Blockchain-Revolution-Tapscott-Don.pdf - ALSO BY Don Tapscott Paradigm Shift The New Promise of Information Technology(1993 Coauthor Art Caston The

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Unformatted text preview: ALSO BY Don Tapscott Paradigm Shift: The New Promise of Information Technology (1993) Coauthor, Art Caston The Digital Economy: Promise and Peril in the Age of Networked Intelligence (1995) Growing Up Digital: The Rise of the Net Generation (1997) Who Knows: Safeguarding Your Privacy in a Networked World (1997) Coauthor, Ann Cavoukian Digital Capital: Harnessing the Power of Business Webs (2000) Coauthors, David Ticoll and Alex Lowy The Naked Corporation: How the Age of Transparency Will Revolutionize Business (2003) Coauthor, David Ticoll Wikinomics: How Mass Collaboration Changes Everything (2006) Coauthor, Anthony D. Williams Grown Up Digital: How the Net Generation Is Changing the World (2008) Macrowikinomics: New Solutions for a Connected Planet (2010) Coauthor, Anthony D. Williams An imprint of Penguin Random House LLC 375 Hudson Street New York, New York 10014 Copyright © 2016 by Don Tapscott and Alex Tapscott Penguin supports copyright. Copyright fuels creativity, encourages diverse voices, promotes free speech, and creates a vibrant culture. Thank you for buying an authorized edition of this book and for complying with copyright laws by not reproducing, scanning, or distributing any part of it in any form without permission. You are supporting writers and allowing Penguin to continue to publish books for every reader. ISBN: 9781101980132 International edition ISBN: 9780399564062 ISBN: 9781101980156 (ebook) While the author has made every effort to provide accurate telephone numbers, Internet addresses, and other contact information at the time of publication, neither the publisher nor the author assumes any responsibility for errors or for changes that occur after publication. Further, the publisher does not have any control over and does not assume any responsibility for author or third-party Web sites or their content. Version_1 To Ana Lopes and Amy Welsman for enabling this book, and for understanding that “it’s all about the blockchain.” “A masterpiece. Gracefully dissects the potential of blockchain technology to take on today’s most pressing global challenges.” —Hernando De Soto, Economist and President, Institute for Liberty and Democracy, Peru “The blockchain is to trust as the Internet is to information. Like the original Internet, blockchain has potential to transform everything. Read this book and you will understand.” —Joichi Ito, Director, MIT Media Lab “In this extraordinary journey to the frontiers of finance, the Tapscotts shed new light on the blockchain phenomenon and make a compelling case for why we all need to better understand its power and potential.” —Dave McKay, President and CEO, Royal Bank of Canada “Deconstructs the promise and peril of the blockchain in a way that is at once accessible and erudite. Blockchain Revolution gives readers a privileged sneak peak at the future.” —Alec Ross, author, The Industries of the Future “If ever there was a topic for demystification, blockchain is it. Together, the Tapscotts have achieved this comprehensively and in doing so have captured the excitement, the potential, and the importance of this topic to everyone.” —Blythe Masters, CEO, Digital Asset Holdings “This is a book with the predictive quality of Orwell’s 1984 and the vision of Elon Musk. Read it or become extinct.” —Tim Draper, Founder, Draper Associates, DFJ, and Draper University “Blockchain is a radical technological wave and, as he has done so often, Tapscott is out there, now with son Alex, surfing at dawn. It’s quite a ride.” —Yochai Benkler, Berkman Professor of Entrepreneurial Legal Studies, Harvard Law School “If you work in business or government, you need to understand the blockchain revolution. No one has written a more thoroughly researched or engaging book on this topic than Tapscott and Tapscott.” —Erik