How Blockchain Technology Can Help us Achieve Prosperity

Transcript

[Music] something you might not know about Canada hi I'm Don Tapscott and before the break I promised to tell you about the digital office in the 1970s the coolest decade of all time the office was full of strange things like typewriters dictaphones adding machines and mimeographs telephones were connected to a wire so people could only

reach you when you were in the office God I missed that not now in 1978 the Canadian company Bell Northern research wondered what would happen if every desk had a computer on it connected to a vast inter Network their incredibly handsome staff created an office that used crazy things like email word processing texting and document management then being our pitted the computerized workers against the computerless old school test group this first ever controlled experiment proved that the digital workers were more efficient Innovative and effective and they had

more fun too and within only 15 years office workers across the globe were playing electronic soliter and watching cat videos to their heart's content and that's something you might not know about Canada um I'm I'm delighted to be here and I really mean that and uh because I think in this room is the future of many many hopeful things uh not just for the global economy but for civilization so it's my honor uh to be here I wrote a book in 191 about that 1981 about that experience and I argued the computers

were becoming Communications tools and everyone was going to use one um unfortunately my mother bought most of the copies of the book it was like a study and bad timing but uh I finally did write a book that somebody read and uh was the digital economy and it was uh the first bestseller about the web and in rewriting the 20th anniversary edition it caused me to reflect on what's happened in the last 20 years and uh what of the promise of the digital age has been fulfilled and what Peril um has emerged and it was a very sobering experience for me so I'd like to just kind of take you through

that a little bit and set you up to understand maybe a bigger picture about why this particular event is so important and about the opportunities that you have not just to build cool businesses or to change some things but really to to be part of a a huge transformation as we move into the second era of the digital of the digital age in the book I said um this is an age of vast opport unity and all kinds of wonderful things are going to occur and of course it did but I also I also said there's a dark side and I went through eight things that could

happen I can't go through all of them today but I'll let me just describe a few of them I talked about dislocation of Labor markets old Industries and jobs disappearing I said technology could contribute to unemployment well there's a next wave of uh machine learning and automation report in the UK said will wipe out 30% of the UK Workforce in the next 25 years I said it's possible that all the data from this digital age will be captured by powerful intermediaries and forces and that they'll create a new asset class perhaps uh being greater than previous asset classes like land or um

Under The Agrarian economy or physical plant and that one upshot of that would be that we could lose our basic right to privacy and of course that's happening today we have what I call data frackers you know in oil and gas you have fracking and uh these are companies that are able to drive steam into the internet if you like and to generate all kinds of uh of of of massive uh data that they control and own now some of this is kind of cool it's a company called Data Miner that goes out onto Twitter and it analyzes tweets and it spots something a sound of an explosion it detects 1 two 3 four

pattern detected um the the uh bitstream goes to U CNN and they're on the case because they know that an explosion has occurred before anybody else now a dark side of that is that this is disrupted Capital markets because companies using data Miner can go on and find out that say home Leo Home Depot had a big uh security violation and they short the company because they know 24 hours before anybody else but the re the bigger problem is that somehow we all did a deal with these powerful social media companies to give away our data and people a friend of mine named Jeff Jarvis wrote a book called public parts

and he argues well this is great transparency is not just for individuals ual or or corporations it's for individuals and if we all give away all our data and we all just open the kimona the world will be a better place we won't cheat on our spouses and so on and I think this is not only uh foolish it's a dangerous concept because privacy is the foundation of a free society and identities need to be managed responsibly and this is a big problem uh for us all today in the digital economy I conjured up this view of of uh Orwell and Big Brothers watching you in hindsight I don't think that was the right analogy it's more

more like France Kafka and the trial you know where you're charged with something you don't know who your accuser is you don't know what the evidence against you is but all of a sudden you don't get that dream job or you can't get across the border so this is this is a a big problem thirdly I said it's possible that we we could have wealth creation but we wouldn't have prosperity and of course this is what I said back then um this is now occurring for the first time in modern history in the developed world the 51st percenti is not getting ahead it's falling behind and everywhere uh people are talking about the problem

of uh social inequality to the point that the bestselling management book and the winner of the financial times McKenzie Award for best business book last year was written essentially by a guy who's a Marxist who argues that capitalism is totally um broken and is at the heart of irreversible social inequality this is not good this is a big problem how can this be well I was talking to Tim burner Lee about this and he said it's true we have this wonderful peer-to-peer technology you may remember people like me saying yeah the old media is centralized it's one way it's it's controlled by powerful forces and

