Blockchain Revolution is Near ….
The Internet and smartphone have transformed our lives already, but the earth beneath our feet is beginning to shift due to the next big thing. It’s called blockchain technology, a clunky name for the underlying technology behind bitcoin.
And a new book, Blockchain Revolution (written by tech guru Don Tapscott and his investment banker son Alex Tapscott and published May 5) describes how this is the architecture of the future.
“The book is about the biggest innovation in computer science in a generation,” said Don in an interview today. “Developers are looking at the blockchain as the alternative to the stock market, to auditing, to Facebook, to Uber, it’s quite extraordinary.”
Not surprisingly, the race is on across Silicon Valley to leverage the technology.
“In 2014 and 2015 alone, more than $1 billion of venture capital flooded into the emerging blockchain ecosystem, and the rate of investment is almost doubling annually,” write the Tapscotts.
Bitcoin is just one of thousands of blockchain ledgers, but it is established as a means of transferring money safely, efficiently and cheaply without using banks, credit card companies or other financial intermediaries.
“It works by establishing trust in a transaction, not through powerful institutions or other intermediaries getting involved, but through clever software code and mass collaboration,” said Don.
The book describes this bitcoin version of blockchain process in detail, but the salient points are that all transactions are time-stamped, operations are collaborative using volunteers who unravel complicated puzzles to validate parties and consummate the transaction. Whoever is successful is paid in small amounts of bitcoins. All transactions are public, permanent, tamper proof (through encryption) and reasonable, accomplished without paying huge fees or commissions to cadres of intermediaries.
Also, every ten minutes the ledger is updated and transactions cannot be reversed or changed.
The implications to banking, insurance and securities industries are immense and most are experimenting with blockchain networks. But the ramifications are dramatic for the rest of us as the architecture becomes harnessed.
The Tapscotts provide examples. For instance, Airbnb or Uber collect equipment or people through their centralized platforms then sell their services for sizeable fees. A blockchain version of Airbnb, for instance, would “look more like a member-owned cooperative. All revenues except for overhead would go to its members who would control the platform and make decisions,” they explain.
People would join and get full access to other members’ information, home listings, history, photos and reputation info before choosing to rent or rent out property. The blockchain would verify parties, buy insurance, settle payment instantly and message to the tenant’s phone the code to unlock the door at the appointed time until the end of tenure. No key exchanges and tiny fees.
Disputes would be avoided, or easy to settle, because transactions could be retraced each step of the way.
Such co-operative blockchain ledgers will replace Airbnb, banks, Uber and social media companies, say the Tapscotts. Developers are already designing social media cooperatives, based on blockchain technology, where users can hide their data, sell it to others themselves if they choose to do so, pay to get pertinent business information sent to them or sell their “attention” to advertisers for a fee.
Blockchain technology could also be used to protect intellectual and artistic property – destroyed by the Internet. Artist, musicians, writers, journalists, academics, film makers, photographers, translators, scientists, architects and engineers could register their works on a digital ledger to establish ownership and royalty entitlement. Entries would be transparent, time stamped and evidence in courts or as a basis to receive micro-payments for usage.
Globally, a blockchain ledger of physical assets could eradicate fraud and corruption in countries where property titles or other documents are collected and controlled, sometimes stolen, by governments or bureaucrats.
Clearly, not only will traditional intermediaries be eliminated – from banks to stock markets, lawyers, accountants and search or social media giants — but a fairer organizing principle will be established online.
This is heady and important stuff and the Tapscotts have done a masterful job explaining how it all works as well as why this is, truly, another revolution.
First published National Post