Brynjolfsson, Professor at MIT; coauthor of The Second Machine Age “An indispensable and up-to-the-minute account of how the technology underlying bitcoin could—and should— unleash the true potential of a digital economy for distributed prosperity.” —Douglas Rushkoff, author of Present Shock and Throwing Rocks at the Google Bus “Technological change that used to develop over a generation now hits us in a relative blink of the eye, and no one tells this story better than the Tapscotts.” —Eric Spiegel, President and CEO, Siemens USA “Few leaders push us to look around corners the way Don Tapscott does. With Blockchain Revolution he and his son Alex teach us, challenge us, and show us an entirely new way to think about the future.” —Bill McDermott, CEO, SAP SE “Blockchain Revolution is a brilliant mix of history, technology, and sociology that covers all aspects of the blockchain protocol—an invention that in time may prove as momentous as the invention of printing.” —James Rickards, author of Currency Wars and The Death of Money “Blockchain Revolution serves as an atlas to the world of digital money, masterfully explaining the current landscape while simultaneously illuminating a path forward toward a more equitable, efficient, and connected global financial system.” —Jim Breyer, CEO, Breyer Capital “Blockchain Revolution is the indispensable and definitive guide to this world-changing technology.” —Jerry Brito, Executive Director, Coin Center “Incredible. Really incredible. The Tapscotts’ examination of the blockchain as a model for inclusion in an increasingly centralized world is both nuanced and extraordinary.” —Steve Luczo, Chairman and CEO, Seagate Technology “Makes a powerful case for blockchain’s ability to increase transparency but also ensure privacy. In the authors’ words, ‘The Internet of Things needs a Ledger of Things.’” —Chandra Chandrasekaran, CEO and Managing Director, Tata Consultancy Services “The epicenter of trust is about to diffuse! The definitive narrative on the revolutionary possibilities of a decentralized trust system.” —Frank D’Souza, CEO, Cognizant “Identifies a profound new technology movement and connects it to the deepest of human needs: trust. Thoroughly researched and provocatively written. Every serious businessperson and policy maker needs to read Blockchain Revolution.” —Brian Fetherstonhaugh, Chairman and CEO, OgilvyOne Worldwide “Blockchain Revolution sets the table for a wave of technological advancement that is only just beginning.” —Frank Brown, Managing Director and Chief Operating Office, General Atlantic “A must read. You’ll gain a deep understanding of why the blockchain is quickly becoming one of the most important emerging technologies since the Internet.” —Brian Forde, Director of Digital Currency Initiative, MIT Media Lab “Blockchain technology has the potential to revolutionize industry, finance, and government—a must read for anyone interested in the future of money and humanity.” —Perianne Boring, Founder and President, Chamber of Digital Commerce “When generational technology changes the world in which we live, we are truly fortunate to have cartographers like Don Tapscott, and now his son Alex, to explain where we’re going.” —Ray Lane, Managing Partner, GreatPoint Ventures; Partner Emeritus, Kleiner Perkins “Don and Alex have written the definitive guidebook for those trying to navigate this new and promising frontier.” —Benjamin Lawsky, Former Superintendent of Financial Services, State of New York; CEO of The Lawsky Group “Blockchain Revolution is an illuminating, critically important manifesto for the next digital age.” —Dan Pontefract, author of The Purpose Effect; Chief Envisioner, TELUS “The most well-researched, thorough, and insightful book on the most exciting new technology since the Internet. A work of exceptional clarity and astonishingly broad and deep insight.” —Andreas Antonopoulos, author of Mastering Bitcoin “Blockchain Revolution beautifully captures and illuminates the brave new world of decentralized, trustless