering investors an opportunity to diversify portfolios traditionally limited to stocks, bonds, and real estate. Notably, Bitcoin has consistently been a top-performing asset, outperforming many conventional asset classes in eleven of the last fourteen years. However, potential investors must remain wary of its high volatility, which has led to significant fluctuations in value.
Future Economic Considerations
Looking ahead, Dr. Enke anticipates that Bitcoin and cryptocurrencies will continue to spur the growth of decentralized finance (DeFi), which is likely to revolutionize lending, borrowing, asset trading, and even the valuation of digital assets like Non-Fungible Tokens (NFTs). The advent of smart contract technology embedded in NFTs holds promise for creators, allowing them to earn royalties from subsequent sales of their work.
Regulatory Landscape
The regulatory treatment of cryptocurrencies in the United States is complex and often inconsistent. Bitcoin has been classified by the Commodity Futures Trading Commission (CFTC) as a commodity, while the Internal Revenue Service (IRS) treats it as property for tax purposes. The Securities and Exchange Commission (SEC) has determined that Bitcoin does not meet the criteria for classification as a security. However, regulatory focus is shifting, and an administration more supportive of cryptocurrencies signals a potential evolution in this area.
The Role of AI in Forecasting Prices
In his research, Dr. Enke employs deep learning artificial neural networks, a form of AI, to predict the price movements of traded assets. By training these models with extensive historical data, they learn to recognize patterns and relationships that influence price changes. When forecasting Bitcoin prices, Dr. Enke has access to a unique dataset provided by the blockchain, allowing for deeper insights.
Moreover, his approach combines traditional forecasting with modern techniques like evolutionary algorithms and classification models to refine the data used for predictions. This integration enhances the accuracy of forecasts by selecting the most relevant factors behind price movements.
Conclusion
As Bitcoin and other cryptocurrencies increasingly permeate the global economy, their impact on financial systems cannot be overstated. While promising greater accessibility and innovative financial solutions, cryptocurrencies also present challenges, particularly regarding volatility and regulatory frameworks. Researchers like Dr. David Enke are at the forefront of understanding these complex dynamics, utilizing advanced technologies such as AI to navigate the future of finance.
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