HOW BLOCKCHAIN TECHNOLOGY WILL IMPACT THE DIGITAL ECONOMY
by Christian Catalini
The survival of any organization depends on its ability to outperform competitors and marketplaces in attracting and rewarding talent, ideas and capital. As communication and transaction costs have drastically declined because of the internet, new platforms have emerged, delivering goods and services at a speed and efficiency previously unimaginable.
THE FIRM AS A NEXUS OF SMART CONTRACTS? HOW BLOCKCHAIN AND CRYPTOCURRENCIES CAN TRANSFORM THE DIGITAL ECONOMY
by Christian Catalini
Through his seminal work on transaction costs, Nobel laureate Ronald Coase highlighted key frictions that prevent organizations from relying exclusively on market transaction to achieve their goals. Uncertainty, asymmetric information and the risk of moral hazard, by undermining the ability to write complete and effective contracts, force organizations to internalize operations and depend on more complex forms of governance in order to effectively create and capture value. At one extreme, Jensen and Meckling define firms as little more than a nexus of contracts between the many stakeholders that gravitate in their ecosystems. As platforms are increasingly becoming the fastest growing organizational form – connecting ideas, talent and capital on a global scale – a new technology promises to accelerate the digital transformation started by the internet...
HOW BLOCKCHAIN APPLICATIONS WILL MOVE BEYOND FINANCE
To understand the transformation that’s being brought about by blockchain technology, it’s useful to start with its largest implementation to date: bitcoin.
In the fall of 2014 my colleague Catherine Tucker and I conducted a large-scale experiment at MIT, in which 4,494 undergraduate students were offered access to bitcoin. The vast majority of students ended up hoarding the cryptocurrency, in the expectation that it would increase in value. Initially distributed to the students at $350 per bitcoin, the digital currency is now worth more than $1,100 per bitcoin, suggesting that many of the students realized that one of bitcoin’s first use cases would be speculation.
SEEING BEYOND THE BLOCKCHAIN HYPE
Christian Catalini interviewed by Paul Michelman
After eluding close inspection by most business leaders outside of the tech and financial sectors, blockchain technology has recently taken center stage in the conversation about management’s digital makeover. Indeed, many believe the impact of blockchain on the ways organizations function and produce value may be greater than the technologies that have grabbed most of our recent attention — data and analytics, the cloud, even artificial intelligence.