B L O C K C H A I N Cryptographic sorcery, entrepreneurial zeal, and utopian dreams have hen he moved off campus as a gripped a striking number cannily well-adapted to the challenge at junior, Dillon Chen W’18 faced a hand. And when they took a step back, situation that irks every city dwell- of Penn students and its potential seemed even more dramat- W er rankled by the price of residen- alumni this year. Why are ic. Rubin soon saw it as a way to revolu- tial internet access. His laptop registered people so excited? tionize financial transparency in the 15 wireless signals—representing more murky world of philanthropy. Haque bandwidth than he’d ever need—but every By Trey Popp envisioned taming the fraud-ridden one was locked. Wouldn’t it be great, he chaos of local educational credentialing thought, if there were a secure way to systems and merging them seamlessly incentivize people to share their signals with global labor markets, leveling a with strangers? Then he thought some citizens and refugees. Meanwhile, back playing field long tilted against develop- more, and landed on a new tool that on campus, a molecular biologist named ing-world strivers. Espinosa glimpsed a seemed purpose-made to pull off that trick. Harvey Rubin Gr’74 was wrestling with chance for exploited subjects of social Around the same time, Diego Espinosa a predicament of his own. He had piloted media empires to reclaim sovereignty WG’91, a longtime equities analyst and a program to supply remote areas of over their own data—without having to investor who has also taught finance at Zimbabwe with vaccines, which require wait for government intervention. the University of San Diego School of continuous cold storage, by using cell- Blockchains are a novel type of data- Business, had an epiphany about how to phone towers to power refrigerators. It base. They are most closely associated turn diabetes prevention into a business had helped inoculate 250,000 people. That with Bitcoin, whose unknown creator venture. Betting on the same technology had sparked interest in expanding to other invented the format as a foundation for that interested Dillon Chen, he hit the countries, but it remained very difficult to a virtual currency. Bitcoin’s tenfold price off-ramp from traditional capital markets guarantee the authenticity and storage appreciation in 2017—along with the and bee-lined toward a sector people conditions of the complex supply chain. downright stupefying gains of other vir- were beginning to call the Next Internet. Now Rubin had his own eureka moment: tual coins, like Ethereum, whose value Halfway around the world, Mir Haque This was a job for blockchain. multiplied by a factor of 70—made the WG’08 soon found himself pitching the Four very different problems, and four global cryptocurrency craze the story of same tech platform to government offi- people convinced that the same tool held the year. But that bubble may be the least cials in his native Bangladesh—as a way the solution. Not just a feasible solution, important—and least interesting—thing to extend financial services to unbanked either, but one that seemed almost un- about the technology underlying it. 34 THE PENNSYLVANIA GAZETTE Jul|Aug 2018 ILLUSTRATION BY CHRIS GASH Jul|Aug 2018 THE PENNSYLVANIA GAZETTE 35 Beneath a familiar surface, blockchain absurd ways to think about a glorified fever roiled Penn’s campus this year with ledger book? a mixture of entrepreneurial zeal, utopian In a search for answers—and a better fantasy, greed, confusion, naysaying, and sense of the right questions to ask—I intellectual electricity this reporter has audited a Wharton MBA class that fo- only witnessed once before: in the San cused partly on blockchain, taught this Francisco Bay Area during the original winter by visiting professor Shimon dot-com boom. Here was a group of stu- Kogan, who is based at Israel’s Interdis- dents trying to put insurance on a block- ciplinary Center Herzliya. I owe many chain. There was one developing a block- insights to him. It is early days for block- chain to enable gastroenterology prac- chain, and academic offerings are scarce. tices to document endoscopies. Joshua Tom Baker, the William Maul Measey Talbot WG’18 was working on a blockchain Some enthusiasts envision blockchain Professor of Law and Health Sciences, that home-healthcare agencies could use transforming capitalism itself. Others see has also addressed blockchain as part of to certify patient interactions for Medicare/ a scam of world-historical proportions. a broader seminar on tech-driven finan- Medicaid reimbursement. Xiao Ling “This is not just a bubble,” one prominent cial services, or FinTech. Next fall, Cros- EAS’11 GEng’17 was part of a team build- hedge fund advised clients in a January bie and Wharton associate professor ing a cryptocurrency they hoped would letter