Blockchain in Business Education
Blockchain technology is poised to impact businesses—and society—by transforming value exchange, or “asset transfer,” between participants in business transactions through low-cost, immutable, truthful, and transparent systems without the need to rely on a trusted third party. The sea change will be just like the internet, which transformed the exchange and sharing of information and trade on a global scale. Given the promise and impact of this emerging technology on business in the coming decades, business schools must take a decisive lead in blockchain research, teaching, and outreach.
Blockchain is a technology that consists of three pillars: data structures based on cryptography, consensus protocols that ensure trust in the system rather than a third party, and the smart contracts that create business value by lowering transaction costs in the value exchange network. The unique properties of the data structure make it fully secure and tamper-proof; the consensus protocols make these systems function truthfully; and the smart contracts provide the “business value” at the transactional level. The seamless integration of these three layers requires a blockchain infrastructure, or backbone. The infrastructure required for blockchain business systems can be provided in-house (just like a company intranet), but a more efficient and versatile solution is to provide the infrastructure as a service or a utility, like a cloud provision for blockchain.
Given the transformational role of blockchain technology in the business world, universities and colleges need to create solid curriculum to meet the future needs of key blockchain contributors: programmers to develop blockchain-based enterprise applications, analysts to design blockchain systems, integrators to ensure blockchain technology artifacts work within existing technology platforms, and business majors to identify business value of this technology for firms. Since blockchain systems are best suited for applications where trust and integrity need to be assured in a cost-effective way, educational institutions should also take the lead by developing a common blockchain-based platform for certification of skills, degrees, and transcripts. Examples of such platforms include Vottun, Aversafe, and Accredible.
Bitcoin and Ethereum are widely known blockchain platforms on which some of the most talked-about cryptocurrencies have been built. They are specific types of blockchain systems, but the application of blockchain technology goes beyond the use case of cryptocurrency. Universities can play an important role in eliminating this confusion around blockchain, which is often perceived as synonymous with Bitcoin or Ethereum, by offering courses on blockchain fundamentals at the undergraduate and graduate levels.
Further, business schools must help learners understand that the component technologies—such as distributed communications, cryptography, and database technologies of blockchain—are not new; they have been around since the 1970s, if not earlier. Each of these technologies has been used in different ways to build secured distributed database systems. However, the way these technologies have been combined to create an immutable blockchain system is new and innovative. Business school students should take courses that cover the business aspects of blockchain: design of incentive systems, pros and cons of consensus algorithms across multiple nodes in the blockchain, economics of cryptocurrencies, and initial coin offerings (ICO) as an alternate avenue to raising funds.
Implementing improper blockchain designs can have serious implications for business, and has already resulted in blockchain security breaches achieved through hacking. Breaches like these can lead to significant financial loss to businesses. A recent MIT study reported a loss of around 1 billion USD because of blockchain security breaches between 2011 and 2018. In the private blockchain, data is replicated in each node of the blockchain, and all the nodes are connected. This makes securing the blockchain challenging. Any security breach in one node can lead to loss of enormous amounts of information, and can affect the organization’s reputation as well as finances.
The business world is in urgent need of more comprehensive and research-based insights about the business value of blockchain technology and how to capture that value, rather than just anecdotes or descriptions of potential use cases. These insights can come only from practical experiences, rigorous academic research, and thought leadership. The insights from academic research can help in designing viable blockchain platforms with appropriate and sustainable incentive mechanisms built into the system. With the proliferation of blockchain-based platforms in today’s world, it is becoming difficult to find out which blockchain business model will work and which won’t. Academic research grounded in theory, and prior experiences with other information technologies, can help business implement frameworks and models that help them design efficient and effective blockchain applications.
At the University of South Florida’s Muma College of Business, blockchain technology is a key thrust area, and the effort is led by faculty in the Information Systems and Decision Sciences Department in close collaboration with faculty in accounting, finance, and marketing, as well as those in other colleges across campus. The blockchain is a truly interdisciplinary technology that has applicability in various domains. For example, the blockchain systems in supply chain require knowledge of blockchain as well as supply chain. Similarly, blockchain applications for accounting and auditing purposes and for designing digital ad campaigns that measure user-brand interactions all require knowledge of technology as well as the use-case domain. Blockchain is increasingly becoming one of the most sought-after knowledge domains for business students in various disciplines. Graduates with knowledge of blockchain technology, together with that of the business domain, are highly desirable candidates in the job market, particularly in the finance, supply chain, and digital marketing industry.
The Muma College of Business offers two courses in blockchain technology: Fundamentals of Blockchain, which introduces blockchain usage in business and how applications can be developed using blockchain (Hyperledger), and Blockchain Programming, which introduces various blockchain-related programming in the Ethereum and Hyperledger platforms.
Though blockchain-related courses are only recently being offered in universities, students are already reaping the benefits. Opportunities to enter blockchain-related careers are growing, with demand particularly seen in the fintech, supply chain, auditing, and consulting industries. Students who are undertaking industry-related blockchain projects in their business curriculum will have an advantage in landing careers in this emerging field. These impacts and more are evidence of business education’s important role in leading the blockchain revolution that is already upon us.
Shivendu serves as an expert advisor on blockchain strategy for the government of India; Dutta works with entrepreneurs on their blockchain-related startup ideas; and Garimella is author of the book AI+Blockchain.