Toronto, ON. – A new digital revolution is coming, and businesses need to adapt or risk becoming obsolete, Canadian technology author Don Tapscott told an audience during the 2016 Gartner CIO & IT Executive Summit on June 15.
Led by innovations such as Bitcoin, blockchains are rapidly transforming the Internet from an information-based platform to one based on value, he said – and this second era is going to affect the business world as profoundly as the first, if not more.
“We’ve had the Internet of Information – now we’re getting the Internet of Value,” Tapscott said. “So it’s incumbent on every business leader to get plugged in, find out what’s going on, become knowledgeable, and to get some programs going in their companies.”
Blockchains are distributed databases that record, validate, and organize the information created as users perform online actions, such as making a purchase or posting an article online. In particular, Tapscott focused on the potential for blockchains to create a “virtual self,” cataloguing a user’s actions across multiple platforms.
Because the information they collect is distributed across networks, blockchains are more secure than any computing platform we have today, Tapscott said, and by allowing employers to search, utilize, and trade talent as easily as experts within a company, they turn user data into a new asset class, similar to gold.
They could also lead to the demise of the enterprise as we know it: after all, Tapscott said, there are four key reasons businesses exist in the first place, all related to transaction costs – and all vulnerable to blockchains:
- Cost of search: identifying the right human resources in an open economy is prohibitively expensive, but with blockchains, instigators will know the exact value of every resource available, he said;
- Cost of coordination: one of the most difficult tasks filled by today’s businesses is organizing workers into groups, which blockchain-powered “smart contracts” will help facilitate;
- Cost of contracting, for which blockchains will establish clear, industry-wide standards;
- Cost of trust, which is currently built as employees serving a company for months or years, a factor blockchains will be able to circumvent by simply providing a user’s work history.
“Blockchains ensure that everyone acts with integrity,” Tapscott told the Gartner audience. “You can’t cheat. You can’t rip somebody off.”
Certain industries, such as financial services, manufacturing, supply chains, retail, and the automotive industry, and institutions, such as government, will be more vulnerable to blockchain disruption than others, he said, likening the current financial services industry to a Rube Goldberg device.
Tapscott acknowledged that while blockchains themselves are nothing new, with peer-to-peer transactional platforms predating Bitcoin by at least a decade, the online currency has proven to be the leader in a quiet revolution that so far has led to such organizations as the Switzerland-based Etherium Foundation, which has not only created a line of software to support the creation of blockchain-powered applications, but raised millions of dollars to help fund them.
Of course, any new technology brings with it the potential for abuse, and while speaking with ITBusiness.ca after his presentation, Tapscott acknowledged that certain outcomes of the blockchain revolution could be less than rosy; for example, a large-scale expansion of the so-called sharing economy, which by some accounts leads to participants earning less than minimum wage for precarious work.
“I think we have an opportunity to create a true sharing economy, rather than the specious ‘sharing economy’ that people talk about where there’s no sharing at all,” he said. “Uber and AirBNB could be cooperatives rather than multibillion-dollar corporations.”
While Tapscott and his son, Alex, were writing their recent book about the subject, Blockchain Revolution, they considered several drawbacks to their thesis, and wound up devoting a chapter to them, he said.
“There are all kinds of reasons why this sort of thing could fail,” he admitted. “Now, we ended up deciding that these are all implementation challenges rather than showstoppers, but there is much to be done to make this revolution successful.”
Asked how some of those challenges could be solved, he responded with a look that said, Do you have a day to chat about it? Because I don’t.
“We need an ecosystem that can govern all of this,” he said. “For example, something as simple as a standards body to determine things like block size.”
“There’s a big opportunity for prosperity for many people, but the flip side of that is that a lot of jobs are going to be eliminated,” he continued. “And there is no rosy scenario where new industries will be built and new jobs created like what’s always happened in the past.”
Ultimately, Tapscott said, the blockchain revolution will require “a new social contract” to resolve questions like how people can productively contribute to society outside the traditional concept of a “job,” while ensuring they can live comfortably.
The revolution is coming regardless, and Tapscott believes that the skeptics who doubt his words are merely at the first stage of a continuum that starts at fear, before graduating to “how can we use this technology to reduce costs?”, and finally to “How can we use this technology to create new markets and reinvent our industry?”
After all, he’s been there before.
“In 1981, I argued that computers would become tools for communicating information that would be used by everybody, and back then most people thought I was nuts,” Tapscott said, noting that any revolutionary idea raises skepticism, which he welcomes.
“It’s been too long since people thought I was nuts,” he said with a chuckle.