Don and Alex Tapscott | Leading a Revolution in Blockchain

Hey everybody and welcome to AQ's Blog & Grill We're really excited and frankly honored today to have two guests

These guys have just published a new book It's called "Blockchain Revolution" and I've got to tell you if you're not paying attention to this you're in trouble Blockchain is something that is happening right now and it's just going to keep happening and Don Tapscott and Alex Tapscott have written a fabulous book on helping us understand what some of the implications and opportunities that may be involved in the blockchain revolution So welcome Don It's great to be here

And welcome Alex Delighted We have Alex on audio and Don on video and audio so onward we go Now in charge of Internet security here at AQ's Blog & Grill, they were a little bit concerned about you know there's a lot of people doing imposter type things online and this isn't healthy So the guys at security added this, wanted me to double check

This is the photo that they came up with of Don Tapscott So we have to do just a quick comparison here Wow I see though, I see that Tapscott look in the eyes I think we can verify that this is indeed Don Tapscott now surely you must remember when you ran for mayor of Edmonton when this was originally –

I do Thankfully for the citizens of Edmonton and for me, I did not win Well you've done pretty well since so that's a good thing Don has authored or co-authored over a dozen bestsellers and now including "Blockchain Revolution", this is going to be a big one His co-author is Alex Tapscott who is the founder and CEO of Northwest Passages Ventures and they've put this put book together

So guys just give us a 30,000-foot perspective on what is this blockchain thing? What's happening here? We're convinced that this is nothing less than the second generation of the internet That we've had the internet of information going back, pre-dating that photo and now we're getting the internet of value Right And that the most important important technologies for companies, governments, for that matter the economy and society are not the social web or big data or mobility or the cloud or even machine learning and artificial intelligence It's the blockchain

And essentially what this internet of information, when you share some information with somebody, you're actually not sending them the information; you're sending them a copy And that's great generally But it's not so great when you start to talk about digital assets that are owned by someone and that might have some kind of commercial or other value And if I, Alan, send you some money it's really important that I no longer have the money And this has been called the double spend problem by cryptographers for a long time

I don't know, Alex, do you want to add on to that? The one thing I'll add is only that because we don't have a native digital medium for value the way we have for information and because there's no way of guaranteeing when we send an asset that it doesn't leave a paper trail or bread crumb trail, as Don mentioned, we rely on intermediaries like banks, like governments, like big technology firms like Apple and Google And these intermediaries perform really important functions in business online Which is simply to establish trust, to verify the identity of parties, to perform the transaction logic which is the processing and settlement and clearing of transactions and to keep records And generally these intermediaries do an okay job but with some pretty significant limitations For one they are all centralized and anything that centralized is vulnerable to attack or hacking or failure

And they capture our data, not only preventing us from monetizing it but also potentially undermining our privacy They exclude a lot of people from the global economy There are two-and-a-half billion people in the world who don't have access to financial services They slow things down Like when you go to Starbucks and tap your card reader you think it's instant but it's actually going through this elaborate system of intermediaries

In some they capture an asymetric amount of the value of global economy So what we have here is finally an opportunity with a brand new technology platform for at two or more parties to transact or do business to move, store and manage literally anything of value, as Don mentioned Not just money and financial assets but potentially intellectual property, titles and deeds, even things like votes or identity or whole companies in a secure and private manner without the need for an intermediary And that is a profound and important innovation that is going to have huge implications for business and for society That's going to change business models dramatically

I mean it's not just re-engineering business models You might have to re-imagine your whole way of doing business Well that's right And I'll just start and then I'll let Don jump into this To be sure it will have a huge impact on financial services

In fact we argue in the book that in less than a decade the entire industry will be virtually unrecognizable and every single part of that industry will be turned on its head for the better But it doesn't stop at financial services, and it will actually impact the architecture of our institutions like the company Don, do you have anything to add to that? Well it's just that as we speak, theory is becoming reality And in the book we talk about a whole bunch of new business models that can be adopted by every company and every industry and we also probe the edges of the frontier proposing real radical new ways of orchestrating capability in society that innovate goods and services to create wealth and to create prosperity And one of them we called "distributed autonomous enterprise"