about cryptocurrencies. “It is not Kevin Werbach will teach Penn’s first full accomplish nothing short of incentivizing just a fraud. It is perhaps the outer limit, class on blockchain. “people to help each other more, and in the ultimate expression, of the ability of But in truth, University administrators the process communicate with each other humans to seize upon ether and hope to are playing catch-up with students. The in a more authentic manner.” ride it to the stars.” That’s a lot of scorn student-run Penn Blockchain Club, Rarely do gold rushes spark such run- to heap on one component of a tool that which has mushroomed to 400 members away idealism. “Blockchain as it helps has attracted some of the 500-pound in the space of two years, has effectively business—like, use this on our supply gorillas of global commerce: IBM, mounted a miniature shadow college to chain and it’ll make things more effi- Walmart, Maersk, Google, Goldman satisfy the hunger for insights and tech- cient, is definitely going to exist, and Sachs, and so on. Even as cryptocurrency nical know-how. Working with the probably soon, in real capacities,” I prices swooned in the first three months Wharton Advisory Board to secure class- heard from Nate Rush, a College junior of 2018, venture capitalists invested half room space, its leaders have organized held in awe among campus tech types a billion dollars in 75 blockchain projects, lectures by self-educated students—from for his coding chops. But what really according to the market-research com- code jockeys to cryptocurrency traders— drove him was a headier prospect: pany PitchBook. and brought in speakers from organiza- “blockchain as it replaces business.” David Crosbie is a lecturer in the School tions ranging from the Ethereum Foun- The Greeks had Plato’s Republic. Rev- of Engineering and Applied Science who dation to the World Bank. So students olutionary Germany begat Karl Marx. made his money creating companies that were another source of insights, along Industrial America gave rise to the Oneida “built plumbing inside the Internet.” He with a number of alumni who are devel- religious perfectionists, the Shakers, and detected a familiar pattern in the inflamed opers, investors, and aspiring thought- Robert Owen’s experimental socialist rhetoric surrounding blockchain. “First you leaders in the blockchain realm. cooperatives. Meanwhile, the great uto- dismiss it as unimportant,” he mused in It is a singularly strange place, where pian hope of our era lies in … cryptograph- February. “Then you embrace it. Then you greed and gullibility rub up against tech- ically based decentralized digital ledgers? try and kill it. And then you become it.” nical sorcery in the fervid atmosphere How has the emergence of blockchain What might become of blockchain? of a Pentecostal tent revival. Speculation ignited so many imaginations in so many Will it liberate the baby-picture-posting, naturally outruns concrete achievements different domains? Does it represent the Like-clicking, Waze-navigating masses on any new technological frontier. But final step in the digitalization of econom- from their data-snooping corporate blockchains and cryptocurrencies, per- ic life? Will it do for assets what the inter- overlords—or help 21st-century monop- haps because they take some concerted net did for information? Is it the death olists amass greater power still? Will it effort to understand, have a way of utter- knell for “lawyers, brokers, and bankers,” unleash the dormant market power of 2 ly consuming the brains of people among the other white-collar middlemen billion unbanked adults around the who’ve put in the work. “Welcome to the Harvard Business Review put on notice world—or turn the digital divide into an rabbit hole,” I heard again and again last year? apocalyptic abyss? Or are those patently from people who’d taken the plunge. 36 THE PENNSYLVANIA GAZETTE Jul|Aug 2018 And there’s no shortage of blue caterpil- tain is a ledger of hashes. If they know mandate a $20 minimum for credit card lars down there, smoking hookahs atop which hash algorithm was used, they swipes.) “What is needed,” Nakamoto mushroom caps. can apply it to guessed passwords in wrote, is a system “allowing any two will- But first there’s a hall of locked doors, hopes of finding matches; that’s why ing parties to transact directly with each and opening them requires an acquain- passwords like “12345” or “admin” or other without the need for a trusted tance with a basic but far-reaching con- “password”—all hugely popular and third party.” cept from cryptography. therefore commonly guessed—are a bad Nakamoto proposed a solution that idea.) Hashes are useful in indexing, would obviate the need for trust entirely, The Hash: The Swiss Army Knife since they turn giant data packets into by replacing it with cryptographic proof.