Block Chain – Journal 1

ALSO BY

Don Tapscott

Paradigm Shift: The New Promise of Information Technology (1993)
Coauthor, Art Caston

The Digital Economy: Promise and Peril in the Age of Networked Intelligence (1995)

Growing Up Digital: The Rise of the Net Generation (1997)

Who Knows: Safeguarding Your Privacy in a Networked World (1997)
Coauthor, Ann Cavoukian

Digital Capital: Harnessing the Power of Webs (2000)
Coauthors, David Ticoll and Alex Lowy

The Naked Corporation: How the Age of Transparency Will Revolutionize
(2003)

Coauthor, David Ticoll

Wikinomics: How Mass Collaboration Changes Everything (2006)
Coauthor, Anthony D. Williams

Grown Up Digital: How the Net Generation Is Changing the World (2008)

Macrowikinomics: New Solutions for a Connected Planet (2010)
Coauthor, Anthony D. Williams

An imprint of Penguin Random House LLC
375 Hudson Street

New York, New York 10014

Copyright © 2016 by Don Tapscott and Alex Tapscott
Penguin supports copyright. Copyright fuels creativity, encourages diverse voices, promotes free speech,
and creates a vibrant culture. Thank you for buying an authorized edition of this book and for complying
with copyright laws by not reproducing, scanning, or distributing any part of it in any form without

permission. You are supporting writers and allowing Penguin to continue to publish books for every reader.
ISBN: 9781101980132

International edition ISBN: 9780399564062

ISBN: 9781101980156 (ebook)

While the author has made every effort to provide accurate telephone numbers, Internet addresses, and
other contact information at the time of publication, neither the publisher nor the author assumes any

responsibility for errors or for changes that occur after publication. Further, the publisher does not have any
control over and does not assume any responsibility for author or third-party Web sites or their content.

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To Ana Lopes and Amy Welsman for enabling this book, and for understanding
that “it’s all about the blockchain.”

“A masterpiece. Gracefully dissects the potential of blockchain technology to take on today’s most pressing global
challenges.”

—Hernando De Soto, Economist and President, Institute for Liberty and Democracy, Peru

“The blockchain is to trust as the Internet is to information. Like the original Internet, blockchain has potential to
transform everything. Read this book and you will understand.”

—Joichi Ito, Director, MIT Media Lab

“In this extraordinary journey to the frontiers of finance, the Tapscotts shed new light on the blockchain
phenomenon and make a compelling case for why we all need to better understand its power and potential.”

—Dave McKay, President and CEO, Royal Bank of Canada

“Deconstructs the promise and peril of the blockchain in a way that is at once accessible and erudite. Blockchain
Revolution gives readers a privileged sneak peak at the future.”

—Alec Ross, author, The Industries of the Future

“If ever there was a topic for demystification, blockchain is it. Together, the Tapscotts have achieved this
comprehensively and in doing so have captured the excitement, the potential, and the importance of this topic to
everyone.”

—Blythe Masters, CEO, Digital Asset Holdings

“This is a book with the predictive quality of Orwell’s 1984 and the vision of Elon Musk. Read it or become
extinct.”

—Tim Draper, Founder, Draper Associates, DFJ, and Draper University

“Blockchain is a radical technological wave and, as he has done so often, Tapscott is out there, now with son Alex,
surfing at dawn. It’s quite a ride.”

—Yochai Benkler, Berkman Professor of Entrepreneurial Legal Studies, Harvard School

“If you work in business or government, you need to understand the blockchain revolution. No one has written a
more thoroughly researched or engaging book on this topic than Tapscott and Tapscott.”

—Erik Brynjolfsson, Professor at MIT; coauthor of The Second Machine Age

“An indispensable and up-to-the-minute account of how the technology underlying bitcoin could—and should—
unleash the true potential of a digital economy for distributed prosperity.”

—Douglas Rushkoff, author of Present Shock and Throwing Rocks at the Google Bus

“Technological change that used to develop over a generation now hits us in a relative blink of the eye, and no one
tells this story better than the Tapscotts.”

—Eric Spiegel, President and CEO, Siemens USA

“Few leaders push us to look around corners the way Don Tapscott does. With Blockchain Revolution he and his
son Alex teach us, challenge us, and show us an entirely new way to think about the future.”

—Bill McDermott, CEO, SAP SE

“Blockchain Revolution is a brilliant mix of history, technology, and sociology that covers all aspects of the
blockchain protocol—an invention that in time may prove as momentous as the invention of printing.”

—James Rickards, author of Currency Wars and The Death of Money

“Blockchain Revolution serves as an atlas to the world of digital money, masterfully explaining the current
landscape while simultaneously illuminating a path forward toward a more equitable, efficient, and connected
global financial system.”

—Jim Breyer, CEO, Breyer Capital

“Blockchain Revolution is the indispensable and definitive guide to this world-changing technology.”
—Jerry Brito, Executive Director, Coin Center

“Incredible. Really incredible. The Tapscotts’ examination of the blockchain as a model for inclusion in an
increasingly centralized world is both nuanced and extraordinary.”

—Steve Luczo, Chairman and CEO, Seagate Technology

“Makes a powerful case for blockchain’s ability to increase transparency but also ensure privacy. In the authors’
words, ‘The Internet of Things needs a Ledger of Things.’”

