Blockchain Revolution (updated)

by Don Tapscott

  Meme artist Ronen V said, “Art is a currency. The evolution of art into digital currency is—no question—the future. And this is a good step.”23 Musicians, photographers, designers, illustrators, or other artists whose work could be digitized and watermarked as a definitive copy could use this technology to transform their intellectual property into a tradable asset, a limited edition perhaps customized for a particular fan. Artists and museums can use Ascribe’s technology to loan pieces to other individuals or institutions.24 Monegraph offers a similar service: it uses digital watermarks and the cryptography intrinsic to the blockchain for authenticating pieces. Artists simply upload the art to a page on the Internet and submit the URL to Monegraph. The firm issues a set of public and private keys, except that the value associated with the public key is a digital deed to the art rather than bitcoin per se. Monegraph also tweets a public announcement of the deed, noteworthy because the U.S. Library of Congress archives public Twitter feeds.25 Someone else might try to claim the URL as his own, but there would already be at least two proofs in the public record to verify ownership.26

  Verisart, a Los Angeles–based start-up with bitcoin core developer Peter Todd as an adviser, has even greater ambitions. Certifying the authenticity and the condition of a piece of fine art is big business, and one that is largely paper based and controlled by elite experts with access to restricted databases. Finding who owns the art, where it’s stored, and in what condition is a real challenge, even for those who actually know what they’re looking for. Verisart is combining blockchain technology and standard museum metadata to create a public database of art and collectibles. This worldwide ledger will serve artists, collectors, curators, historians, art appraisers, and insurers anywhere in the world.27 By using the bitcoin blockchain, Verisart can confer digital provenance to any physical work, not just digital art, and users will be able to check a work’s authenticity, condition, and chain of title from their mobile device before they participate in an online auction or agree to a sale. “We believe technology can aid trust and liquidity, especially as more of the $67 billion annual art market shifts to private sales (peer-to-peer) and online transactions,” founder Robert Norton told TechCrunch. “The art world is not broken. It just relies too much on middlemen to ensure trust and liquidity. We believe the advent of a decentralized world-wide ledger coupled with powerful encryption to mask the identities of buyer and seller will be attractive to the art world.”28 The artist becomes what could be called a “rights monetizer” with the technology making deals and collecting revenue in real time.

  You could apply this same model to other fields as well. In science, a researcher could publish a paper to a limited audience of peers, as Satoshi Nakamoto did, and receive reviews and the credibility to publish to a larger audience, rather than assigning all rights to a scientific journal. The paper might even be available for free but other scientists could subscribe to a deeper analysis or threaded discussions with the author about it. She could make her raw data available or perhaps share data with other scientists as part of a smart contract. If there is a commercial opportunity flowing from the paper, the rights could all be protected in advance. More on this in chapter 9.

  3. Blockchain Cooperatives

  The trust protocol supercharges cooperatives—autonomous associations formed and controlled by people who come together to meet common needs.

  “It’s nonsense to call Uber a sharing economy company,” said Harvard professor Benkler. “Uber has used the availability of mobile technology to create a business that lowers the cost of transportation for consumers. That’s all it has done.”29 David Ticoll said, “In common English usage, sharing denotes free exchange—not financial transactions. As in kids’ sharing toys. It’s a shame that this term has somewhat lost that meaning.” To him, “sharing is the main way that humans and members of other species have conducted exchanges with one another for millions of years, beginning with the act of conception itself. While some Internet companies have facilitated genuine sharing, others have appropriated and commoditized the social relationships and vocabulary of sharing.”30

  Most so-called sharing economy companies are really service aggregators. They aggregate the willingness of suppliers to sell their excess capacity (cars, equipment, vacant rooms, handyman skills) through a centralized platform and then resell them, all while collecting valuable data for further commercial exploitation.

  Companies like Uber have cracked the code for large-scale service aggregation and distribution. Airbnb competes with hotels on travel accommodations; Lyft and Uber challenge taxi and limousine companies; Zipcar, before it was purchased by Avis, challenged traditional car rental companies with its hip convenience and convenient hourly rentals.

  Many of these companies have globalized the merchandising of traditional local, small-scale services—like bed-and-breakfasts, taxis, and handypersons. They use digital technologies to tap into so-called underutilized, time-based resources like real estate (apartment bedrooms), vehicles (between-call taxis), and people (retirees and capable people who can’t get full-time jobs).

  Blockchain technology provides suppliers of these services a means to collaborate that delivers a greater share of the value to them. For Benkler, “Blockchain enables people to translate their willingness to work together into a set of reliable accounting—of rights, assets, deeds, contributions, uses—that displaces some of what a company like Uber does. So that if drivers want to set up their own Uber and replace Uber with a pure cooperative, blockchain enables that.” He emphasized the word enable. To him, “There’s a difference between enabling and moving the world in a new direction.” He said, “People still have to want to do it, to take the risk of doing it.”31

  So get ready for blockchain Airbnb, blockchain Uber, blockchain Lyft, blockchain Task Rabbit, and blockchain everything wherever there is an opportunity for real sharing and for value creation to work together in a cooperative way and receive most of the value they create.

