Although it has emerged from the field of cryptocurrency, decentralized tamper-proof blockchain technology has important implications not only for the financial sector, but also for real estate, insurance, law and other areas. Blockchain works like a constantly updated database distributed between a computer network, instead of being controlled by a single entity.
Emin Gün Sirer, associate professor of computer science and co-director of Cornell's CryptoCurrencies and Contracts Initiative (IC3), says the widespread adoption of blockchain and smart contracting will be an "extinction event" for many companies.
What is the blockchain, and why is it important?
Blockchain is a set of technologies that allows a group of wary parties to collaboratively implement a system. It limits what every single part can do, ensures that even an insider can not bring the system down and provides users with the guarantee of being able to control financial records and perform an audit independently.
For example, the country of Georgia has recently placed all its land records on a blockchain. There is great fear that people who are well connected will falsify the records and pretend that some piece of government land actually belonged to the grandfather. It is easy enough to falsify documents left in a room that is closed somewhere or stored in a single machine somewhere. But if you are using blockchain you can not do it.
Why are we listening so much on the blockchain right now?
Part of the reason are the smart contracts, which are a programmatic way to determine how cash flows, made possible by blockchain. Think of them as free and autonomous programs that can take money, calculate things and send money in a way that nobody can interfere. This allows us to decentralize traditional business activities and allows us to have financial programs that can make their own decisions, regardless of any human entity.
For example, I can say that I would like to donate $ 5,000 to a new movie, assuming I can raise a million dollars, otherwise I want my money back. It is very easy to do this with smart contracts; it is impossible to do with the interfaces that the banks give us.
The ability to eliminate intermediaries will be an extinction event for many companies. It is also a great opportunity for new companies to train because they can do things like building new business models that are much more transparent to the user.
What is Cornell's role in the field?
Some of us at Cornell had worked with peer-to-peer cash even before [the development of bitcoin]. The increase in Bitcoin's popularity has fueled the rush to apply similar technologies to all aspects of financial technology and other areas. We made some strategic assumptions and ended up organizing IC3, a multi-institutional effort that has driven this nascent push. In the meantime, people were developing the code in the outside world, but the scientific bases were not there. Not only did we provide a scientific basis for what they were doing, we also demonstrated that many things that people were repeating were false and we provided new alternatives and solid foundations.
A recent report identified Cornell as a leader in providing blockchain related classes. What courses are available at Cornell for students interested in blockchain?
The courses we have are generally aimed at undergraduates and advanced university students. It is a fascinating field with many interesting applications. It is interdisciplinary, so there are many different choices.
At Cornell we evaluate the fundamentals. Anyone who is just teaching "blockchain" is probably making students uncomfortable. We have a series of very interesting courses that teach the fundamentals of computer science and its interactions with finance, game theory and mechanism design, illustrated through blockchain examples. I think the idea is to create people who can jump into blockchain because the area is exciting, but they also have the basis for doing anything else in computer science.
The course I taught last spring, for example, focused on the fundamentals of distributed systems. Every single application we examined was in blockchain, so that students who left the course would learn how to build blockchain applications.
It's crazy how much interest there is in blockchain. I have university students from all the incoming universities. I taught a course of 6000 levels in the spring. Normally you would have three to seven people in those courses, and if you have more than 10 there is a lot of interest. I had over 80 people sign up.
What are the negative aspects of all this interest?
Every time you have a lot of hype you have some fraud. People are selling to the public what appears to be unattainable titles, hopes and dreams. They are selling cryptocurrency tokens that one day will be worth something when a system that can not be built will be built.
Moreover, the [kind of blockchain] which made Bitcoin famous consumes enormous amounts of energy. About the energy value of Austria – and Austria is a large industrialized nation.
At IC3, we are working on technologies that can revolutionize financial technology. These tools can reach millions of transactions per second and do it without wasting energy, in a sustainable and green way. This, in turn, has the potential to enable new applications far beyond financial technology, which we can not even imagine today.