Don Tapscott, a leading theorist of the digital age, explains why the blockchain technology will fundamentally transform the institutions our societies are built upon.
“Who has heard the word blockchain before?” Don Tapscott draws an analogy to 1993 when he used to ask people who had heard of the “World Wide Web” and everytime it became more and more people.
With the blockchain, once again a 'tech jeannie' has been released from the bottle, initiated by an unknown person named Satoshi Nakamoto, Tapscott explains. “It's now available at our disposal to rewrite the economic order of things and transform society for the better.”
Tapscott wrote a book about the digital economy in 1994. He predicted that the technology will deliver many wonders. He thought it might lead to GDP growth, but not to a growth in jobs. He has also written about data as a new asset and foreseen the danger that data might not be owned by the ones that created it, but by large corporations and governments.
Reviewing his own book, he was shocked that all negative possibilities he wrote about in fact became true. “The digital age has brought us many benefits, but if you look at how it impacted our economy, it's a troubling report”, Tapscott resumes.
What if there was a second generation of the Internet?
The first generation of the Internet was one of information. It used to be peer to peer information, but it was not exactly suitable for business. There were no possibilities of peer to peer value transfers. What if a new generation makes that possible? Surely that would be a radical thing, because so far the benefits of the Internet have been distributed asymmetrically. They have been captured by powerful forces.
The next generation of the internet will be based on the underlying technology of bitcoin. It is a crypto-currency that is neither created nor controlled by states. However, what is even more interesting is the underlying technology called blockchain. It is one of the greatest innovations of Computer Science in this generation, Tapscott thinks. It is a large distributed ledger, a huge database that ultimately runs on hundreds of millions of computers. It is open-source and incorruptible because if you want to hack a transaction you would need to hack it across all of the computers on the blockchain.
Every block is linked to the previous block which is linked to the previous block and so on. There is not just the bitcoin blockchain. Another great blockchain is Ethereum offering value added capabilities for developers. Tapscott is calling it the “Trust Protocol”.
The blockchain can also benefit the banking system and radically simplify it because there is no settlement. If you pay someone, that's it, the transaction is settled.
Tapscott continues explaining some examples of blockchain's potential impact. Disrupters might get disrupted. Services like Uber or Airbnb could be enhanced and transformed by the technology. Factom is an interesting tool that enables developers to build applications using the blockchain. You can also think of personal avatars that make sure only necessary data will be shared in a transaction and not just everything.
Wrapping up, Tapscott gives us seven reasons why the blockchain can lead to a new distribution of prosperity
1) Including billions of people in the global economy
2) Protecting rights through immutable records
3) Enabling citizens to own and monetize their data (and protect privacy)
4) Ending the remittance rip-off and reinventing financial services
5) Creating a true Sharing Economy
6) Unleashing a new halcyon age of entrepreneurship and feeding the creators of content first
7) Transforming foreign aid
There you have it. The technology at your fingertips to implement it and seven vast potentials to change the current economic order for the better.