And this is basically a company that shareholders that fund it through a crowd-funding campaign but it has no real management It's basically software and the software is given clear instructions and certain principles and they're intelligent agents and smart contracts on a blockchain that enable all of this to work And we struggled with whether or not to include such a radical idea and we decided what the heck We need to really push people The day the book comes out an organization called The Distributed Autonomous Organization is launched and it has no people

It's purely software on a blockchain and its first job was to go and raise money For twelve days – I haven't looked today – the last time I looked it was over $145 million US dollars That this thing had raised And you know this thing is going to go over $200 million at the current rate

A company that's done the largest crowd funding campaign in history with no investment bankers and with no people inside with no commission fees So buckle up It's going to be a really interesting time to be in business Yeah no kidding Now Alex you come from the investment banking world

How do you think your colleagues from that sector are going to react to this when you get a crowd funding for over $140 million in the first two weeks? I mean how can this happen? During our research when I started this not a single bank had woken up to this opportunity and now virtually every single company in the entire industry is investing heavily because they recognize that this is going to impact them And there have been many reports by banks like Santander who have said that banks can cut $20 billion from their expense line just by moving stock settlements to this platform and that's one tiny fraction of what they do What banks really should be asking themselves is how does this technology impact my role as a trusted intermediary if trust can be syndicated or synthesized through technology then does that not make me less relevant in many different areas So there are certain parts of what banks do where they act as intermediary that simply will not exist in the future Now that doesn't mean there aren't opportunities, but banks need to not think about what they do now and think about what they could do in the future by using this technology

Which is to say maybe this technology can allow me to do the impossible, and I'll give you one example NASDAQ is currently working with technology firms in Silicon Valley to turn the energy that's created through distributed power grids, the solar panels that people keep on their rooves, into tradable assets where you can buy and sell power or you can negotiate price peer to peer without having to go through a central intermediary like a regulated utility That's talking about a thing of value It is an asset, a digital asset, that's had no medium really to enable people to trade it and now they've decided to create that So maybe NASDAQ's future is in the power market not in the stock market

Right Which again is that re-architecture and re-imagining as opposed to just adjusting or heaven forbid re-engineering So it's a classic dilemma, the innovator's dilemma, how quickly do you cannibalize your own business or how quickly do you innovate from within? Yeah We'd argue that these banks are sitting on a burning platform where the cost of staying put is greater than the cost of moving And they ought to embrace change otherwise they'll find themselves out of a job in many different areas

Okay so Alex I think it might have been you in the book and maybe in an interview said that blockchain doesn't eliminate jobs as much as it changes the definition of work Can you guys unpack that for us a little bit? I know the banks are looking at cutting costs but how do we redefine work connected to the blockchain? There will clearly be a lot of jobs from the old economy that are eliminated by this technology That's unquestionable And there's no evidence to suggest that there will be new industries, new job types created that will be commensurate with the ones that are lost So this is a bit of a problem

To say the least Because structural unemployment especially for youth unless we do something about it Unless we redefine what work is That's a powder keg So what we argue in the book is that likely we are going to need a new social contract in society, a new understanding between all of the players about who does what and who gets what

We did this before when we went from agrarian feudalism to industrial pastoralism Now this is not at the core of the book The book is really a handbook for people who want to bring about change with the second generation of the internet But business can't succeed in a world that's failing and towards the end of the book we do talk about some of these broader issues about what is to be done to ensure that this second era of the internet is an era where the promise is fulfilled Right, okay

Now will the blockchain revolution and you guys aren't talking about the blockchain evolution You're talking about the revolution Is it actually going to make the sharing economy come true? Well, the sharing economy is one of those terms used to describe a new breed of corporations like Lift and Uber and Airbnb but it really has, those companies really have nothing to do with sharing as we see it They're not sharing economy companies, their aggregation economy companies Consider the fact that Uber's created $65 billion of value and nobody who has participated in that platform as a user or as a driver has seen any amount or any part of that