money.” —Tyler Winklevoss, Cofounder, Gemini and Winklevoss Capital “A fascinating—and reassuring—insight into a technology with the power to remake the global economy. What a prize. What a book!” —Paul Polman, CEO, Unilever CONTENTS Also by Don Tapscott Title Page Copyright Dedication Praise for Don Tapscott and Alex Tapscott Acknowledgments PART I: Say You Want a Revolution CHAPTER 1: The Trust Protocol In Search of the Trust Protocol How This Worldwide Ledger Works A Rational Exuberance for the Blockchain Achieving Trust in the Digital Age Return of the Internet Your Personal Avatar and the Black Box of Identity A Plan for Prosperity Promise and Peril of the New Platform CHAPTER 2: Bootstrapping the Future: Seven Design Principles of the Blockchain Economy The Seven Design Principles 1. Networked Integrity 2. Distributed Power 3. Value as Incentive 4. Security 5. Privacy 6. Rights Preserved 7. Inclusion Designing the Future PART II: Transformations CHAPTER 3: Reinventing Financial Services A New Look for the World’s Second-Oldest Profession The Golden Eight: How the Financial Services Sector Will Change From Stock Exchanges to Block Exchanges Dr. Faust’s Blockchain Bargain The Bank App: Who Will Win in Retail Banking Google Translate for Business: New Frameworks for Accounting and Corporate Governance Reputation: You Are Your Credit Score The Blockchain IPO The Market for Prediction Markets Road Map for the Golden Eight CHAPTER 4: Re-architecting the Firm: The Core and the Edges Building ConsenSys Changing the Boundaries of the Firm Determining Corporate Boundaries CHAPTER 5: New Business Models: Making It Rain on the Blockchain bAirbnb Versus Airbnb Global Computing: The Rise of Distributed Applications The DApp Kings: Distributed Business Entities Autonomous Agents Distributed Autonomous Enterprises The Big Seven: Open Networked Enterprise Business Models Hacking Your Future: Business Model Innovation CHAPTER 6: The Ledger of Things: Animating the Physical World Power to the People The Evolution of Computing: From Mainframes to Smart Pills The Internet of Things Needs a Ledger of Things The Twelve Disruptions: Animating Things The Economic Payoff The Future: From Uber to SUber Hacking Your Future for a World of Smart Things CHAPTER 7: Solving the Prosperity Paradox: Economic Inclusion and Entrepreneurship A Pig Is Not a Piggy Bank The New Prosperity Paradox Road Map to Prosperity Remittances: The Story of Analie Domingo Blockchain Humanitarian Aid Safe as Houses? The Road to Asset Ownership Implementation Challenges and Leadership Opportunities CHAPTER 8: Rebuilding Government and Democracy Something Is Rotten in the State High-Performance Government Services and Operations Empowering People to Serve Selves and Others The Second Era of Democracy Blockchain Voting Alternative Models of Politics and Justice Engaging Citizens to Solve Big Problems Wielding Tools of Twenty-first-Century Democracy CHAPTER 9: Freeing Culture on the Blockchain: Music to Our Ears Fair Trade Music: From Streaming Music to Metering Rights Artlery for Art Lovers: Connecting Artists and Patrons Privacy, Free Speech, and Free Press on the Blockchain Getting the Word Out: The Critical Role of Education Culture on the Blockchain and You PART III: Promise and Peril CHAPTER 10: Overcoming Showstoppers: Ten Implementation Challenges 1. The Technology Is Not Ready for Prime Time 2. The Energy Consumed Is Unsustainable 3. Governments Will Stifle or Twist It 4. Powerful Incumbents of the Old Paradigm Will Usurp It 5. The Incentives Are Inadequate for Distributed Mass Collaboration 6. The Blockchain Is a Job Killer 7. Governing the Protocols Is Like Herding Cats 8. Distributed Autonomous Agents Will Form Skynet 9. Big Brother Is (Still) Watching You 10. Criminals Will Use It Reasons Blockchain Will Fail or Implementation Challenges? CHAPTER 11: Leadership for the Next Era Who Will Lead a Revolution? The Blockchain Ecosystem: You Can’t Tell the Players Without a Roster A Cautionary Tale of Blockchain Regulation The Senator