By Samson Sands
Kevin Werbach, professor of Legal Studies and Business Ethics at Wharton and founder of Supernova Group, spoke at Penn Wharton Budget Model’s Spring Policy Forum. He discussed the uses and risks of blockchain, a technology he argues is the “most overhyped technology of our time” as well as “the most significant fundamental advance in digital platform since the Internet.”
Blockchains are new ways of engaging in transactions. Instead of a single intermediary that monitors all transactions, Werbach explains that blockchain is “a family of distributed ledgers… for secure exchange of value.” Once a transaction is made, the blockchain records it on every network, and it cannot be altered or hacked. Blockchains invite users to “trust the system as a whole without necessarily trusting any individual actor.” The innovation of blockchain is to remove the need for a central governing system.
Can governments use blockchains?
Werbach says yes, there are many ways that governments can use blockchains, particularly at a time when trust in government is low. One example of the government utilizing blockchain is when issuing city bonds. It allows for more efficient and smaller-value transactions without an intermediary. More uses for government will appear as blockchain technologies become more secure ‘around the edges’.
Blockchain’s risks are chiefly due to the fact that it is still in development. For example, blockchains are host to incredible amounts of fraud. Even though the blockchain system itself cannot be hacked, people’s online information can be, and hackers can make unalterable transactions via blockchain.
Werbach concludes that in the future, the problems of blockchain will be solved and blockchain will be a critical tool for companies and governments as the 21st century matures.