Blockchain Revolution (updated)

by Don Tapscott

  Questions persist over how much new leadership will come from the old Internet governance community. Vint Cerf, who coinvented the Internet itself and led the creation of the Internet Society and the Internet Engineering Task Force, which has created virtually all the important Internet standards, suggested that a good starting point for blockchain would be to create a BOF (Birds of a Feather) interest group within the IETF.56 Initially, many organizations involved in Internet governance viewed digital currencies and blockchain technologies as outside their purview, but that is changing. The World Wide Web Consortium, W3C, has made Web payments a priority, and blockchain is central to that discussion.57 Additionally, the Internet Governance Forum (IGF) has hosted sessions about blockchain and bitcoin, where participants have explored new decentralized governance frameworks enabled by this technology.58 Boundaries between old and new are fluid, and many leaders in the Internet governance network, such as Pindar Wong, the Internet pioneer, former vice-chair of ICANN and trustee of the Internet Society, have been the most effective leaders in blockchain governance as well.59

  What does the new governance network look like? There are ten types of GSNs. Each involves some combination of companies, governments, NGOs, academics, developers, and individuals. None of them are controlled by states or state-based institutions like the UN, IMF, World Bank, or the G8. All will play an important role in the leadership and governance of blockchain technology.

  1. Knowledge Networks

  The primary function of knowledge networks is to develop new thinking, research, ideas, and policies that can help solve global problems. More informed and savvy users can better protect themselves from fraud and theft and protect their privacy. They can also realize the full value of this disruptive technology, creating opportunities for a greater share in global prosperity and greater financial connectivity.60 Knowledge networks must foster a culture of openness and inclusion, be transparent, and involve multiple stakeholders.

  Blockchain Implications: Knowledge networks are the origination points for disseminating new ideas to other GSNs and the broader world. They are the key to avoiding pitfalls and showstoppers. Knowledge will prepare stakeholders to advocate more effectively, create or cocreate policy, and spread critical information to users. Knowledge sharing instigates a fruitful dialogue with government. According to Jerry Brito of Coin Center, whatever the particular policy issue is, if governments “don’t understand the technology and don’t understand the implications, they’re setting themselves up for failure.”61 Many voice the need to create spaces for ideas and information to be shared and debated. “There should be a forum to present proposals or ideas,” Tyler Winklevoss said.62 MIT’s Digital Currency Initiative is a leading knowledge network, trying to unite and excite academics and universities globally. Below the radar, informal meetups, like the San Francisco developer meetup and the New York developer meetup, are also making knowledge a priority. Blockchainworkshops.org is another group that has convened stakeholders to spread knowledge and key lessons. Reddit, the online forum and community, is also a breeding ground for new knowledge in the space.

  2. Delivery Networks

  This class of networks actually delivers the change it seeks, supplementing or even bypassing the efforts of traditional institutions. For example, ICANN performs an essential role in the Internet governance network, delivering solutions in the form of domain names.

  Blockchain Implications: How do we ensure that the incentives are adequate for distributed mass collaboration, making the technology ready for prime time? We will likely have an “ICANN moment” for blockchain, where organizations will form to deliver essential functions. However, whereas ICANN and many other GSN types in the Internet governance network are distinctly American, blockchain leaders should push to make these organizations international. Joichi Ito said, “I do think there’s already a big push to make governance non-American and international from the beginning because that’s one thing we learned from ICANN, that it’s hard to get out from under America once you get started as part of America.”63 The Coalition for Automated Legal Applications (COALA) is a global organization that performs a few key roles: It disseminates knowledge, influences policy, and advocates for blockchain technology, and supports the development and deployment of blockchain-based applications, all critical to overcoming major potential showstoppers.64

  3. Policy Networks

  Sometimes networks create government policy, even though they may consist of nongovernmental players. Policy networks support policy development or create an alternative for policy, whether governments support them or not. The goal of policy networks is not to wrest control of the policy-making process from governments. Instead, their goal is to turn decision making from the traditional hierarchical broadcast model to one of consultation and collaboration.

  Blockchain Implications: Today, a nascent policy network is emerging. Coin Center, a not-for-profit policy group in Washington, D.C., focuses on five core verticals: innovation, consumer protection, privacy, licensing, and AML/KYC (anti–money laundering/know your customer). The Chamber of Digital Commerce, a trade organization, focuses on promoting the acceptance and use of digital currencies.65 The United Kingdom has its own Digital Currency Association, as do Australia and Canada, that speaks for industry. With the hiring of John Collins, a former senior adviser to the U.S. government, Coinbase became the first company to install a permanent policy advocate.66 Promoting and uniting many strong voices in the policy arena will ensure that blockchain has a better chance of fulfilling its potential. For example, we know mining consumes a lot of energy and that climate change is a big problem. Responsible policy will go a long way toward building a sustainable future, and government can’t do it alone.

  4. Advocacy Networks

  Advocacy networks seek to change the agenda or policies of governments, corporations, and other institutions. The Internet has lowered the cost of collaboration, and today the world is witnessing the dramatic rise of increasingly powerful advocacy networks that are more global, widely distributed, and technologically sophisticated than anything we’ve seen.