Who Would Change the World Central Banks in a Decentralized Economy Regulation Versus Governance A New Framework for Blockchain Governance A New Agenda for the Next Digital Age The Trust Protocol and You Notes Index ACKNOWLEDGMENTS This book came from the meeting of two minds and two life trajectories. Don had been leading a $4 million syndicated research program called Global Solution Networks (GSN) at the Rotman School of Management, University of Toronto. The initiative was investigating new, networked models of global problem solving and governance. He researched how the Internet was governed by a multistakeholder ecosystem and became interested in digital currencies and their governance. Meanwhile, Alex was an executive with the investment bank Canaccord Genuity. He noticed the growing enthusiasm for early-stage bitcoin and blockchain companies in 2013 and began leading his firm’s efforts in the space. During a father-son ski trip to Mont-Tremblant in early 2014, we brainstormed over dinner about collaborating on this topic, and Alex agreed to lead a research project on the governance of digital currencies, culminating in his white paper, titled A Bitcoin Governance Network. The more we dug into the issues, the more we concluded that this could be the next big thing. Meanwhile our agent, Wes Neff at the Leigh Bureau, along with Don’s publisher Adrian Zackheim at Portfolio/Penguin (Wikinomics, Macrowikinomics), was encouraging Don to formulate a new book concept. When Alex’s paper became widely recognized as leading thinking in this area, Don approached Alex to be his coauthor. Adrian, to his credit, made us an offer we couldn’t refuse and the book never went to auction, as is normally the case. We then made what in hindsight was a smart decision. We approached the best book editor we knew, Kirsten Sandberg, formerly of Harvard Business School Press, and asked her to edit our book proposal. She did a spectacular job and our collaboration was so effortless that we asked her to be a full-time member of the book research team. Kirsten participated with us in more than one hundred interviews and collaborated in real time as we tried to understand the myriad issues on the table and develop helpful formulations to explain this extraordinary set of developments to a nontechnical audience. She helped us bring the story to life. In that sense, she was our coauthor and this book would not have appeared, at least in its current comprehensible form, without her. For that, and for all the stimulation and laugh lines, we are very grateful. Our heartfelt thanks to the people below who generously shared their time and insights with us and without whom this book would not be possible. In alphabetical order: Jeremy Allaire, Founder, Chairman, and CEO, Circle Marc Andreessen, Cofounder, Andreessen Horowitz Gavin Andresen, Chief Scientist, Bitcoin Foundation Dino Angaritis, CEO, Smartwallet Andreas Antonopoulos, Author, Mastering Bitcoin Federico Ast, CrowdJury Susan Athey, Economics of Technology Professor, Stanford Graduate School of Business Adam Back, Cofounder and President, Blockstream Bill Barhydt, CEO, Abra Christopher Bavitz, Managing Director, Cyberlaw Clinic, Harvard Law School Geoff Beattie, Chairman, Relay Ventures Steve Beauregard, CEO and Founder, GoCoin Mariano Belinky, Managing Partner, Santander InnoVentures Yochai Benkler, Berkman Professor of Entrepreneurial Studies, Harvard Law School Jake Benson, CEO and Founder, LibraTax Tim Berners-Lee, Inventor, World Wide Web Doug Black, Senator, Canadian Senate, Government of Canada Perriane Boring, Founder and President, Chamber of Digital Commerce David Bray, 2015 Eisenhower Fellow and Harvard Visiting Executive in Residence Jerry Brito, Executive Director, Coin Center Paul Brody, Americas Strategy Leader, Technology Group, EY (formerly IoT at IBM) Richard G. Brown, CTO, R3 CEV (former Executive Architect for Industry Innovation and Business Development, IBM) Vitalik Buterin, Founder, Ethereum Patrick Byrne, CEO, Overstock Bruce