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.
Digital securities must deal with a multitude of shareholder rights. In private companies, shareholder agreements can include complex rights such as first rights of refusal, preemptive rights, tag along rights, drag along rights, and many other.
Unlike the usual attack vectors such as phishing, email, pop-ups, attachments, chats, etc., digital securities on a blockchain can be compromised by non-traditional vectors such as forking, hacking, and adverse selection by miners’ activities, and commingling of cryptocurrencies and digital securities. A permission-based blockchain considerably mitigates such risks.
A technology that allegedly removes the need for trusted central parties merely moves that trust to unqualified, anonymous, and unaccountable people.
Blockchain is primarily not about decentralization; rather, it is about distributed ledgers. This article explains the root of this confusion.
A tremendous amount of development that took place for almost half a century made the modern blockchain possible. In the near future, we expect to see some innovation in blockchains to improve performance and scalability, which is a special challenge for public blockchains.
Distributed systems need coordination, fault tolerance, consensus, and several layers of technology management (such as systems and protocols). The need for security of data motivates the use of cryptography. Several scaling techniques handle the distribution of massive amounts of data in multiple ledgers. Consensus algorithms keep all copies in sync in the face of systems failure and malicious actors.
In distributed systems, fault tolerance becomes a very important topic. In one sense, it is a logical extension to managing a linked list on a single computer. Obviously, in real-world applications, each of the nodes in a distributed system are economic entities that depend on other economic entities to achieve their goals. Faults within the system must be minimized as much as possible. When faults are inevitable, recovery must be as quick and complete as possible.
In this four-part series, we will provide a very high-level overview of each of the main components of technology. In reality, the number of technologies, variations, configurations, and considerations of trade-offs are numerous. Each piece in this puzzle was motivated by certain business requirements and technical considerations.
The three main fallacies are that smart contracts are: (a) smart, (b) contracts, and (c) comprehensible. They are not. Transactions involving cryptocurrency or security tokens do not automatically become contractual because the transactions may violate one or more of the six legal doctrinal principles.