Technology guru Don Tapscott, together with his investment banker son Alex, makes a bold claim on the subtitle of the pair’s just-published book, Blockchain Revolution (Penguin Canada, Toronto). They promise that the “technology behind Bitcoin is changing money, business and the world.”
Certainly Bitcoin and Blockchain technology are something anyone in the financial services industry needs to pay attention to. The first of seven chapters on Transformations is devoted to reinventing the Financial Services Industry, which the authors dub “the world’s second-oldest profession.”
The global financial system supports a global economy worth more than $100 trillion, making it the world’s most powerful industry and foundation of global capitalism, the authors write. And yet, with some of it still running on 1970s mainframe computers, close up the financial system is a “Rube Goldberg contraption of uneven developments and bizarre contradictions.”
If ever an industry were ready for disruption, this one would appear to be it. In an interview at the book launch, Alex Tapscott told me that true “fin tech” (financial technology) is based on the blockchain. And blockchain itself is what The Economist magazine dubbed “The Trust Machine.” Accordingly, the Tapscotts’ book begins with a chapter titled The Trust Protocol.
Distributed Ledger Technology
Banks around the world are paying close attention to blockchain, but the financial industry has already rebranded and privatized blockchain technology as “distributed ledger technology.” The goal appears to be to “reconcile the best of bitcoin – security, speed and cost – with an entirely closed system that requires a bank or financial institution’s permission to use,” the authors write.
To them, blockchains are more reliable databases than what they already have, permitting buyers, sellers, custodians and regulators “to keep shared, indelible records, thereby reducing cost, mitigating settlement risk, and eliminating central points of failure.”
If you’re a financial services executive, you need to pay attention this technology, and hence this book. Investors, particularly those interested in technology, would also do well to spend some time researching this field; the Tapscotts’ book is a convenient place to start. There are dozens if not hundreds of names of new outfits just springing up, which may be household names among blockheads – my own term for Blockchain cognoscenti – but are probably still below the radar of the general public and broad swath of investors.
Canadian firms major blockchain innovators
And many of the leading firms are Canadian, which should be music to the ears of the federal government and its “innovation” agenda. For example, in 2013 a then-19-year old Canadian of Russian descent – Vitalik Buterin – created a company called Ethereum, a new platform that runs decentralized applications such as smart contracts. Unlike bitcoin, Ethereum has created powerful tools that let software developers create anything from decentralized games to stock exchanges. And in 2015, one of the first Ethereum software developers was launched, Consensys Systems.
The book’s scope goes far beyond the financial world, however. It covers everything from serving the world’s two billion “unbanked” citizens, to “rebuilding” democracy and government, enabling artists, musicians and other creators of intellectual property to get a fair price for their creations, and much more. Ignore this book — already a bestseller according to a tweet today by Don Tapscott — at your peril.
Digital Citizen video on blockchain
See also a discussion of the Tapscotts and Blockchain Revolution at this half-hour video that recently aired on That Channel’s Digital Citizen Show. It features myself, Digital Citizen’s Norman Evans and ThatChannel.com’s Hugh Reilly.