At the CMAideas executive breakfast, Don Tapscott closed the talk on his new book Blockchain Revolution by conjuring up the evocative image of a murmuration of a flock of starlings. Collectively the birds fly gracefully in unison and together have a greater power than they would individually. This, Tapscott said, is the potential of the blockchain, a way for people to act together for the greater good of all.
Blockchain Revolution, co-written with his son Alex Tapscott, is the first book to delve into the possibilities of blockchain technology and how it could transform the way we interact online. According to the Tapscotts:
“The technology most likely to change the next decade of business is not the social web, big data, the cloud, robotics, or even artificial intelligence. It’s the blockchain, the technology behind digital currencies like Bitcoin.”1
What is the blockchain?
First, a primer. Blockchain is the underlying technology of digital currencies like Bitcoin. What the technology does is essentially create a shared online ledger or database. All of the transactions in the database are maintained in a block, with subsequent transactions timestamped and linked to the previous ones to create an encrypted blockchain.
The blockchain creates trust between individuals who don’t know each other, without the need to go through a third-party such as a bank, credit card company or government. And because the blockchain can be viewed by anyone at any time, it creates accountability for users. In Blockchain Revolution, the authors describe this as the “trust protocol”.
The concept is pretty simple. I give something of value to you directly and there is a source of truth that records that the transaction happened. What this means is that the intermediary is no longer part of the transaction. For those of us who work in B2B businesses, the impact of blockchain technology could be far reaching.
Possibilities of blockchain
As part of his talk, Tapscott outlined some new opportunities the blockchain could create:
- Creating a true peer to peer sharing economy
- Platforms like Airbnb and Uber are really aggregators. With the blockchain, an app could be created that directly connects those looking for accommodation or a ride to someone offering the service. Reviews would establish the identities of those using the app.
- A distributed ledger system could foster innovation. The blockchain could also potentially decrease the amount of time required to settle financial transactions and reduce the expenses of financial institutions.
- No central authority would be responsible for maintaining property records. In countries without proper land registries, the blockchain could create an online land registry system that would protect property for owners. In corrupt countries this could possibly prevent the illegal seizure of property.
- Huge sums of money flow from the developed to non-developed world in the form of remittance payments. This process takes several days and often costs seven percent or more of the amount being sent. Payment networks using the blockchain would reduce both the time to transfer funds and the cost to do so.
- Artists who create music, books, films and other forms of art are often not compensated fully for their work online. The blockchain could empower creators to offer their work directly to their audiences without the need for an intermediary.
- The modern corporation was created by the need for economies of scale. With the blockchain, companies could become less vertically integrated and look more like networks. The benefit would be the distribution of wealth among more participants. This could change corporate structures and the human relationships within them.
Transformation in action
Although adoption of the blockchain is still in early days, there are a number of initiatives embracing the technology. Some of the most interesting so far include:
- A consortium of 40 global banks researching how advanced ledger technologies can be applied to global financial markets.
- Currently testing blockchain technology for trading shares in the Nasdaq Private Market.
- A cross-industry initiative to advance blockchain technology.
- Smart Securities
- A technology that allows complex financial instruments to be modeled in an easy-to-understand programming language and fully digitized onto a distributed ledger.
- Australian Stock Exchange
- Investigating the use of blockchain for clearing and settling trades.
- A digital wallet for your phone. Users can fund their accounts with cash or from their bank accounts. They can then send or receive funds from anyone else using the app. Abra can also be used to pay for purchases online where it is accepted.
- The goal of Artlery is to increase the number of people who can participate in the art market. Their tools track engagement and provide easy methods to value, price and sell art.
- An online ledger for diamond certification and other transactions. It offers verification for insurance companies and owners.
Although there is a lot of enthusiasm for the transformational power of blockchain technology, the reality is that it is still in its infancy. What’s most important is that it’s inspiring a rethinking of the way we do things today and imagining a better future for more people.
Tapscott has issued a challenge to us all: Do we have the curiosity to explore how our companies interact with the blockchain? Can we go beyond merely sharing information online to sharing trust?
Learn more about blockchain technology
- Reuters: Banks, tech companies move on from bitcoin to blockchain
- The Economist: Hype springs eternal
- The Economist: The great chain of being sure about things
- The Economist: Trust machine
- Wired: Blockchain 2.0: The renaissance of money
- Nasdaq: Why bitcoin blockchain is the biggest thing since the internet
- Wall Street Journal: A bitcoin technology gets Nasdaq test
- The Telegraph: Nasdaq makes first share trade using blockchain technology
1 Harvard Business Review: The Impact of the blockchain goes beyond financial services