everybody out there is a passive recipient the New Media is distributed it's interactive it's one to one it's many to many it has this awesome neutrality it will be what we want it to be well says Tim this beautiful distributed platform for the communication of information not value information got laid on top of a society that's anything but and now we have asymmetrical benefit so the rich are getting richer and we've now got the these uh uh uh uh powerful data frackers that end up owning our data but also creating wealth but not Prosperity uh just another one I said I

think many governments are slow to compreh may be slow to comprehend the shift and that uh basically occurred that have governments changed fundamentally in the last 20 years I mean sure they're delivering Services electronically but the Deep structure and architecture of government is still pretty much the same so there have been some initial stuff government is a platform government's releasing raw data and creating a platform whereby the private sector Civil Society other government agencies can self-organize to create public value but it's been very limited and when it comes to democracy I argued you know we can move to a second era

democracy with the internet where the first era we had representative institutions but there was a weak public mandate and citizens were in Earth we could create a second era based on stronger representation more transparency so the big money doesn't control the Democratic process and with a culture of public deliberation and and active uh citizen Citizenship is that what's happened well um hard hardly if anything governments have used technology in a totally cynical way to reinforce existing power structures and we now have nothing less than a crisis of legitimacy of our Democratic

institutions and this is worrisome so you see the guy in the middle there I'm sad to say that's the former mayor of Toronto where I live um Rob Ford now the the problem with Rob Ford was not just that he was a crackhead criminal um who was also racist sexist homophobic and hung out with the with the low lives of of the city the problem is a lot of young people said yeah he's a total idiot and City Hall is full of crap and I'm not even going to vote and if young people turn away from democracy this is a big problem this is a Davos a couple

of years ago and I was on a uh panel on citizen engagement and I was you know I was saying we have to fix this look at the US Congress 92% of the American population wants to see background checks for firearms but Congress can't do anything about that um and I said if we don't fix this there you know more and more young people are agreeing with the bumper sticker don't vote it only encourages them and uh we're going to have a a social explosion that'll make the 1960s look like kids stuff well I get stopped by a guy in the panel who created a vas you know a AV a a z uh it's a little network with 34 million

young people who want to change the world and he says holda Don I don't get your point why is it a crisis if all around the world a new generation of young people think that our fossilized institutions of democracy are bankrupt and I'm like you know Bob Dylan there's something going on here and you don't know what what it is this is a big problem and the internet has has not contributed to solving this problem it's made it worse because politicians have basically used this technology to help them entrench power and many countries move towards a surveillance Society these are protests in the world going back to my first book in 81 um 20 years ago there were 6,000

protests last year there were 260,000 so we're in the we're moving into social explosion territory here as we told young people you work hard you stay out of trouble you be a good kid you graduate you can have a prosperous life well I'm not I'm not going to say my generation lied but I don't think we got it right so the stakes here are very very high now this is Obama we had great hope for him I learned about this when somebody said check out my Barack obama.com your book economics is one down from the homepage and he's saying yeah we believe in the economics and I'm asking you to believe not just in my

ability to bring about real change in Washington I'm asking you to believe in yours and I looked at this thing and it was like well my first reaction was I am man um but not so fast on because it turns out I'm not the man there was a a economics Community there's also a single moms for daycare community and a young firef fighter firefighters Community created a platform where by 35,000 communities self-organized that brought him to power so the next election I went to them and I said cool what are you going to do now with my Barack obama.com they said we're killing it I said why it's an opportunity to engage all these said we don't need that we got Big Data we can Target swing voters in all the states um the all the

swing States and uh they went from yes we can to we know you and then in the F yeah it worked they got elected in the next election the midterm election youth voting was the lowest in 70 years some people say maybe ever so we have a burning platform for change now uh enter into um the next era of the internet I think we're getting another kick at the can and it started um you know with Bitcoin and I confess to be uh a late a late awakened awakener on this was just a little over you know two and a

half years ago I started thinking whoa could this be the real deal could this be this thing that we've been looking for and of course the underlying technology of Bitcoin enables peer-to-peer exchange not just of information but of value that doesn't mean that we this dream of a true peer-to-peer society and a Prosperity can be created but we're getting another kick at the can and that's why what you're doing is so uh important this is not just about creating some cool businesses to me this is dealing with a world that's too unprosperous it's too unjust it's too unsustainable and it's too conflicted

