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MIT SMR Strategy Forum
Each month, we pose a question about business, management, technology, or public policy to our panel of academic experts. Here you can see what they think and why.
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We asked our panel of strategy experts to tell us how strongly they agree with this statement:
In the next five years, the blockchain will have a transformative effect on finance in emerging markets.
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Raw Responses
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Responses weighted by panelists’ level of confidence
Panelists
| Panelist | Vote | Confidence | Comments |
|---|---|---|---|
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Disagree | 6 | “This is one of those statements that one hopes would be true, but the cold economics doesn’t really support it. For finance, the speed of processing required really means some form of centralization is needed. There may be contracting areas that are transformative though.” |
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Neither Agree nor Disagree | 5 | “Bitcoin was launched more than three years ago with price swings that were insane. I am not an expert in blockchain (though I have read about it), and there is a lot of hype around it, so I find it impossible to predict the possible impact.” |
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Strongly Disagree | 7 | “The blockchain is an intellectually interesting technology in search of a problem it can solve better than good old, public-key cryptography plus a traditional database or ledger. So far at least, the use cases have been driven more by hype and outright scams than practical benefit.” |
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Disagree | 8 | “While long-term transformation will no doubt occur, new industries and technologies have a long gestation period. Blockchain [is] in the pre-firm and sales takeoff stages, and it will take more than five years for it to reach the ‘hockey stick’ inflection point and subsequent takeoff.” |
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Disagree | 5 | |
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Agree | 6 | “I see blockchain as an enhanced contracting technology, and it is in areas where contracts work less well that it will have the most impact. Emerging-market financial contracting is a leading example. There is, however, a great deal of uncertainty about what might occur.” |
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Disagree | 5 | “There’s no shortage of hype about blockchain and, if anything, there is even more hype about the transformative potential of blockchain on finance in emerging markets. But finance tends to follow, not lead, the fundamentals of economic development. I am not at all sure blockchain can alter those fundamentals.” |
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Disagree | 8 | “Blockchain is a distributed ledger. Ledgers matter and are valuable but are hardly transformative against existing technology. We will see applications of blockchain, some of which could be accomplished without blockchain but requiring a bit more trust in a central authority. Incremental — not transformative.” |
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Disagree | 7 | “I think blockchain will transform some payment systems, but the transformation of financing itself requires the development of basic institutions like lending systems before blockchain can take hold.” |
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Strongly Agree | 8 | “Blockchain is likely to be a classically disruptive innovation — it will be fascinating to see what new kinds of ‘banks’ emerge.” |
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Disagree | 4 | “The impact of new technologies takes a while to have a significant effect.” |
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Neither Agree nor Disagree | 1 | |
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Neither Agree nor Disagree | 1 | |
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Neither Agree nor Disagree | 1 | “I know nothing about blockchain.” |
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Strongly Disagree | 7 | “Blockchain has been seeking an application for more than a decade to no avail. While there are important use cases (e.g., Ripple international settlement), blockchain will survive as the use of cloud databases by distributed players who agree on particular verification standards increases. In the absence of a separate fundamental innovation, this will be an incremental rather than transformative advance.” |
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Agree | 3 | “in some cases, emerging economies without an existing ‘installed base’ of structures/products/service are early adopters of new platforms. This could be an instance of this phenomenon.” |
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Neither Agree nor Disagree | 5 | “I think we are in an era of design substitution in financial technology. I think we will definitely see transformative changes, but it’s too soon to know whether those changes will be in the form of blockchain.” |
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Agree | 6 | “I expect that the technology will have a bigger proportionate impact on financial markets in emerging [rather] than advanced markets. But I suspect that other factors, such as political instability, will constrain its ability to transform.” |
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Disagree | 6 | “Blockchain finance has to be cleaned up quite a bit before it will have the transformative effect its enthusiasts forecast. Right now, it enables too much pump and dump, fraud, and money laundering. For these and many other reasons, no government accepts it as a form of payment. These are difficult challenges — might be solved in five years, but I remain a skeptic.” |
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Neither Agree nor Disagree | 8 | “This is such a wide-open space — so hard to predict. I’m on the conservative side though.” |
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Disagree | 5 | “Blockchain may reduce transaction costs and the extent of corruption, but many types of contracts will still depend on local institutions for enforcement.” |
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Disagree | 4 | “The financial industry is constantly crowing about the value created by its latest innovation. I tend to side with Paul Volcker, who said in 2009 that the ATM is the only useful innovation in banking over the last 20 years.” |
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Disagree | 8 | |
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Agree | 8 | “For a 10-year horizon instead of five, [I] strongly agree at full confidence.” |
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Agree | 6 |
Comment (1)
Manish Verma