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How blockchains present the opportunity to rewire the economic power grid

Kenny MacIver — July 2016

While the first wave of the internet never fulfilled on its promise of distributing wealth and power more evenly, the arrival of blockchain offers another “kick at the can,” argues tech sector maven Don Tapscott.

“Once again the technology genie has been released from the bottle, summoned at an uncertain and difficult time in human history.”

Like many other witnesses to the early years of the web, Don Tapscott now realizes he was perhaps overly optimistic about the new medium’s potential to “democratized economies.” However, with the new wave of blockchain technology the opportunity arises again — and, because this time the promise is built around the movement of value rather than simply information, the opportunity is much more tangible.

“Blockchains give us another kick at the can, to rewrite the economic power grid and to create a much more egalitarian and prosperous society,” he says. “But only if we will it.”
Unflat earth

Looking back at his analysis of the transformational potential of the internet in his 1994 bestseller The Digital Economy, Tapscott says: “The sense was that unlike old technologies that were centralized, broadcast, controlled by powerful forces with everyone a passive recipient, the internet and the information web was distributed, one to one, many to many, not controllable and with an awesome neutrality.” The feeling was that “if we do this right it will create a much more democratized economy,” he says. “Value and reputation would derive from quality of contribution, not status. The world would be flatter, more meritocratic, more flexible and more fluid.”

“But that did not occur,” Tapscott acknowledges in his latest book, Blockchain Revolution. And for a very fundamental reason. “This wonderful, distributed internet of information got laid on top of a society that is anything but distributed and, as a result, the benefits became asymmetrical and powerful forces captured the bulk.”

The upshot is all too evident across the developed world where prosperity is now declining for the first time in modern history for the average family. “It is not just failing to get ahead, it is actually slip-sliding away,” Tapscott says.

“Thoughtful people everywhere are trying to understand the implications of a protocol that will enable mere mortals to manufacture trust. This has never happened before.”

There is another determing factor: the fact that the first era of the internet was restricted to the movement of information and not value. “The internet of information was great but it did have a big weakness. You couldn’t store, move, transact value without a powerful intermediary like a bank or government agency — and that’s what blockchains solve.” (See From the internet of information to the internet of value for more details on the power of blockchains.)

“Today thoughtful people everywhere are trying to understand the implications of a protocol that is the foundation of a growing number of global distributed ledgers (blockchains) and which enables mere mortals to manufacture trust through clever code. This has never happened before — trusted transactions directly between two or more parties, authenticated by mass collaboration and powered by collective self-interests, rather than by large corporations motivated by profit.”

“Now, with blockchain technology, a world of new possibilities has opened up to reverse all these trends. We now have a true peer-to-peer platform that enables many exciting new things. We can each own our identities and our personal data. We can do transactions — creating and exchanging value — without powerful intermediaries acting as arbiters of money and information. We can protect our privacy and monetize our own information. We can ensure creators are compensated for their intellectual property.”

And that has the potential to rebalance economic power, he maintains. “Rather than trying to solve the problem of growing social inequality through the redistribution of wealth only, we can start to change the way wealth is distributed — how it is created in the first place, as people everywhere from farmers to musicians can share more fully, a priori, in the wealth they create. The sky does seem to be the limit.”

 

 • Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World by Don Tapscott and Alex Tapscott is out now.

 

• Photography: Emmanuel Fradin

First published
July 2016
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About: Don Tapscott
An authority on the social and economic impact of digital technology, Don Tapscott is a business author, strategist and management school lecturer whose bestsellers have included The Digital Economy, Paradigm Shift and Growing Up Digital. His latest work predicts that the blockchain technology will fundamentally change the internet.

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