Blockchain is the use of cryptography, the practice and study of techniques for safe communication in the presence of adversaries, to secure and link a long continuous list of records generally referred to as block. It is a form of open distributed ledger that is usually intrinsically resilient to the modification of its data. It contains the ability to record transactions between two parties competently and in a certifiable perpetual way. This is due to the fact that once its data is recorded it cannot be altered retroactively without affecting all the other blocks which subsequently requires the collusion of the network majority. An example of a blockchain is evident in bitcoins where it serves as the public ledger of all transactions (Narayan, Bonneau, Felten, Miller & Goldfeder, 2016).
Ethics in business govern the conducts of both the employees and the entire organization. They can be based on individuals’ preferences, organizational statements or aspects of a legal system. They are principles and morals set aside to help in the handling of problems that arise in any business settings. They may integrate organizational standards, sets of values and norms. They conceptualize ethic codes and social responsibility. Maintaining an acceptable and favorable ethical status remains a vital responsibility granted to the manager of any business (Stead, Worell & Stead. 1990). Blockchain is generally considered as the most influential technology for the future of economics. As economics, the pros and cons of any business invention should be analyzed and its ethical considerations evaluated.
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Blockchain as a distributive rather than centralized network creates safety for business. For example, in order to hack the system, all the data sources within the distribution network must be broken into at the same time. In case of a bank robbery, in the presence of blockchain, a centralized data source will not be available thus would be harder to retrieve information from the computer systems and conduct a robbery. It is notable that anything of value can be transferred and saved safely and confidentially without threat of unlawful consideration. The safety is as well evident from its ability to make the transactions done by a verifiable immense peer to peer global network. The use of public key cryptography in blockchain technology leads to the production of incorruptible data. Decentralization of data also makes the data transparent to everyone therefor building the component of trust. The quality of the data is usually enhanced by massive database duplication and computational trust. This openness makes it user friendly it is therefore termed by economists as a distributed ledger or database open to the public. Although this comes as a benefit, a drawback comes in when scammers use this anonymity to their advantage. Hackers and manipulations can still take place. Ethically, it builds trust and reduces cases of morality question like integrity and fraud.
Blockchain can be described as a foundational innovation rather than a disruptive type of innovation. A disruptive type of innovation is a term that refers to a business innovation that tends to interrupt an existing market and the value network by introducing a new market and value network. This move tends to displace established and existing businesses. On the other hand, a foundational innovation tends to enable the progress of an existing market by its ability to be applied in different problem domains (Assink, 2006). Blockchain is a foundational technology as it has the potential to create new foundation for the business market. In addition, it cannot undermine the traditional business models with a lesser cost elucidation and replace incumbent firms. It was selected by the World Economic Forum as one of the top ten emerging technologies in 2016 due to its ability to provide future transactions involving anything of value. Political economy and political philosophy have ethical implications especially where economic benefits are in discussion. With objectives of economists being economic growth through accelerated consumption and production of goods and services, finance remains a core component of the economy. Raising the economy to a substantial growth results to the interpretation of welfare as being subordinate even though some argue that economic growth provides more welfare than other acceptable substitutes.
Cryptocurrencies possess the ability to refrain from economic crises. For example, in cases of banks there is usually the freezing of accounts. In addition, they do not need intermediaries such as banks, lawyers and the government. This deems blockchain safer when vices like human errors, fraud and corruption are to be included. The drastic changes in the economy can be felt with the introduction of such a safe transaction media. With many people already employed as intermediaries in institutions, the introduction of blockchain that offers no such positions may be faced with a lot of resistance. Cryptocurrencies, no matter how famous they are turning out to be, have not been fully accepted by major government institutions, offices, retailers and many economist in general. They do not recognize cryptocurrencies as valid payment. There is also the rising fear that bitcoin, an example of a blockchain technology, may end up diving into two separate cryptocurrencies hence making it even harder for cryptocurrencies to be accepted.
On the contrary, cryptocurrencies value increases over time such as bitcoins. The block time for cryptocurrencies determine the value of the currencies. In case of bitcoins, the block time is set within 10 minutes and each block generated within the currency translates to a verified data that I equivalent to a cryptocurrency (Nian & Chuen, 2015). Many blockchain transactions are irreversible. With scammers around who claim to multiply your coins once you send them to their company, cases can occur within the system as well. The disadvantage about the irreversibility of transaction is the inability to retrieve lost money. For example, customers at bitcoins were unable to retrieve their money when theft occurred. Many economists have argued on the possibility of coming up with a mechanism in the blockchain that can make reversals in such cases. That is a rising ethical issue that will challenge the acceptance of blockchain technology. The dividend policy should also be noted (Haber & Stornet, 1991).
Blockchain creates contracts that are partially or fully executed without human interaction. It is based on automated escrow. This is advantageous for the business community as it will help in the reduction of moral hazards as well as elevate the use of contracts in general. This could be enhanced by the coding of contracts and its execution when the set terms and conditions are met. This tactic can as well be used by non-profitable organizations to provide their services. The World Food Program (WFP) for example, wants to implement this method to monitor the cash transfer operation and make sure they are more secure, faster and cheaper. The smart contract can be used widely with another example on the entertainment industry. In the case of a DJ, the smart contract can guarantee that every time their mix are played it pays the DJ almost immediately under the laid down conditions of the contract. As an ethical business consideration, blockchain must possess the ability to create financial contracting at a balanced edge. These contracts must as well include room for intellectual property rights that will grant the subject analogous rights rather than reproducible good or services.
In conclusion, blockchain technology can be supported as an intensively transparent and public ledger system that can be used permanently to compile data, store data by authentication and tracking digital use and payments. With the raising acceptance that blockchain has received, there is a possibility of 10% GDP globally be stored under blockchains technology as reported by World Economic Forum. In behind the scenes however, there may be trouble with blockchain as evident from bitcoins. It will take details for blockchain technology to seep into the economic and social infrastructure. Quite the opposite, it is imperious that businesses that feel and see the need to remain relevant create adaptive measure for it to fit in the competition. Ethically, blockchain should also create room for financial performances of the companies. Ethical standards of an organization can be disrupted if a corporate psychopath might be allowed to handle sensitive issues. The open type of financial system evident in blockchain technology may result to a higher savings and investment levels, productivity and general public welfare as expected as part of economic ethics in many businesses. Since history supports the fact that neither regulated nor unregulated firms always behave ethically, the success of blockchain is notable.
References
Assink, Marnix. (2006). “Inhibitors of disruptive innovation capability: a conceptual model.” European Journal of Innovation Management . 9 (2): 215-233.
Haber, Stuart. & Stornetta, Scott. (1991). “How to time-stamp a digital document.” Journal of Cryptology. 3 (2): 99-111.
Narayan, Arvind., Bonneau, Joseph., Felten, Edward., Miller, Andrew. & Godfeder, Steven. (2016). Bitcoin and cryptocurrency technologies: a comprehensive introduction . Princeton: Princeton University Press.
Nian, Pak. & Chuen, Lee. (2015). “A Light Touch of Regulations for Virtual Currencies.” Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Academic Press. P. 319.
Stead, W.E., Worrell, D. L. & Stead, J.G. (1990). An integrative model for understanding and managing ethical behavior in business organizations. Journal of Business Ethics . 9 (3), pp. 233-242.
