The technology that will define the economic and social paradigms of the next 20 years has arrived. It is not artificial intelligence, robotics or the internet of things. Rather, it’s the technology behind digital currencies like bitcoin, ether, or XRP, called “blockchain.”
In our book Blockchain Revolution, my son Alex Tapscott and I argue that blockchain represents nothing less than the second era of the internet. Today, the internet is a central facet of our way of life, but it is largely limited to an internet of information. Blockchain enables us to construct an internet of value.
It does this using a vast, distributed ledger in which thousands of computers compete to verify groups of transactions – called “blocks.” Those transactions are then timestamped and added to an ever-growing “chain” of blocks.
That chain is decentralized, meaning the transaction records are not stored on one server, but on thousands. This makes blockchain virtually insusceptible to hacks, an increasingly common issue on the internet of information.
Through the use of clever incentives and cryptography, blockchain enables us to establish trust between two parties without the need for large intermediaries. Because trust is built into the system, Alex Tapscott and I have taken to calling it the “trust protocol.”
Why should this matter to you?
You could be an immigrant sending money back to your loved ones. Remittances are the largest flow of capital from the developed to the developing world, but the process takes almost a week with fees as high as ten per cent. Using blockchain, companies like the Toronto-based start-up Paycase would enable you to send money instantly, and for a fraction of the cost.
Perhaps you’re a fan of music, and would like to see artists compensated for their creations. Blockchain enables creators to maintain control over the ways their work is used, by establishing digital scarcity. British singer-songwriter Imogen Heap has already built a blockchain-empowered rights and payment layer for just that purpose.
Maybe you’re a young mother in China, where 300,000 children were recently made sick due to counterfeit or tainted baby formula. Companies like WaLiMai have begun using blockchain to enable you to instantly verify that what you’re feeding your child is an authentic product.
Or you could simply be concerned with the way our personal data is handled in the digital age. Using blockchain, we can build a “digital black box” in which we carry all the data that makes up our identity online, empowering individuals to profit from the data they create.
Blockchain has the potential to either improve or enable everything from online voting to the internet of things – any situation that benefits from a native system of trust between parties.
World leaders are taking note. Today, many of the world’s largest organizations are looking to blockchain for opportunities to improve the way they operate.
At the World Economic Forum in Davos this year, the word “blockchain” appeared in the program more often than the words “Europe” and “the United States.” One commenter who had analyzed conversations at Davos said the word “blockchain” was the second-most uttered theme, second only to – you guessed it – the word “Trump.”
Nor is this technology something only to consider in the distant future. Last year, more money was raised through Initial Coin Offerings, a fundraising method for blockchain companies, than through traditional venture capital. The face of finance has already been permanently and irreversibly changed.
It is 1994 in the world of blockchain, with enormous public interest and frantic competition to build the next “killer app” for the technology.
However, there is also a significant knowledge gap between leaders and decision-makers in companies, and builders with a technical understanding of blockchain. To help close that gap, we established the Blockchain Research Institute, which Microsoft Canada supports as a Founding Member. At the BRI, we’re conducting the definitive investigation into blockchain use-cases and applications, with over 70 projects researched by some of the word’s leading authorities on their subject matter.
Once organizational leaders have the knowledge required to understand the strategic implications of blockchain, the only hurdle to the blockchain revolution is our own willingness to embrace disruptive innovation.
In blockchain, we have an opportunity to truly realize the promise of the new digital economy. All it takes is leadership.
Don Tapscott is one of the world’s leading authorities on the impact of technology on business and society. He has authored 16 books, including Wikinomics: How Mass Collaboration Changes Everything, which has been translated into over 25 languages.
Alongside his son Alex Tapscott he is the co-founder of the Blockchain Research Institute, a Toronto-based think-tank conducting the definitive investigation into blockchain use-cases and applications.
He currently serves as the Chancellor of Trent University, and in 2015 was named a Member of the Order of Canada.