So what if you could create a new kind of Uber, a super Uber, that ran as a distributed application on the blockchain, where the interface and the user experience was indistinguishable from Uber Blockchains like Ethereum, Bitcoin and others have a native payment system so the transaction could happen on a peer-to-peer basis without having to rely on a financial intermediary and it would get you to where you're going You know the car would have a reputation, you would have a reputation based on your past experience on this platform, which as it happens would be enshrined in the record of the truth which would mean it would be a more reliable reputation score than anything we could possibly create today Right They could also pay for insurance, pay for fuel, negotiate liability in the event of an accident or a crash and operate fully autonomously without the need for human intervention

So the net effect of that is a platform where the creators of the value get to participate in that value where the ride could potentially be more reliable, user experience more seamless and the price for consumers lower, leading to benefits to all stakeholders except for the intermediary who's been dis-intermediated Exactly so it's it's a win-win I find that quite attractive and you know I'm an entrepreneur in residence at two incubators and you know the people I'm working with should be very excited about this I think that there will be a lot of entrepreneurs who are going to like this book a lot and benefit from it There's a blockchain called Ethereum that among other things has a whole layer of software development tools that enable entrepreneurs and others, social entrepreneurs, to rapidly build apps on this platform

And I spoke at the Ethereum conference in London and I don't know, there were 600 chairs in the room and there had to be another 500 people sitting on the floor everywhere And in the room there were people developing an alternative to the music industry so that artists could actually get paid There was a group building an alternative to democracy where politicians would be accountable to the people who voted for them There had to be a dozen projects underway to dis-intermediate or otherwise transform various parts of the financial services industry And boy I haven't seen this kind of explosion of innovation in at least a couple of decades, maybe more

That's wonderful Now you guys close the book, and we'll close the interview now, the last sentences of your book: "Today's leaders cannot afford to be tomorrow's losers Too much is at stake and we need your help Please join us" So is this Alex and Don Tapscott heading towards the new future and leading the way? Well we see ourselves as well as a couple of stakeholders in this ecosystem but we're not trying to predict the future here

You know we think the future is something to be achieved, not predicted And there are a lot of ways that this revolution could fall short, could not reach its potential, could fail to create the future that we think is possible and that means that people will need to step up, you know? Technology is not a panacea for the world's problems It doesn't create prosperity any more than that it destroys privacy People create prosperity And so we're calling on all leaders in the private sector and government, entrepreneurs and developers, NGOs and citizens to you know to lead this revolution in a positive way

Because we do think that there's a lot at stake Very good Don, any last words? You know that the first generation, the internet of information did lots of great things but it did not enable us as humans somehow to create prosperity because social inequality is now growing throughout the developed world What we think happened is that this internet of information that was distributed you know, one's many and one to one, and it wasn't controlled by powerful forces and had this awesome neutrality that laid on top of a society that was anything but And it was captured, it has been captured asymmetrically by these powerful intermediaries and forces

And it's tough for me to say that I mean I wrote the bestseller about the web and business, "The Digital Economy" in '94 And what we think is happening now is that we're getting another kick at the can and if we seize the time maybe this smaller world our kids inherit will be a better one, and we can solve many of the big, intractable problems that seem so difficult to tackle because we as humanity don't have the tools to bring our collective know-how and will to bear So that's the picture of the opportunity Wow

Gentlemen, Alex, Don, thank you To our viewers, this is a great book We're going to be sharing six copies of it with you There it is right there I have my own copy

Alex and I joke that the way to buy this book is in volume In volume Of course Exponentially Exponential growth is what we're talking about here

So guys again thank you for joining us and if you're forming a movement whether you know it or not please include me because I'm right with you So thanks for your time and so long for now Thanks Alan Thanks Alan Thanks Alex AQ's Blog & Grill

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