On the road to a blockchain revolution
“There has probably never been a more interesting or more important time to be in government or to be working with governments - at least not in modern history,” says Don Tapscott. It's quite a statement. But one that Tapscott quickly seeks to justify.
“On the one hand, you have the irresistible pressure to reduce the cost of government, which is about meeting public expectations that governments should be better, not worse. There is then the challenging broader context - a creation of wealth but not of prosperity, a world that is too unstable and too unjust, a new generation of young people coming into the workplace that have grown up digital, who have different expectations regarding government, the world and what should occur. This all means that it is not a time for tinkering but instead for fundamental change.”
And fundamental change is what Tapscott - a world-renowned author, consultant and strategist - says is coming in the form of blockchain technology. “Once again, the technology genie has escaped from the bottle,” he says. “And it could transform business, government, and society in the most profound ways.”
This is by no means the first time Tapscott has identified a groundbreaking concept and explained its global impact. He has authored more than 15 books including Wikinomics: How Mass Collaboration Changes Everything, which has been translated into over 25 languages. Innovation, the media and the economic and social impact of technology have all fallen under his critical eye. And his most recent work, BLOCKCHAIN REVOLUTION: How the Technology Behind Bitcoin is Changing Money, Business, and the World, co-authored with his son, Alex, is already rocketing up the bestseller charts.
So, why blockchain? What makes it so important? Before getting into that, Tapscott says it is worthwhile to set a little context, starting with the ‘internet of information', something we've had for more than 40 years. “We were right when we said the internet would become a tool for the communication of information rather than just processing data,” he says.
“But when you use the internet of information to communicate information today, you're essentially printing the information. Even the web is a publishing platform and an email is a copy of something, too. This works fine for all kinds of information. But when you start to think about assets, which are owned by somebody and have value, printing a copy is not a good idea. So if you're talking about money or intellectual property or music or film or financial assets - swaps, contracts, deeds, and loyalty points - it really is important that if I send you that asset I no longer have it.”
And this is where powerful institutions - like governments or banks - are called upon to establish identity and trust online. Tapscott goes on to say that this intermediary role is fine up to a point, but not without its problems - security for one.
“They all use central servers and any central server can be hacked,” he points out. “They also take a cost - a transaction cost - for doing stuff. And another problem is that they exclude billions of people from the global economy. Billions may have a mobile device connected to the internet, but they don't have a bank account. This doesn't mean that the web isn't a great thing - of course it is - but when it comes to the core of the economy and commerce and wealth creation, the internet of information has not been so great.”
And this is where blockchain comes in.
The internet of value
Some might be think that the array of technology now at our disposal - smart devices, big data, artificial intelligence, drones and so on - means that we don't need anything else. Tapscott, though, begs to differ. “The most important technology for the transformation of our economy and institutions - including government - is blockchain,” he says firmly. “This technology is at the heart of the transformation of society.”
So what is it? Why does it herald such a transformational shift? “What if there was a new platform whereby we could all communicate assets and store and protect assets in a secure way, and work with those assets without a powerful intermediary?” he asks. “This is essentially what the blockchain is. It is most well known as the underlying technology for bitcoin but it is so much more.” He goes on to describe it as a giant spreadsheet run on millions of computers which enables trust to be established in an economy without a central intermediary.
“Anyone can use the blockchain because it is on a network rather than a single institution,” he says. “Every 10 minutes, all transactions of value are verified, cleared, and stored in digital code in a block that is linked to the preceding block, creating a chain. Each block is highly encrypted and time-stamped across all these millions of computers in the network, which means that hacking it is practically impossible. With blockchain, your personal information is private, but the activity is transparent.”
There is no limit to what this digital ledger of transactions can be programmed to record. Bitcoin is one example but anything of value and importance - from money to birth certificates, financial accounts to the provenance of food - can be stored there. And for governments, the arrival of this technology couldn't be more timely, says Tapscott.
“The internet of information was supposed to enable a new era of democracy where citizens were supposed to be engaged,” he recalls. “But today there is a crisis of legitimacy over our democratic institutions. All across the OECD, youth voting is declining and, if a whole generation of young people turn away from democracy as a way of building a better world, we have a big problem.” To illustrate his point he cites the contrasting approaches of the '08 and '12 Obama presidential campaigns.
“The first time President Obama was elected, he used MyBarackObama.com and 35,000 communities self-organised,” he says. “They raised $100 million, engaged young people, and the youth vote went up. Four years later they didn't use it, as they had big data. They went from ‘Yes we can' to ‘We know you'. They targeted voters in all the swing states and won another election handily but missed an opportunity to engage young people, and the youth vote in the midterms two years later dropped to the lowest level for 70 years.”
Today, however, the Estonian government - widely lauded as the world leader in deploying digital technology - is once again showing the way. “Estonia is building an extraordinary platform based on the blockchain, where citizens have their identity but still preserve their privacy,” says Tapscott. “Speed, lower cost, security and fewer errors are just some of the benefits, but this is just one example of what will be many. After all, blockchains can be used to store any important government information.”
For Tapscott, we stand on the threshold of a technology that can truly reshape our world - it's now down to citizens, governments, business and society as a whole to make the most of it. “This is now at our disposal to give us another kick at the can over the next few decades,” he says.
“It has given us the opportunity to rewrite the laws of commerce and the nature of government and democracy, and perhaps to redo the economic power grid for the better of society. The promise of a much more democratised, peer-to-peer and open world awaits.”
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