  4. The Metering Economy

  Perhaps blockchain technology can take us beyond the sharing economy into a metering economy where we can rent out and meter the use of our excess capacity. One problem with the actual sharing economy, where, for example, home owners agree to share power tools or small farming equipment, fishing gear, a woodworking shop, garage or parking, and more, was that it was just too much of a hassle. “There are 80 million power drills in America that are used an average of 13 minutes,” Airbnb CEO Brian Chesky wrote in The New York Times. “Does everyone really need their own drill?”32

  The trouble is, most people found it easier and more cost-effective to make one trip to Home Depot and buy a drill for $14.95 than rent it for $10 from someone a mile away, making two trips. Wrote Sarah Kessler in Fast Company magazine: “The Sharing Economy is dead and we killed it.”33

  But with blockchains we can rent our excess capacity for certain commodities that are pretty much zero hassle—Wi-Fi hot spots, computing power or storage capacity, the heat generated by our computers, our extra mobile minutes, even our expertise—without lifting a finger, let alone schlepping to and from some stranger’s house across the city. When you travel, your Wi-Fi can rent out itself in your absence, charging fractions of pennies for every second of usage. Your imagination (and possibly new regulation) is your only limit. Your subscriptions, physical space, and energy sources can now become sources of income, metering their use directly to a counterparty and charging them for it through micropayments. All you need is a decentralized value transfer protocol to allow them to safely and securely transact with one another. These platforms instill subsidiary rights in all our assets. You need to decide the extent to which you want to assign others usage and access rights—even the right to exclude others from using your assets—and what to charge for those rights.

  This can work for physical assets too. For example, we’ve heard a lot about autonomous vehicles. We can build an open transportation network on the blockchain where owner
s each have a private encrypted key (number) that lets them reserve a car. Using the public key infrastructure and existing blockchain technologies like EtherLock and Airlock, they can unlock and use the car for a certain amount of time, as specified by the rules of the smart contract—all the while paying the vehicle (or its owners) in real time for the time and energy that they use—as metered on a blockchain. Because blockchain technology is transparent, the group of owners can track who is abiding by their commitments. Those who aren’t take a reputational hit and eventually lose access altogether.

  5. The Platform Builders

  Enterprises create platforms when they open up their products and technology infrastructures to outside individuals or communities that can cocreate value or new businesses. One type is prosumers, customers who produce.34 In a dynamic world of customer innovation, a new generation of producer-consumers considers the “right to hack” its birthright. Blockchain technology supercharges prosumption. Nike running shoes could generate and store data on a distributed ledger that, in turn, Nike and the shoe wearer could monetize as agreed in their smart contract. Nike could offer a tiny piece of its shares with every pair it sells, if the customer agrees to activate the smarts in the shoes, or even sync her shoes to other wearables, such as a heart monitor or glucose level calculator or other valuable data for Nike.

  Some platforms differ from prosumer communities where a company decides to cocreate products with its customers. With open platforms, a company offers partners a broader venue for staging new businesses or simply adding value to the platform.

  Now with blockchain technology companies can quickly create platforms and partner with others to create platforms or utilities for an entire industry. Robin Chase founded Zipcar (a service aggregator) as well as Buzzcar (users can share their cars with others), and is now the author of Peers Inc., a lucid book on the power of peers working together. She told us, “Leveraging the value found in excess capacity depends on high-quality platforms for participation. These platforms don’t come cheap. The blockchain excels in providing a standard common database (open APIs) and standard common contracts. The blockchain can make platform building cheaper and manageable.” That’s just the beginning. “Best of all, its common database makes for data transparency and portability: consumers and suppliers can pursue the best terms. They can also cooperate as peers on the blockchain to create their own platforms, rather than using the capabilities of traditional companies.”35

  Think of the car of the future itself. It would exist as part of a blockchain-based network where everyone can share information, and various parts of the vehicle can do transactions and exchange money. Given such an open platform, thousands of programmers and niche businesses could customize applications for your car. Soon such platforms could transform entire industries such as financial services by settling all kinds of financial transactions and exchanges of value. A consortium of the largest banks is already working on the idea. Platforms are the rising tide that lifts all boats.

  Wikinomics introduced the concept of ideagoras—emerging marketplaces for ideas, inventions, and uniquely qualified minds, which enabled companies like P&G to tap global pools of highly skilled talent more than ten times the size of its own workforce. Firms use services like InnoCentive and Inno360 to facilitate holding “Challenges,” “Digital Brainstorms,” and other techniques to find the right temporary talent outside their boundaries to address critical business challenges. It’s about using data to find the right talent to hack your business for the better.

  Talent—the uniquely qualified minds to solve problems—can post their availability to the ledger so that firms can find them. Rather than InnoCentive, think bInnoCentive. Individuals can cultivate not only a portable identity, but also a portable résumé (an extended version of their identity) that can provide appropriate information about them to potential contractors. Think a distributed skills inventory owned by no one or everyone.

