Will Blockchain be the Ultimate Disruptor?
Harvard Says Yes!

This year, I have covered Blockchain technology with four different articles (Issues 3-17, 3-24, 3-25, 3-31). Blockchain's claim to fame is its ability to fully encrypt personal data on the internet, allowing for the digital translation of assets and the elimination of need for a protective middle man. Essentially, this new crypto-technology enables secure-funds transactions and ensures that data cannot be hacked by outsiders.

Epstein explained that blockchain is a "distributed ledger." It's not a database sitting in an office. It's a database that everyone can access.

"We're seeing decentralization and a paradigm shift of moving from institutions to ourselves. Power has been given back to the business owners, who no longer need to rely on the permission of banks and governments to send money electronically," says blockchain expert Jeremy Epstein.

When you use a bank as an intermediary to transfer funds to another person by check, each person involved in the transaction has a separate record. The bank doesn't know right away that the person writing the check has a balance to cover the amount written out--there is an element of trust, and things can go wrong.

"We've been built to have other organizations be custodians of our assets (like banks). However, there have been more and more violations of our data,” Epstein added.

Conversely, Blockchain allows for privacy in the combination of records and the elimination of any intermediaries. Both parties can view the encrypted ledger and see any mutual transactions, but no one party controls it. Rather, each transaction is a block that is added to a chain once all parties affirm the block is correct. The chain itself is protected by cryptography.

"With blockchain, everyone can clearly see who the owner of the asset is, but only the person with the right key can unlock the door of that asset.

Think about the title of the asset - it would be in your control. This is why people buy title insurance. Blockchain lets us buy and sell any asset without an intermediary. Additionally, the asset is programmable, so you can set up business rules and computational logic for each asset. For instance, you could put in place a rule that states, 'I can't sell this without others signing off.' Thus, the asset cannot be not sold unless business rules are met."

According to Harvard research, Blockchain also maximizes transparency and anonymity. Each transaction is seen by anyone who has access to the chain; however, since each node (or user) has a unique alphanumeric identifier, each user can decide whether to remain anonymous in the transaction between addresses. These transactions can also be programmed with algorithms that can automate transactions between users.

So, if blockchain is so good, why hasn’t it caught on yet? There are four reasons to that question.

Trust Issues. Epstein emphasized the issue of believability and gaining trust of users. He said, "How
 will people get their head around this technology? Building trust and credibility will take time.

Stigma. Harvard found that some industries may view blockchain as "disruptive" because
it "can attach a traditional business model with a lower-cost solution and overtake incumbent
firms quickly." However, they argue that blockchain is most importantly a foundational technology
that can be used to create new business models and underpin business, economic, and social

Novelty. It will take decades for blockchain to seep into our economic and social infrastructure. The
process of adoption will be gradual and steady. Epstein agrees, saying that, "it is still very, very
early. Think Internet circa 1993."

Adoption. Epstein indicates that the financial services industry has implemented blockchain
technology more than any other. They're looking to improve efficiencies with cross-border
transactions. Bitcoin is the most well-known blockchain application.

Essentially, "Email is to the internet the way bitcoin is to blockchain. There are multiple apps, just like there are multiple blockchains," says Epstein.

Blockchain is still in its early stages, and new crypto-technology applications and advancements are regularly occurring. We expect big changes over the next few years, as over $1 billion has been invested into this tech by venture capitalists.

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