Will Blockchain Transform Emerging Markets?

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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.
RAW RESPONSES
WEIGHTED BY CONFIDENCE

Raw Responses

Responses weighted by panelists’ level of confidence

Panelists

Panelist Vote Confidence Comments

Joshua Gans

University of Toronto
Profile
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.”

Steve Tadelis

University of California, Berkeley
Profile
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.”

Erik Brynjolfsson

Massachusetts Institute of Technology
Profile
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.”

Rajshree Agarwal

University of Maryland
Profile
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.”

Barry Nalebuff

Yale University
Profile
Disagree 5

Richard Holden

University of New South Wales
Profile
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.”

Richard Florida

University of Toronto
Profile
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.”

R. Preston McAfee

Economist
Profile
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.”

Anita McGahan

University of Toronto
Profile
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.”

Rebecca Henderson

Harvard University
Profile
Strongly Agree 8 “Blockchain is likely to be a classically disruptive innovation — it will be fascinating to see what new kinds of ‘banks’ emerge.”

Ashish Arora

Duke University
Profile
Disagree 4 “The impact of new technologies takes a while to have a significant effect.”

Petra Moser

New York University
Profile
Neither Agree nor Disagree 1

John Van Reenen

Massachusetts Institute of Technology
Profile
Neither Agree nor Disagree 1

John Roberts

Stanford University
Profile
Neither Agree nor Disagree 1 “I know nothing about blockchain.”

Scott Stern

Massachusetts Institute of Technology
Profile
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.”

Daniel Levinthal

University of Pennsylvania
Profile
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.”

Melissa Schilling

New York University
Profile
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.”

Joel Waldfogel

University of Minnesota
Profile
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.”

Shane Greenstein

Harvard University
Profile
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.”

Kathleen Eisenhardt

Stanford University
Profile
Neither Agree nor Disagree 8 “This is such a wide-open space — so hard to predict. I’m on the conservative side though.”

Olav Sorenson

Yale University
Profile
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.”

Tom Lyon

University of Michigan
Profile
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.”

Yael Hochberg

Rice University
Profile
Disagree 8

Lori Rosenkopf

University of Pennsylvania
Profile
Agree 8 “For a 10-year horizon instead of five, [I] strongly agree at full confidence.”

Timothy Simcoe

Boston University
Profile
Agree 6

Topics

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.
Learn more about this series

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Comment (1)
Manish Verma
Definitely, Blockchain technology has a great future. Recently big companies like nestle, facebook etc. have started working on it. I personally feel by 2022, it will be introduced in every domain.