and we now have an opportunity to do something about that well the economists blessed their hearts uh got involved with the cover story last last week I'm not sure they totally nailed it but uh it was it's we're moving the the uh ball forward here and of course um I'm hopeful the ball will seriously get moved forward in April when this book comes out by the way uh if you want to get this book pre-order it the very best way to do it is in massive volume Christmas is coming soon no but just really confused things um along

with a publisher they've changed the name of the book so a week from now it won't be this on Amazon it'll be called blockchain Revolution um which you know what the heck trust protocol is kind of cool I thought it was a riff off the the god protocol from Nick zabo's article of uh a very long ago but uh it will be called Revolution now of course there's a huge battle it's shaping up right will the financial services industry it's this rube gold bergian industry that you tap something in Starbucks and then this these bits flow through seven computer systems some of them being

1970s mainframes and finally like two or three days later the thing gets settled there's an obvious opportunity in R3 you know it's a coalition of 22 Banks they want to use this not to disrupt financial services but to eliminate all of that so we're all look looking at a at the same Ledger and there is no settlement the transaction occurs and it's done the settlement is zero you know milliseconds as opposed to um as opposed to three days and these are all the things that the bank Banks do now we went through and dissected all of these in the book each of these is a is a whole story talking about both the opportunity to disintermediate

traditional Financial Services institutions because that's what they do they move money they store money they they uh exchange for exchange money they account for value and so on but also how the industry could use this to transform itself so let me uh try and pull this together how long do I have by the way I'm sorry okay what does all this mean well I think this guy holds the key to everything Ronald CO's Nobel pre prizewinning economists and um 80 years ago he wrote a this he never wrote about the internet and he died before you guys really came on the scene

but 80 years ago he wrote a Nobel prizewinning paper where he asked a deceptively simple question he said why does the firm exist if Adam Smith is right the open Market's the best mechanism to determine how goods and information and money and people are allocated in an economy why don't why aren't we all independ and contractors why do we have firms and he said the answer is and he won a Nobel Prize for saying this the answer is transaction cost and he defined that broadly the cost of search he said 80 years ago the cost of finding all the right information in an open economy the right people to do something totally prohibitive so we bring it inside the boundaries of a corporation or we have

stuff like filing cabinets to get information or charts to find people and the big industrialists understood this so Henry Ford had within the boundaries of the Ford Motor Company a power plant steel mill Shipping Company Glass Factory why because the cost of transactions in an open market were greater than the cost of doing things inside the boundaries of Ford so back um back in the day 1990 we started calling this saying that the boundaries of corporations are becoming more porous and then with um the internet ver some vertically integrated companies began to bundle into Network Cisco figured this out and a network business model it's a 15-year-old diagram of the Cisco

business ecosystem Cisco figured this out and u a a network business model conferred competitive Advantage because the tonic of the market got brought to bear on all these different parts of the of the organization now with um the internet initially moving from a platform for the presentation of of content with HTML to becoming more a computational platform with you know XML soap and uddi and all this sort of lingua franka for distributed computing now with blockchain Technologies the opportunity exists to drop those transaction costs so much that we can actually start to

envisage uh radical new models of how we orchestrate capability in society to innovate to create goods and services um and to engage with the rest of the world so everyone's thinking well a big solution to the problem of social inequality is redistribution of wealth well we're probably going to have to do some of that but what if we had a different approach which was not redistribution it was distribution what if we started enabling millions and tens of millions and maybe hundreds of millions of people around the world to participate in the creation of companies they might only have $10 to contribute but they end up being owners

of a highly distributed and networked type uh Enterprise well this is uh this is pretty exciting and it holds the key to a lot of problems so uh I don't have time to tell that too bad it's a great story um so the old is Uber I love the dis the disruptive economy you know I love it somebody I was at a thing yesterday and somebody said Uber is a sharing economy company and I'm like what Uber is a $45 billion Corporation that's a service aggregator and I get my view of sharing uh from preschoolers you ask a three-year-old if I give you one of my cookies is that

sharing i k yeah that's sharing if I give you a cookie but you have to give me some money is that sharing no that's mean so what is blockchain Uber call it super uber or subber as we said in the book what does that look like well I'm sure you all know we uh actually with some uh help from Joan the consensus folks we detailed this quite a bit in the book and how does this actually work and how do transactions flow and what kind of Technology enables this to occur but it's it's not a $45 billion Corporation it's a distributed app this is all about the cre creators of value