Cahan, Visiting Scholar, Stanford Engineering; Stanford Sustainable Banking Initiative James Carlyle, Chief Engineer, MD, R3 CEV Nicolas Cary, Cofounder, Blockchain Ltd. Toni Lane Casserly, CEO, CoinTelegraph Christian Catalini, Assistant Professor, MIT Sloan School of Management Ann Cavoukian, Executive Director, Privacy and Big Data Institute, Ryerson University Vint Cerf, Co-creator of the Internet and Chief Internet Evangelist, Google Ben Chan, Senior Software Engineer, BitGo Robin Chase, Cofounder and Former CEO, Zipcar Fadi Chehadi, CEO, ICANN Constance Choi, Principal, Seven Advisory John H. Clippinger, CEO, ID3, Research Scientist, MIT Media Lab Bram Cohen, Creator, BitTorrent Amy Cortese, Journalist, Founder, Locavest J-F Courville, Chief Operating Officer, RBC Wealth Management Patrick Deegan, CTO, Personal BlackBox Primavera De Filippi, Permanent Researcher, CNRS and Faculty Associate at the Berkman Center for Internet and Society at Harvard Law School Hernando de Soto, President, Institute for Liberty and Democracy Peronet Despeignes, Special Ops, Augur Jacob Dienelt, Blockchain Architect and CFO, itBit and Factom Joel Dietz, Swarm Corp Helen Disney, (formerly) Bitcoin Foundation Adam Draper, CEO and Founder, Boost VC Timothy Cook Draper, Venture Capitalist; Founder, Draper Fisher Jurvetson Andrew Dudley, Founder and CEO, Earth Observation Joshua Fairfield, Professor of Law, Washington and Lee University Grant Fondo, Partner, Securities Litigation and White Collar Defense Group, Privacy and Data Security Practice, Goodwin Procter LLP Brian Forde, Former Senior Adviser, The White House; Director, Digital Currency, MIT Media Lab Mike Gault, CEO, Guardtime George Gilder, Founder and Partner, Gilder Technology Fund Geoff Gordon, CEO, Vogogo Vinay Gupta, Release Coordinator, Ethereum James Hazard, Founder, Common Accord Imogen Heap, Grammy-Winning Musician and Songwriter Mike Hearn, Former Google Engineer, Vinumeris/Lighthouse Austin Hill, Cofounder and Chief Instigator, Blockstream Toomas Hendrik Ilves, President of Estonia Joichi Ito, Director, MIT Media Lab Eric Jennings, Cofounder and CEO, Filament Izabella Kaminska, Financial Reporter, Financial Times Paul Kemp-Robertson, Cofounder and Editorial Director, Contagious Communications Andrew Keys, Consensus Systems Joyce Kim, Executive Director, Stellar Development Foundation Peter Kirby, CEO and Cofounder, Factom Joey Krug, Core Developer, Augur Haluk Kulin, CEO, Personal BlackBox Chris Larsen, CEO, Ripple Labs Benjamin Lawsky, Former Superintendent of Financial Services for the State of New York; CEO, The Lawsky Group Charlie Lee, Creator, CTO; Former Engineering Manager, Litecoin Matthew Leibowitz, Partner, Plaza Ventures Vinny Lingham, CEO, Gyft Juan Llanos, EVP of Strategic Partnerships and Chief Transparency Officer, Bitreserve.org Joseph Lubin, CEO, Consensus Systems Adam Ludwin, Founder, Chain.com Christian Lundkvist, Balanc3 David McKay, President and Chief Executive Officer, RBC Janna McManus, Global PR Director, BitFury Mickey McManus, Maya Institute Jesse McWaters, Financial Innovation Specialist, World Economic Forum Blythe Masters, CEO, Digital Asset Holdings Alistair Mitchell, Managing Partner, Generation Ventures Carlos Moreira, Founder, Chairman, and CEO, WISeKey Tom Mornini, Founder and Customer Advocate, Subledger Ethan Nadelmann, Executive Director, Drug Policy Alliance Adam Nanjee, Head of Fintech Cluster, MaRS Daniel Neis, CEO and Cofounder, KOINA Kelly Olson, New Business Initiative, Intel Steve Omohundro, President, Self-Aware Systems Jim Orlando, Managing Director, OMERS Ventures Lawrence Orsini, Cofounder and Principal, LO3 Energy Paul Pacifico, CEO, Featured Artists Coalition Jose Pagliery, Staff Reporter, CNNMoney Stephen Pair, Cofounder and CEO, BitPay Inc. Vikram Pandit, Former CEO, Citigroup; Coinbase Investor, Portland Square Capital Jack Peterson, Core Developer, Augur Eric Piscini, Principal, Banking/Technology, Deloitte Consulting Kausik Ra...
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