What blockchain can’t do
This article originally appeared in the Harvard Business Review. We’ve included an excerpt here.
Blockchain technology has the potential to do amazing things. It can provide an immutable, digital audit trail of transactions, and can be used to cheaply verify the integrity of data. It can help businesses and individuals agree, on a global scale, about the true state of affairs within a market without relying on a costly intermediary.
This is achieved through a clever combination of economic incentives and cryptography, and ensures that at any point in time, digital records reflect the true “consensus” among the key stakeholders involved. When it comes to sharing digital records and assets, it can therefore replace the need for trust between players, or the need for a central authority to verify and maintain the records of transactions.
However, when assessing blockchain business models, it is useful to understand what blockchain can’t do.
Christian is co-creator of Libra, head economist at Calibra (Facebook), and the Theodore T. Miller Career Development Professor at MIT.
Catherine is the Sloan Distinguished Professor of Management Science and a professor of marketing at MIT’s Sloan School of Management.