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Blockchain Beyond Cryptocurrency—Promises and Pitfalls

At the 2019 World Economic Forum in Davos, the Global Blockchain Business Council announced that 40% of investors believe that blockchain could be the most important innovation since the invention of the internet. Shortly thereafter, the editors of Sloan Management Review (SMR) asked its panel of experts to answer a related question: In the next five years, will blockchain have a transformative effect on finance in emerging markets?

Simon Johnson

Of the 25 experts surveyed by SMR, nearly 60% disagreed or strongly disagreed with this premise when their responses were weighted for the level of confidence in their opinions. A mere 27% of the panel agreed or strongly agreed. Panelist and MIT Sloan Professor Erik Brynjolfsson said, “So far, at least, the use cases have been driven more by hype and outright scams than practical benefit.” Fellow panelist MIT Sloan Professor Scott Stern noted that “while there are important potential use cases … in the absence of a separate fundamental innovation, this will be an incremental rather than transformative advance.”

At MIT Sloan and across the Institute, skepticism is more often the beginning—rather than the end—of conversations and explorations. In fact, blockchain is inspiring a surge of research and invention in the MIT community these days, including by faculty members and MIT Sloan Fellows alumni. In the articles that follow, we hope to set aside the mystique surrounding blockchain and discuss some of the principles and pathways that could lead to productive uses of the technology beyond cryptocurrency. In future articles, we will circle back to focus on blockchain developments in the realm of monetary exchange.

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