  As every business becomes a digital business, the hackathon is an important form of ideagora. Now with blockchain technology and open source code repositories, every company could provide venues to geeks and other business builders for problem solving, innovating, and creation of new business value.

  Blockchains and blockchain-based software repositories will fuel such activity. Companies can now use powerful new programming languages like the Ethereum blockchain with built-in payment systems. An excerpt from a conversation on Hacker News: “Imagine how cool it would be if I could share a guid for my repo—and then your bit client (let’s call it gitcoin, or maybe just bit) can fetch new commits from a distributed block chain (essentially the git log). Github is no longer an intermediary or a single point of failure. Private repo? Don’t share the guid.”36

  How cool indeed! (Well, maybe you didn’t understand one iota of that little piece of coolness, but you probably get the idea.)

  6. Blockchain Makers

  Manufacturing-intensive industries can give rise to planetary ecosystems for sourcing, designing, and building physical goods, marking a new phase of peer production. It’s about making it on the blockchain. Just as a modern aircraft has been described as “a bunch of parts flying in formation,” companies in most industries are tending to disaggregate into networks of suppliers and partners. Three-dimensional printing will move manufacturing closer to the user, bringing new life to mass customization. Soon, data and rights holders can store metadata about any substance from human cells to powered aluminum on the blockchain, in turn opening up the limits of corporate manufacturing.

  This technology is also a powerful monitor of the provenance of goods and their movement throughout a supply network. Consider an industry close to all our hearts (and other body parts)—the food industry. Today your local grocery store may claim—and truly believe—that its beef is safe, raised humanely, fed quality ingredients, and given no unnecessary drugs. But it can’t guarantee it. No one keeps histories of single cows; bad things happen to good bovines. We trust our hamburger with no means to verify. Usually it makes no difference; billions and billions keep getting served. But once in a while, we get a glimpse of mad cow disease.

  The food industry could store on the blockchain not just the number of every steer, but of every cut of meat, potentially linked to its DNA. Three-dimensional search abilities could enable comprehensive tracking of livestock and poultry so that users could link an animal’s identity to its history. Using sophisticated (but relatively simple to use) DNA-based technologies and smart database management, even the largest meat producers could guarantee quality and safety. Imagine how these data might expedite lab tests and a community health response to a crisis.

  Knowing how our food was raised or grown is not a radical idea. Our ancestors bought supplies at local markets or from retailers who sourced products locally. If they didn’t like how a local rancher treated his cattle, they didn’t buy his beef. But transportation and refrigeration have estranged us from our foodstuffs. We’ve lost the values of the old food chain.

  We could restore these values. We could lead the world in developing a modern, industrialized, open food system with down-to-earth family farm values. Transparency lets companies with superior practices differentiate themselves. The brand could evolve from the marketing notion of a trustmark—something that customers believe in because it’s familiar—into a relationship based on transparency. Surely food producers have an appetite for that.37

  7. The Enterprise Collaborators

  Yochai Benkler spoke about how blockchain technology could facilitate peer-to-peer collaboration within firms, and between firms and peers of all sorts. “I’m excited about the idea that you have a fully distributed mechanism for accounting, for actions, and for digital resources across anything; whether it’s currency, whether it’s social relations and exchange, or whether its an organization.”38

  Today, commercial collaboration tools are beginning to change the nature of knowledge work and management inside organizations.39 Product
s like Jive, IBM Connections, Salesforce Chatter, Cisco Quad, Microsoft Yammer, Google Apps for Work, and Facebook at Work are being used to improve performance and foster innovation. Social software will become a vital tool for transforming virtually every part of business operations, from product development to human resources, marketing, customer service, and sales—in a sense the new operating system for the twenty-first-century organization.

  But there are clear limitations to today’s suites of tools, and the blockchain takes these technologies to the next level. Existing vendors will either face disruption or embrace blockchain technologies to deliver much deeper capability to their customers.

  What would a blockchain social network for the firm look like? Think Facebook for the corporation (or simply an alternative to Facebook for you). Because several companies are working on this, we can flash-forward a year or two and here’s what we get:

  Every user has a multifaceted wallet, a sort of portal into the decentralized online world. Think a portable personal profile, a persona or identity that you own. Unlike your Facebook profile, the wallet has diverse functions and stores many kinds of personal and professional data and valuables including money. It is also private to you and you share only what you want. You have pairs of public-private keys that serve to anchor your persistent digital ID. While multiple personas can be housed in the wallet for each person or company, let’s assume that a wallet holds a single canonical persona anchored in a single key pair. A publishing system delivers a stream of information that you or your firm will happily pay for—a colleague’s patch of new code, a summary of a conversation with a new client, or—with the client’s permission—a tape recording of a call, a Twitter feed from a conference that you couldn’t attend, live stream of a client’s use of your new product, photographs of your competitors’ booths at an industry expo, a Prezi presentation that seems to be closing new business, a video how-to of something a colleague just invented, assistance in completing a patent application, or anything else that you value.