  Blockchain Implications: Advocacy networks arise with the disillusionment with traditional political and civic institutions, making them a logical fit for the blockchain community, which is trying to upend how those traditional institutions solve problems. However, in these early days, advocacy networks must work with government as a partner. Advocacy networks are closely tied to policy networks, so it’s unsurprising that Coin Center and the Chamber of Digital Commerce are taking the lead in this area. We could also include here COALA, MIT’s Digital Currency Initiative, and others. Advocacy is critical to scaling blockchain technology. In the absence of strong advocates who stand up for stakeholders and stakeholder rights, governments and other powerful institutions could try to stifle, twist, or usurp this powerful open network to their exclusive advantage, another dangerous potential showstopper.

  5. Watchdog Networks

  These networks scrutinize institutions to ensure that they behave appropriately. Topics range from human rights, corruption, and the environment to financial services. In the process, they drive public debate, boost transparency, and ignite movements for change. The role of watchdogs is inherently intertwined with that of advocacy networks and policy networks. Policy networks collaborate with government to shape policy that works. Watchdogs ensure that industry complies with policies and effectively monitors and enforces compliance. Governments that abuse the public trust can also be scrutinized and held accountable.

  Blockchain Implications: The Blockchain Alliance is a partnership between law enforcement, NGOs, trade organizations, and the private sector and is the first true advocacy network to form in the space. Coin Center and the Chamber of Digital Commerce, with support from BitFury, Bitfinex, BitGo, Bitnet, Bitstamp, Blockchain, Circle, Coinbase, and others, have partnered with law enforcement agencies such as the U.S. Justice Department, the FBI, the Secret Service, and the D
epartment of Homeland Security. As we highlighted in the previous chapter, blockchain being co-opted by criminals on a widespread scale is a showstopper. These watchdogs have an important advocacy role as well. In the aftermath of the Paris terrorist attacks, some European lawmakers, regulators, and law enforcement blamed bitcoin as the source of terrorism financing. The Blockchain Alliance called for patience: Let’s not regulate out of fear,67 they said. As of this writing, we don’t know how effective they were, but surely in their absence things would have turned out worse, with government approaching the job unilaterally. Other than the self-policing role of community members who convene, collaborate, and debate on forums and on Reddit, few other watchdog networks have stepped up. Partnerships with law enforcement are a helpful start, but the blockchain ecosystem needs fully independent organizations, perhaps like traditional watchdogs such as Amnesty International and Human Rights Watch, to monitor governments, corporations, and other large institutions. Otherwise, we risk falling victim to another showstopper: that blockchain becomes a new and powerful surveillance tool used by corrupt and unscrupulous governments.

  6. Platforms

  The digital age allowed organizations to be much more than closed, siloed institutions; they can also be platforms for value creation, innovation, and global problem solving. Organizations like Change.org empower individuals to initiate campaigns in support of social causes from human rights to climate change. A “petition platform” harnesses the collective force of millions of people and catalyzes their passion into lasting impact. Open data platforms can apply to many issues—from climate change to the blockchain.68

  Blockchain Implications: As blockchain technology gains in systemic importance, stakeholders must aggregate and scrutinize data. The bitcoin blockchain may be radically open, transparent, and reconcilable, but closed blockchains used in everything from financial services to the Internet of Things might not be. Imagine a platform that allowed regular citizens to aggregate and scrutinize data, proving a strong bulwark against creeping showstoppers of scalability, government encroachment, or unsustainable energy use. They would enable watchdogs and advocates among us to hold institutions and corporations more accountable and drive constructive discussion.

  7. Standards Networks

  Standards networks are non-state-based organizations that develop technical specifications and standards for virtually anything, including standards for the Internet itself. They determine the standards that form the fundamental building blocks for product development and allow a promising innovation to make the leap to mass adoption. For global standards networks to work, they must engage the expertise of individuals, institutions, civil society organizations, and, most of all, private sector enterprise. The Internet Engineering Task Force, one of the primary standards bodies for the Internet governance network, excels at incorporating the many views of diverse stakeholders.

  Blockchain Implications: Originally, the Bitcoin Foundation funded development of the bitcoin core protocol, the common standards used by the community. However, the near-collapse of the foundation (precipitated by mismanagement and waste) proved the need for networked governance solutions. Recognizing the profound importance of this technology and the need for careful stewardship and nurturing, MIT created the Digital Currency Initiative, which has since bankrolled the bitcoin core developers so they can continue their work. “We stepped in immediately and provided them with positions at the MIT media lab, so they could continue to independently work on supporting the core development of bitcoin,” said Brian Forde.69 For the core developers, their ability to work autonomously was central to the design.

  Gavin Andresen is among the core developers working at MIT. He believes leadership is required to move the agenda forward on common standards, such as the much-debated block-size question. “Maybe you can design light socket set waves by committee, but you can’t design software standards that way,” he suggested. Pointing to the early days of the Web, Andresen said, “The Internet model shows that you can have technologies where consensus does arise, even though there’s no one clear leader,” but that “you can either have a person or a process that ends in a person. You definitely need one or the other.”70 Consensus mechanisms alone can’t support standards developments.

