Tapping into the wisdom of crowds

Canadian business strategist Don Tapscott believes a new technology called blockchain can spread wealth more evenly

BLOCKCHAIN REVOLUTION: HOW THE TECHNOLOGY BEHIND BITCOIN IS CHANGING MONEY, BUSINESS, AND THE WORLD

By Don Tapscott and Alex Tapscott

Portfolio Penguin, paperback/348 pages/$34.19 with GST at Books Kinokuniya or on loan from the National Library Board under the call name English 332.178 TAP -[BIZ]

From salt and shells to metal, paper and plastic, human beings have been using tokens to exchange value among themselves for at least 3,000 years.

Then, around 1993, the Internet became accessible publicly and, since then, people have exchanged an unprecedented amount of value and valuable information on it.

Blockchain has a failsafe process to authenticate all its transactions. This is done through “miners”, comprising millions of computer experts sitting at their computers all around the world, who run and maintain the blockchain.

The rub, notes the Canadian business strategist and IT trend- watcher Don Tapscott, is that all that value is now in the hands of a tiny group of powerful companies and governments, who also sometimes trade their customers' personal details for profit. This group keeps getting richer and richer, resulting in a very lopsided distribution of wealth worldwide.

Now, what if there was a way to upend such an inequitable world order, one that would create and spread wealth around more evenly?

Tapscott and his son, Alex, are convinced that one already exists, in the form of a new technology called blockchain.

The elder Tapscott has an uncanny knack for predicting what will happen next in the frenetic world of technology and made his name with bestsellers such as The Digital Economy in 1994 and Macrowikinomics in 2011.

Alex is an expert on blockchain technology.

  • Meet at the pod on Oct 26

  • This month's Big Read Meet will held be on Oct 26 in The Pod on Level 16 of the National Library Board (NLB) headquarters at 100 Victoria Street.

    This breathtaking venue is fitting as the meet's featured speaker will be Professor Helga Nowotny, ex-president of the European Research Council, who is a visiting professor at the Nanyang Technological University. The Austrian sociologist will talk about her book, The Cunning Of Uncertainty, from 6.30pm at The Pod.

    Sign up for it at any NLB e-Kiosk or go to www.nlb.gov.sg/golibrary and look for The Big Read Meet.

As Don freely admits in his many talks on blockchain, which can be viewed on YouTube, he was initially sceptical of blockchain, but has since been won over by its possibilities in transforming an Internet- enabled world hobbled by income inequality, abject pollution and states spying on their own citizens, into a kinder, gentler planet.

Blockchain, whose very name would turn most people off, is an online ledger, or accounting book, that anyone can view any time, by downloading some free software to do so. Those who deal through this online ledger need not reveal full details of their identity, but just enough to see a deal through.

That is because blockchain has a failsafe process to authenticate all its transactions. This is done through "miners", comprising millions of computer experts sitting at their computers all around the world, who run and maintain the blockchain. That means there is no single, centralised body controlling blockchain, not even a central bank.

The miners capture all transactions happening within the ledger every 10 minutes and records them in a list, called a block. A series of such lists is known as a chain, hence the term blockchain.

The miners' job is to verify, or confirm, each list in the ledger. They do so by trying to solve a complex puzzle. The first miner to crack the code authenticates the transaction. He is then paid a small fee for his effort, likely in bitcoin, the virtual currency introduced in 2009 by the mysterious Satoshi Nakamoto.

The miners also have to record the transactions they have verified into the ledger, which anyone can view and track. It is, if you like, the wisdom of crowds writ large.

As Don says: "It's an awesome neutrality."

The Tapscotts have devoted three-quarters of this book to exploring blockchain's possibilities to make the world a better place. They interviewed 100 people at the forefront of technology and social enterprise, and learnt that, among many other things, blockchain can ensure that donations go directly to earthquake victims, bypassing corrupt agencies. Farmers and fishermen might finally get fairer prices for their toil if shoppers paid them directly for their produce.