receiving the value that they create um I was with imagin uh Heap at um at her it's actually her her son Scouts one one year birthday party a couple of nights ago in a barn somewhere outside of London and um and I mean the musicians have been getting screwed for years originally with the labels they got a small piece of the value and then the internet made it worse because it brought brought these new intermediaries in like apple and Spotify that took more of the value and the poor musicians are at the end of the food chain getting this poultry little piece well what if we had a music industry that was kind of like a distributed app and you post your

music up there and you got uh specifying the rights you want to listen to it for free cool um no problem you want to you want to remix it well here's a smart contract that governs that you want to put it into a movie you got a smart contract here and every time it plays you get a little uh uh royalty stream this holds the possibility for a 21st Century Music Industry where finally musicians can make a living um creating their music how exciting is that old Airbnb the new is B Airbnb blockchain Airbnb it's a distributed app and yeah well how about Airbnb covers Insurance okay you know for less than 1% of the total cost we

can build an insurance and marketing and all the rest and rather than Airbnb taking you know 15 or 20% off the top oh and if you're International losing another 8% through foreign exchange uh stuff anytime Western Union gets involved bad things are going to happen so um well now that we're on that uh how about anal Domingo um that's a great story in the book Filipino nanny who uh used to get on a bus for two hours every month to go pay her remittances Western Union to take roughly 10% of her $200 and it takes three to six days to get

there um now U using Abra it happens in a millisecond and um and it costs her like half a percent so this is pretty cool how about do you know that 70% of land in the world if you own a little piece of land somewhere and you have a piece of paper that's uh threatened because you can have a little piece of paper saying I own this little house in Honduras and some dictator comes in and says no you don't Central computer system says my friends own it well so using uh factum uh now we're putting land Registries on the blockchain good luck dictator if any of you by the way are

tyrants or dictators I would seriously recommend some career planning on that um you know the old surveillance Society new that's a weird picture is that my body um anyway the weird is a um or the new is a you know distributed Avatar right now there's the virtual you you know there's the ver the virtual Joe and but but Joe doesn't own that it's owned by these big data frackers what if you owned the virtual U it was your identity in a black box and it went around and it disclosed just whatever whatever whatever um it needed to do a transaction and you pay for something and and there's no data trail

that you paid for it plus you not only get to protect your privacy you get to collect this data Maybe you decide you want to monetize it so I wanted to end just with a thought about you and how this uh meeting I think uh fits in we have a lot of problems in the world and um this is a pollution flows in the world you think pollution is a local problem it's not most of these problems are not getting better so why is that um are they just too hard to solve maybe our models wrong what's our model anyone here of Breton Woods 1944 the winners of the

world war 44 countries got together and they created the world bank and the IMF a year later a bigger group created the UN a year later the UNESCO and then the G the WTO and the G8 and the G20 Global institutions based on nation states well there's a new model emerging and U about a year ago I finished a a big study $4 million study on this new model was sponsored by all of these companies and we said the new model is called multi-stakeholder networks and they've got individual companies Civil Society governments they're addressing a global problem they used technology but they're not controlled by States so it turns out

there are 10 types of these networks and the one that's more most relevant to today it's called a governance Network there are now things on governance on planet Earth that are governed by an ecosystem not by States so the internet itself has standards as part of that governance Network the ITF uh the W3 uh Consortium has operation ational networks that just do stuff I can't delivers domain names it's got policy networks like the internet governance form there are advocacy networks like the Electronic Frontier Foundation what we need today is a governance network not Big G government

a self-organizing set of governance networks around blockchain Technologies I think in this room you're uh creating a platform but you're also an operational delivery Network and that you're not just advocating or talking about it or developing policy you're actually building stuff and so that's where you fit into the big picture now we have a lot of work to do and right now it's the wild west out there when it comes to blockchain Technologies and but we're starting to get better processes deal with stuff like block size and and uh and and so on but we have a long way to go so if I could

just do we have that was there oh too bad I had a centilating video there at the end um but I think I'm out of time anyway aren't I yeah okay uh it was about something called the murmuration go on to the Google and ask the Google and it will tell you but it's about starlings over the Moors of uh England and it's about self-organization and about creating ecosystem it's a great natural analogy for the opportunity that you have so thank you and uh God [Applause] Speak