  Scalingbitcoin.org is an organization that convenes engineers and academics to address major technical issues, including standards questions. Pindar Wong, who chairs the planning committee for Scalingbitcoin.org (among his many other important leadership roles), has been a key leader in convening key stakeholders and clearing technical logjams in the sector. In financial services, both R3 and the Hyperledger Project are tackling critical standards issues. Invariably, there will have to be standards networks on a variety of things, from the blockchain protocol that forms the basis of the financial services industry of the future, to common standards for privacy and payments in the Internet of Things.

  While each of these groups attacks the problem from different angles and with different agendas, each shares a common goal to make this technology ready for prime time—by building infrastructure, developing standards, and making it scalable.

  8. Networked Institutions

  Some networks provide such a wide range of capabilities that we describe them as “networked institutions.” They are not state-based but true multistakeholder networks. The value they generate can range from knowledge, advocacy, and policy to actual delivery of solutions.

  Blockchain Implications: The World Economic Forum (WEF), a leading networked institution, has been a vocal proponent of blockchain technology. The blockchain was front and center at Davos in January 2016. Jesse McWaters, financial innovation lead at the WEF, believes blockchain technology is a general-purpose technology, like the Internet, which we can use to make markets radically more efficient and improve access to financial services. The WEF predicted that within a decade, we could store 10 percent of global GDP on blockchains.71 As an organization, the WEF has championed and advanced big issues, such as income inequality, climate change, and even remittances. Other networked institutions, from the smallest groups to the biggest foundations in the world, such as the Clinton Foundation and the Bill and Melinda Gates Foundation, would be wise to champion this technology to advance such big issues as financial inclusion and health care delivery. Networked institutions often have a role to play in influencing government policy making, making them a critical link and strategic partner in overcoming a number of major showstoppers.

  9. Diasporas

  Diasporas are global communities formed by people dispersed from their ancestral lands and united by culture and identity with their homeland. Thanks to the Internet, these people and affiliated organizations can collaborate in multistakeholder networks. One of the functions of many of today’s diasporas is to address and help solve common global problems.

  Blockchain Implications: Diasporas are critical to blockchain’s future. For one, blockchain makes the process of sending remittances simple and affordable. Far from being a job killer, blockchain actually creates time and resources for these people to pursue other wage-earning opportunities or entrepreneurial endeavors. While a few companies have originated in places such as the Philippines and Kenya, diasporas must do more to accelerate knowledge, adoption, and acceptance of blockchain payment methods. Today, the majority of companies targeting the opportunity, such as Abra and Paycase, are U.S., U.K., Canada, or China based.

  10. Governance Networks

  The blockchain governance network will combine all the features and attributes of the nine other GSN types. Ultimately, a blockchain governance network should strive to be inclusive and welcome participation from all relevant stakeholder groups. The network should be a meritocracy, meaning that the community would champion viable proposals regardless of the rank and status of the proposer. The network should be transparent, releasing all of its data, documentation, and meeting minutes for public scrutiny. Finally, decisions should be reached, as much as possible, by cons
ensus in order to gain legitimacy for the outcomes.

  A NEW AGENDA FOR THE NEXT DIGITAL AGE

  A blockchain governance network is critical to stewardship of this global resource. But how can we ensure that this next generation of the Internet fulfills its promise?

  The next era of the digital age is delivering unlimited possibilities, significant dangers, unknown roadblocks, formidable challenges, and a future that is far from certain. Technology, especially the distributed kind, creates opportunities for everyone, but inexorably humans determine the outcome. In the words of Constance Choi, “This technology holds both promise and peril. It’s how we wield it.”72 As this chapter has discussed, there is a role for everyone to play in achieving the new promise of the digital age.

  In previous epochal transitions, societies took action to implement new understandings, laws, and institutions. These transformations of civilization took time, usually centuries, and were often punctuated by strife or even revolutions.

  Today the situation is different. Change is happening infinitely faster. More important, Moore’s law indicates that the rate of change is accelerating exponentially. We’re moving to the proverbial “second half of the chessboard” where exponential growth upon exponential growth creates the incomprehensible.73 The upshot is that our regulatory and policy infrastructures are woefully inadequate and adapting too slowly or not at all to the requirements of the digital age. The disruptions of today are moving so fast they are getting beyond the capacity of individuals and institutions to comprehend them, let alone manage their impact. Our democratic institutions and instruments were designed for the industrial age—in fact they originated precisely in the transformation from agrarian feudal societies into industrial capitalist states.

  How can we accelerate the human transformation required to keep pace with accelerating technological innovation and disruption? How can we avoid massive social dislocation, or worse? Lest we be accused of being technology determinists or utopians, may we propose that it’s time for a new social contract for the digital age. Governments, the private sector, the civil society, and individuals need to collaborate to forge new common understandings.