Written by Jackie Yang
Today, most people hear the word “blockchain” and immediately associate it with Bitcoin. Though this is a reasonable assumption, it’s actually a common misconception that blockchain is automatically related to cryptocurrency.
In fact, blockchain is just a form of technology–a method of transferring data. In simple terms, it allows a party to upload information into a shared database that all members of the network can instantly access with the knowledge that the information is absolutely correct. This is due to the “immutable” nature of blockchain – the fact that once data is entered into the network, it’s done in a way that cannot be deleted or modified. This creates a permanent and traceable record for companies to track things like shipment progress, equipment history, payment of employees or even the source of raw inputs–an advantage applicable to businesses across a wide array of industries.
In fact, businesses around the world are already jumping on this trend. According to Deloitte’s 2019 survey of business executives, over half of respondents believe that blockchain technology is a “critical priority” for their organizations in 2019. Within these organizations, blockchain is primarily used in financial services—where money exchanges hands—or in supply chain management. The Swiss Stock Exchange (SIX), for example, is creating a trading platform that utilizes blockchain technology. In the Trade Finance space, consortiums like Marco Polo and TradeIX are cropping up that let companies pay for shipments and take out Letters of Credit using blockchain technology. Even the US government has started exploring the possibilities of blockchain, working with Coca-Cola to employ this technology in combating forced labor. The immutable nature of blockchain’s data storage is great for regulators overseeing labor laws and monitoring embargos, and the instant information uploads are very beneficial for planning and tracking expenses while reducing costs by eliminating paper and wait-times associated with traditional transactions.
Blockchain usage in supply chain management also relies on these two traits. Sweetgreen, for example, has partnered with the blockchain startup Ripe.io to track tomatoes all the way from farms to when they’re served. IBM is working with grocery stores and retailers like Walmart, Smithfield, and Carrefour to verify the certificates of origin for their produce. Even the apparel industry, under fire for being wasteful and unethical, is now looking to use blockchain to prove that their raw goods are all sourced and processed ethically.
As more and more companies find solutions in blockchain that can actually be applied to their businesses, technology providers are now jumping onto this trend. Platforms like Corda, Ethereum, and Hyperledger products are being integrated into numerous sectors, and traditional banks like JP Morgan are even developing their own platforms. According to the Deloitte 2019 Blockchain survey, industry usage of this software now has real applications and has moved past the “high-publicity, low-results” stage. PwC’s global blockchain survey established that 84% of respondents are already actively involved in blockchain.
Of course, there are hurdles to full adoption of this technology given how new and largely unregulated it is. For a long time, governments had been wary of utilizing blockchain. And though today, some countries like China, Malaysia, and Switzerland are beginning to take on their own projects, there is still a sizable disconnect between bureaucratic understanding of blockchain and its actual deployment in the markets. The general public is also relatively unaware of this technology. Even though customers of Sweetgreen are direct beneficiaries of blockchain, how many actually know this? Academics as well, and even professors at Stern, are also skeptical of blockchain’s actual ability to be used.
Associate Professor Hanna Halaburda said of the decentralized nature of blockchain, “As more businesses explore blockchain, this distinction becomes increasingly important. There are many expected benefits from decentralization that may elude us if it fails in practice.”
Professor Nouriel Roubini took an even harsher stance, saying in 2018, “Blockchain has been heralded as a potential panacea for everything from poverty and famine to cancer. In fact, it is the most overhyped – and least useful – technology in human history.” He believes that the decentralization of information is impractical and too libertarian to actually be useful.
However, Stern hasn’t completely disregarded this technology; in fact, it ranks 3rd on a list of the Top 10 Institutions offering courses on blockchain. NYU Stern offers classes on cryptocurrencies, and the Chairman of the Finance Department and Director of the NYU Pollack Center for Law and Business, David Yermack, has spearheaded the effort to include this developing technology into the school’s curriculum. He believes that blockchain “is really changing every industry,” and quickly.
“Year over year we’ll change well over half the course material,” he said in an interview with the Financial Times. “It keeps you young to be reading half the night just to keep up with the latest innovations.”
And as Yermack says, blockchain does have potential if applied correctly. It’s been growing steadily since it’s introduction in 2008 and has proven itself over the last few years as not only usable—but crucial to many industries. Late-adopters are scrambling to not be left behind. If one thing is true about all this noise, it’s that the hype is slowly but steadily dying down. What has emerged is the recognition of blockchain’s ability to transform businesses as we know them.