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The internet changed everything in our lives—from our social lives to the way we do business. The internet also created myriad ways for businesses to collect and harness vast amounts of data and, in doing so, opened doors to scams, frauds, and murky dealings. This is where blockchain technology may potentially create benefits of similar magnitude.
Jiasun Li, assistant professor of finance, is researching this new tool for internet commerce. “Blockchain is a kind of distributed ledger that could change how business activities are organized,” he says. “It essentially provides an alternative way for economic activities to be conducted.”
Blockchain is a cryptography-secured database that registers ownership and transactions. Every time a transaction is made, details are secured in “blocks,” which are linked together and replicated in multiple computers linked to the system.
The technology makes forging or tampering with these records easily detectable. In turn, this security makes the many intermediaries currently necessary to secure transactions redundant. Removing the market powers from intermediaries could potentially reduce transaction costs.
Li imagines that blockchain technologies will eventually be used not only to reduce transaction costs, but also to create new markets. He asserts that, because of the potential to revolutionize commerce, understanding this new technology is important for everyone in the world of business.
“Any business leader with an entrepreneurial mindset, or those in traditional industries facing potential opportunities or threats from these new markets, should gain a better understanding of blockchain technology,” he says.
Li’s interest in blockchain grew out of his curiosity about new technologies, including Bitcoin, which was created by the same individual or group as blockchain under the moniker “Satoshi Nakamoto.” Blockchain has great potential, Li says, but he warns against getting excited too early.
“Blockchain technology is still in its early days,” he says. “We should, on one hand, avoid hype and be patient with its progress and be objective with its current bottlenecks. On the other hand, we should avoid being overly dismissive and missing the possibilities.”