How Blockchain Will Transform Businesses

Cornell University professor and IC3 co-director Emin Gun Sirer talks to In The Future about understanding blockchain strategy—and when to apply it.


Conversation has been edited and condensed for clarity and brevity.

Blockchain, crypto currency and smart contracts: the three words that can send shivers down any organization’s spine. This burgeoning technology promises innovation and transformation—but it’s constantly changing, and it’s often difficult to understand. According to expert Emin Gun Sirer, big companies just need to bust through the hype—and stay patient—to usher in the next big disruption.

Gun SirerGun Sirer is an associate professor of computer science at Cornell University and also a co-director of The Initiative For CryptoCurrencies and Contracts, or IC3. He has a long and impressive resume of improving crypto currencies, working on data stores and building peer-to-peer systems. He talked to In The Future about the misconceptions that often surround blockchain, and what innovation-driven organizations need to do in order to eventually implement their blockchain strategies down the line.

Into The Future (ITF): The blockchain is a complicated subject. How would you break it down in a more simple way?

Emin: My research focuses primarily on blockchain, cryptocurrency and smart contracts. These are a set of new technologies that have recently emerged, promising to revamp how we do business. There are two aspects of this new coming revolution that are really interesting. One is that they allow the data between businesses to be shared securely without the custodian. You and I can go into business and have our data stored by a third party that is not controlled by you, or me or anyone else. And that’s an amazing thing. By extracting that component from the backend of each business—and creating this new shared service, a new shared common good—we can suddenly have all kinds of efficiencies. Whether it’s business, healthcare, insurance, shipping, education or you name it—their back offices will have to be rewritten to take advantage of this new capability.

ITF: And what’s that second big thing that it promises?

Emin: There’s something else that’s far cooler and more exciting going on, and that’s the applications that can run on their own. These are called smart contracts. They promise to change not just the backend, but also the way we construct businesses in the first place. They allow us to programmatically direct funds in a manner that is free from human tampering. Conflicts almost always involve money and a custodial relationship with that money. What this revolution allows us to do is to automate that middleman who deals with the money, and bring a level of financial transparency that’s yet to be seen. The simplest way that people can think of smart contracts are as Excel spreadsheets that actually divert money and pay out.

ITF: How do you see companies applying this new technology and evolving along with it?

Emin: A lot of companies are already feeling the pressure. If I walk around through lower Manhattan, chances are pretty high that two people are going to be talking about their blockchain strategy. Every finance company is thinking about how to integrate blockchain into their operations. The smart contract revolution is here—it’s a toy for geeks but I can see that it’s in the pipeline and it’s ready to disrupt, and we’re waiting for interesting applications to come out. We’re slowly building the infrastructure for it. Companies need to keep abreast of developments, and they need to understand what the technology actually offers. There’s a lot of hype and there are a lot of approaches that are not going to go anywhere. I think companies should get somebody to look into what this revolution means for them.

ITF: How can executives begin to better understand this kind of technology—and know what’s available?

Emin: There are some resources online and elsewhere for them to catch up, but I would not direct them to any of those. I think the online sources will send them down into rabbit holes, and some of those rabbit holes lead up to craziness. A person who wants to get up-to-date should attend an industry event. There are interesting events being held on both [U.S.] coasts, and major cities bring together people working in the profession. I think attending these will catch up any C-level executive on what’s coming down the pipe. The other thing they can do is look at the initiative that I co-chair—IC3. We hold public meet ups where we talk about our research, so people can get a glimpse into the future before the future has happened. Sponsoring projects with people who work in this space would be the next thing, and it gets more exciting from there.

ITF: You write a lot about misconceptions in this area of tech—so what do you see as the biggest problems out there?

Emin: The very first thing I would identify as a big problem in this space is this notion of speculative assets—that is, people are pushing these coins as if they can act as a store of value. And they can do nothing such. They are not designed to be stores of value, there is nothing about their operation technically or socially that will turn them into something you can truly count on to store the money you put into them. The value of these coins will fluctuate up and down and the narrative that they are a store of value is completely irresponsible. The other narrative that goes along with it is known as HODL—it’s sort of a meme that came out of this community that means hold on to your coins at all cost. Typically, these coins have some kind of a deflationary aspect—there will be less and less of them in the future. That is used as an argument for why the coins will go up in value. But what’s unstated in that is an assumption that the coins will always be useful. And we don’t know that part. My biggest worry is that this speculative mania that’s grown around coins is going to explode and it will taint the idea forever. So I’d like to caution people about investing in coins based on any of these narratives.

ITF: Ultimately, if it’s understood and applied well, how can blockchain make businesses better?

Emin: Blockchain can transform businesses. It’s an enormous enabler for new business models and new companies that can step up and challenge the incumbent. So for traditional already established companies, blockchain have provided a lot of efficiencies in the backend. A bank dedicating two floors of people in a high rise can be replaced with a database that ensures that they and everybody else agree with a common history of events. This seems like a small thing, but to any finance person who has spent time in the backend of their system, they know this is a big enabler. And industries where data is fractured and fragmented would benefit immensely from the introduction of a blockchain. Take shipping for example—there’s stuff being sent from person to person—there’s paperwork that needs to be kept track of. Yet, it’s very difficult to manage the flow of information and it’s a complicated system. Blockchains are a great fit because they themselves are decentralized but they bring order to that otherwise discombobulated system.

ITF: What advice would you leave with an executive looking to innovate through blockchain?

Emin: My main piece of advice would be to not make any decisions that tie a company into any specific blockchain. I suspect that blockchains have not yet matured to where they can be deployed for really high-value assets. Existing technologies will have to be transformed substantially, and it’s too early to commit permanently to a single platform. It is time, however, to start thinking about how these new technologies can be integrated into businesses in the future. They are definitely coming down the pipeline and every company needs a strategy.