Researchers: Blockchain Emerging as the Next Big Innovation in Global Trade
By Shivendu Shivendu, Kaushik Dutta and Kiran Garimella
TAMPA (August 7, 2019) -- Blockchain technology is poised to impact businesses – and society – by transforming commerce through low-cost, immutable, truthful, transparent systems without relying on a trusted third party. The sea change will be just like the Internet transformed the exchange and sharing of information and trade on a global scale. Hence, it is not surprising that, given the promise and impact of this emerging technology on the businesses in coming decades, the Muma College of Business has taken a decisive lead in blockchain research, teaching and outreach.
By incorporating blockchain as part of their operational and administrative processes, universities and colleges can create a solid curriculum to meet the educational needs of both programmers and business majors. Blockchain is best suited for applications where trust and integrity need to be assured in a cost-effective and efficient way. For educational institutions, a common blockchain platform for certification of skills, degrees and transcripts is the most obvious disruptor of inefficient administrative processes.
Universities can eliminate confusion around blockchain by removing its comparison to Bitcoin, Ethereum or public blockchains in general.
Students must understand that the component technologies of blockchain are not new; they have been around since the 1970s, if not earlier. Business school students should take courses that cover the business aspects of blockchain: criteria for choice of the appropriate chain for a business problem, design of incentives, pros and cons of consensus algorithms, trade-offs in decentralization, the Consistency, Availability and Partition Theorem, fundamental economics of cryptocurrencies, tokenomics, cryptography and the mathematical basis of blockchain technologies.
The implementations of improper business blockchain designs have serious implications for business. There have been examples of enormous losses experienced by public blockchains due to hacking because of misapplication of cryptocurrency models to financial securities instruments.
The business world is in urgent need of such insights, backed not just by anecdotes, but by practical experience, serious academic research and thought-leadership.
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 together with other colleges across campus.
Few business schools offer two graduate courses in blockchain technology like USF does:
- Fundamentals of Blockchain – This graduate course is for all majors and is taught
by Shivendu Shivendu. The course introduces the blockchain usage in business and how
the applications can be developed using blockchain. The course uses Hyperledger as
the blockchain platform.
- Blockchain Programming – This graduate course is for students who want to get into blockchain-related technical jobs. The course introduces various blockchain-related programming in Ethereum and Hyperledger platform.
Though the teaching of blockchain technologies is new, already our students have reaped the benefits. There are a growing number of opportunities for students to enter blockchain related careers including one graduate in the Muma College of Business’ Business Analytics and Information Systems master’s program who was hired recently at Deloitte, consulting for blockchain applications. Our Industry Practice Center Projects focused on business applications of blockchain technology have been undertaken by graduate students together with several independent research studies under the supervision and guidance of the Muma College of Business faculty.
The college is heavily invested in research into this emerging technology. Shivendu studies the economics of blockchain-based business systems and his research focuses on developing incentive-compatible economic models for decentralized systems. Professor Kaushik Dutta is an internationally acclaimed researcher on the technology and distributed consensus mechanisms inherent in any blockchain business system. His pioneering research on using blockchain for recommendation systems was presented and was well received at WITS 2018, a leading technology conference for Information Systems and Information Technology researchers.
Shivendu and Dutta are in collaboration with Kiran Garimella, a leading technologist in blockchain technology, who is the chief scientist and CTO for KoreConX, where he leads the strategy and development of an Artificial Intelligence-based blockchain platform.
What exactly is blockchain?
It’s a technology that consists of three pillars: data structures based on cryptography, consensus protocols that ensure trust in the system rather than a trusted “middle-man” third party and the smart contracts that create business value by lowering the 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 without a trusted third party 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 approach at the Muma College of Business is to integrate these three pillars in research, teaching and outreach.
The infrastructure required for blockchain business systems can be provided in-house (just like an in-house 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. The blockchain infrastructure not only requires appropriate hardware and software support, but it also requires a robust consensus mechanism, which must contain incentives for all the participants to be “truthful” because there is no central authority to enforce integrity or compliance governing the exchange of value. In other words, the incentives of all the participants must be designed so that no participant has any gain from deviating from the rules.
In terms of implementation of blockchain infrastructure, platforms like Ethereum require a large number of participants in the network to verify the transactions and the blockchain applications can generate value only through the large number, which are incentivized to participate in the blockchain systems. In the world of cryptocurrencies or “tokens,” this is achieved by speculative demand for the “token” or outside value of the cryptocurrency. This entire system is autonomous.
About the authors:
- Shivendu Shivendu worked with a blockchain startup, POKT Network in the Tampa Bay area during the spring of 2019, under a unique externship initiative to build industry collaboration at the Muma College of Business. This externship research project focuses on developing the incentive-compatible economic model for POKT conceptualizing the network as a two-sided network.
- Kaushik Dutta has worked with the startup industry for several decades and currently works with several entrepreneurs on their blockchain-related startup ideas. He was appointed as the international adviser for the Blockchain Center at South China University of Technology in collaboration with Falacloud in Guangzhou.
- Kiran Garimella is an advocate of universities taking a leading role in eliminating confusion around blockchain by removing its perceived synonymity with Bitcoin, Ethereum or public blockchains in general. He has authored a book, “AI+Blockchain,” which focuses on industry perspectives. Garimella advises startups on blockchain technology and reviews blockchain business plans.