Overview

Theory and politics. The blockchain and related innovations represent a new and relatively complex set of potential investment opportunities. The technology has received significant attention from a range of individuals and institutions, from computer scientists to corporations to private equity groups. We outline the theory of the technology as well as the governance implications to guide investors.

Disruptive opportunity. Advocates of the blockchain believe it has tremendous potential to enable novel ways of creating, managing, and maintaining systems of fundamental rights. It is already being used to facilitate transparency and combat corruption — for example, Kenya is piloting its use to record land ownership and transfer, historically a poorly managed and easily manipulated process1. The blockchain operates, by design, independently of traditional arbitrators and regulators. Its widespread adoption could remove courts, central banks, and government policy makers from financial and sociopolitical transactions, which in turn has governance implications for the economic, legal, and institutional relationships as we know them today.

Governance implications. Innovation spurred by blockchain technology could result in more efficient and transparent business models. For this reason, investors should be actively assessing emerging blockchain-specific opportunities. However, in addition to understanding the basics of the technology, we believe it’s important to understand the governance implications of the blockchain ecosystem. This report undertakes an assessment of the current pillars of blockchain governance and compares these pillars to current norms of corporate governance as laid out in Cornerstone Capital’s proprietary framework. We see two scenarios: “A Blockchain World” and “Our World with Blockchain,” each offering distinct advantages and disadvantages.

Download the full report here.

Sebastian Vanderzeil is Director, Global Thematic Analyst with Cornerstone Capital Group. He holds an MBA from New York University’s Stern School of Business. Previously, Sebastian was an economic consultant with global technical services group AECOM, where he advised on the development and finance of major infrastructure across Asia and Australia. Sebastian also worked with the Queensland State Government on water and climate issues prior to establishing Australia’s first government-owned carbon broker, Ecofund Queensland.

Emma Currier is a Research Associate at Cornerstone Capital Group. Emma graduated with a Bachelors of Arts degree in Economics from Brown University in May 2016. While at school, she worked with the Socially Responsible Investing Fund and as a teaching assistant for the Public Health and Economics departments. She spent her sophomore summer researching differences between American and Indian educational styles in Arunachal Pradesh, India, and completed a summer investment bank analyst position with Citi in the Media & Telecom group in 2015.