So, blockchains do away with middlemen.

Of course, you might wonder: What if these miners all gang up and take down the entire system?

Well, say the Tapscotts, that is "practically unfeasible" because they would have to hack into every single block of data within the blockchain to do so, a process akin to rubbing out the entire history of commerce.

Now, here is the rub: Once a deal is recorded on this online ledger, it cannot be suspended, reversed, cancelled, disputed or otherwise changed. That is the flip side to iron-clad integrity.

To gain a grip quickly on what blockchain is and what it can do, you would do well to go right to Chapter 10, where the Tapscotts have an exhaustive litany of Don'ts for those keen to ride on blockchain.

Their list, which takes up the entire Chapter 10, is daunting. Among other concerns, running blockchains burn enormous amounts of energy, as much as the entire energy consumption of Cyprus, by some estimates.

Also, blockchains will wipe out the jobs of many intermediaries, even as the process of verifying transactions might be too slow for many customers.

But kudos to the Tapscotts for not fudging the challenges or sweeping them under the carpet.

All told, however much blockchain technology might change the world, it is merely a means to exchange value and so humanity would have to accept blockchain as a form of payment before it can work. This book's most valuable contribution to the reader is, perhaps, to warn you of blockchain, so that everyone can evaluate it with his eyes wide open.


FIVE QUESTIONS THIS BOOK ANSWERS

1 Why should people change the way they pay others and store value?

2 What is so bad about the ways in which people do business today?

3 What is the second- generation Internet likely to be?

4 What leadership would be most effective in future?

5 How might governments create more wealth for their people?


Just a minute

THE GOOD

1. Canadian business strategist Don Tapscott was initially sceptical about the promises of blockchain technology in which the public can view and track transactions in virtual currency such as bitcoin.

His son, Alex, is an expert in blockchain and helped him come around to the idea. The reader benefits from the elder Tapscott's initial doubts because that has led him to troubleshoot the perils of blockchain before giving it his vote of confidence. I would recommend that you go straight to Chapter 10, in which he scrutinises the hurdles to adopting blockchain technology.

2. They did 100 interviews for this book, with a cross-section of stakeholders in the future economy, as well as critics of it. Such legwork has resulted in a narrative brimming with hope as well as bristling with caution, which makes a dry subject like technology engaging.

3. The Tapscotts argue for and against blockchain technology in a lucid way. Don Tapscott, in particular, is among the foremost interpreters of hard-to-grasp IT trends of our age. Their tone is warm and trusting throughout, which is crucial for understanding a subject this complex. At one point, they say they make no apologies for using jargon in their descriptions, so as to be accurate. Even so, the reader will not huff or stumble over the smattering of geekspeak in their narrative.

4. Lawyers and regulators will find this book instructive in approaching disruptive technologies. One of the Tapscotts' interviewees, law professor Joshua Fairfield of the Washington and Lee University, says: "The courts have already started to get it wrong, applying intellectual property rules to anything that is intangible." There is, he stresses, no intellectual property element in online elements, so for now, governments and lawyers are barking up the wrong tree.

THE BAD

1. This book is crying out for a diagram or two to explain blockchain's complex structure and processes. I appreciate that the "virtual" in virtual currency means something unseen like air. But though it is run largely by computers, these are still operated by people and the Tapscotts could have illustrated how everyone connects with, and supports, everyone else in a blockchain.

THE IFFY

1. There is a howler of an anecdote in the book. It comes from an interviewee who says a robot would need a nose as sensitive as a human's if it is to be trusted to buy fresh milk from a supermarket. Has that interviewee not heard of stamped expiry dates on dairy cartons? Which raises the question: How closely were the Tapscotts listening to their interviewees?

A version of this article appeared in the print edition of The Sunday Times on October 02, 2016, with the headline 'Tapping into the wisdom of crowds'. Print Edition | Subscribe