Tepper Blockchain Initiative Asks "What Uses Will Bring the Most Benefits to Business and Society?"
By Ariel Zetlin-Jones, Associate Professor of Economics
Everyone is talking about blockchain technology. Best known as the structure underlying cryptocurrencies, it also has promising applications in financial markets, supply chain, and other areas.
But how trustworthy is it? And how can we shape the roles it may play in business and society in the future?
In blockchain technology, blocks containing unique data sets are linked, forming a chain. The technology links these blocks together in a way that protects the record of information in each block.
It functions like a ledger. Instead of a centralized, trusted party verifying the data, like a bank, multiple users maintain this ledger. Every user stores and updates the information in the ledger.
Blockchain: a new form of trust.
To be effective, a blockchain needs a consensus protocol, an agreement among users that allows each to trust that the data in their ledger are correct and the same as the data in everyone else's ledger. In this way, blockchain is a new form of trust, one that is based on computer science and financial incentives.
In the Blockchain Initiative at Tepper, experts in business and technology are examining how this new form of trust is likely to play out in business and society:
- We're exploring the role financial incentives play in fostering trust and consensus in blockchain settings. There are risks involved in using a trustless database system, so we're looking at the roles cryptography and incentives have in making these blockchain ledgers secure. Our initiative has people who understand technology and computer science working with people who understand business and incentives.
- We're asking questions like: How secure is blockchain? Is it really that difficult to manipulate the data in a blockchain, as many of its supporters claim? How do you make blockchains and their associated cryptocurrencies stable?
- We're studying the costs and benefits of moving existing business and societal data to blockchain. We start by asking: Why do we need to replace a trusted party with a trustless system? We want to better understand the roles of blockchain in business and society, the ethical considerations of using it, and how policymakers should regulate blockchain applications. We're also developing quantitative tools to evaluate the performance of blockchain applications now in use.
- We're teaching our students how to answer these questions for themselves. Our course, Developing Blockchain Use Cases for CMU Coin, involves faculty and students from across campus — computer science, economics, finance, and public policy. Students move between the technical challenges of coding smart-contracts on a blockchain to the economic, financial, and strategic challenges of using it in a real-world, business use case.
Blockchain is rich with possibilities. Our goal is to understand what uses will bring the most benefits to business and society in the future.