—Chandra Chandrasekaran, CEO and Managing Director, Tata Consultancy Services

“The epicenter of trust is about to diffuse! The definitive narrative on the revolutionary possibilities of a
decentralized trust system.”

—Frank D’Souza, CEO, Cognizant

“Identifies a profound new technology movement and connects it to the deepest of human needs: trust. Thoroughly
researched and provocatively written. Every serious businessperson and policy maker needs to read Blockchain
Revolution.”

—Brian Fetherstonhaugh, Chairman and CEO, OgilvyOne Worldwide

“Blockchain Revolution sets the table for a wave of technological advancement that is only just beginning.”
—Frank Brown, Managing Director and Chief Operating Office, General Atlantic

“A must read. You’ll gain a deep understanding of why the blockchain is quickly becoming one of the most
important emerging technologies since the Internet.”

—Brian Forde, Director of Digital Currency Initiative, MIT Media Lab

“Blockchain technology has the potential to revolutionize industry, finance, and government—a must read for
anyone interested in the future of money and humanity.”

—Perianne Boring, Founder and President, Chamber of Digital Commerce

“When generational technology changes the world in which we live, we are truly fortunate to have cartographers
like Don Tapscott, and now his son Alex, to explain where we’re going.”

—Ray Lane, Managing Partner, GreatPoint Ventures; Partner Emeritus, Kleiner Perkins

“Don and Alex have written the definitive guidebook for those trying to navigate this new and promising frontier.”
—Benjamin sky, Former Superintendent of Financial Services, State of New York; CEO of The
sky Group

“Blockchain Revolution is an illuminating, critically important manifesto for the next digital age.”
—Dan Pontefract, author of The Purpose Effect; Chief Envisioner, TELUS

“The most well-researched, thorough, and insightful book on the most exciting new technology since the Internet.
A work of exceptional clarity and astonishingly broad and deep insight.”

—Andreas Antonopoulos, author of Mastering Bitcoin

“Blockchain Revolution beautifully captures and illuminates the brave new world of decentralized, trustless
money.”

—Tyler Winklevoss, Cofounder, Gemini and Winklevoss Capital

“A fascinating—and reassuring—insight into a technology with the power to remake the global economy. What a
prize. What a book!”

—Paul Polman, CEO, Unilever

CONTENTS

Also by Don Tapscott
Title Page
Copyright
Dedication
Praise for Don Tapscott and Alex Tapscott
Acknowledgments

PART I: Say You Want a Revolution

CHAPTER 1: The Trust Protocol
In Search of the Trust Protocol
How This Worldwide Ledger Works
A Rational Exuberance for the Blockchain
Achieving Trust in the Digital Age
Return of the Internet
Your Personal Avatar and the Black Box of Identity
A Plan for Prosperity
Promise and Peril of the New Platform

CHAPTER 2: Bootstrapping the Future: Seven Design Principles of the
Blockchain Economy
The Seven Design Principles

1. Networked Integrity
2. Distributed Power
3. Value as Incentive
4. Security
5. Privacy

6. Rights Preserved
7. Inclusion

Designing the Future

PART II: Transformations

CHAPTER 3: Reinventing Financial Services
A New Look for the World’s Second-Oldest Profession
The Golden Eight: How the Financial Services Sector Will Change
From Stock Exchanges to Block Exchanges
Dr. Faust’s Blockchain Bargain
The Bank App: Who Will Win in Retail Banking
Google Translate for : New Frameworks for Accounting and Corporate
Governance
Reputation: You Are Your Credit Score
The Blockchain IPO
The Market for Prediction Markets
Road Map for the Golden Eight

CHAPTER 4: Re-architecting the Firm: The Core and the Edges
Building ConsenSys
Changing the Boundaries of the Firm
Determining Corporate Boundaries

CHAPTER 5: New Models: Making It Rain on the Blockchain
bAirbnb Versus Airbnb
Global Computing: The Rise of Distributed Applications
The DApp Kings: Distributed Entities
Autonomous Agents
Distributed Autonomous Enterprises
The Big Seven: Open Networked Enterprise Models
Hacking Your Future: Model Innovation

CHAPTER 6: The Ledger of Things: Animating the Physical World
Power to the People
The Evolution of Computing: From Mainframes to Smart Pills
The Internet of Things Needs a Ledger of Things
The Twelve Disruptions: Animating Things
The Economic Payoff
The Future: From Uber to SUber
Hacking Your Future for a World of Smart Things

CHAPTER 7: Solving the Prosperity Paradox: Economic Inclusion and
Entrepreneurship
A Pig Is Not a Piggy Bank
The New Prosperity Paradox
Road Map to Prosperity
Remittances: The Story of Analie Domingo
Blockchain Humanitarian Aid
Safe as Houses? The Road to Asset Ownership
Implementation Challenges and Leadership Opportunities

CHAPTER 8: Rebuilding Government and Democracy
Something Is Rotten in the State
High-Performance Government Services and Operations
Empowering People to Serve Selves and Others
The Second Era of Democracy
Blockchain Voting
Alternative Models of Politics and Justice
Engaging Citizens to Solve Big Problems
Wielding Tools of Twenty-first-Century Democracy

CHAPTER 9: Freeing Culture on the Blockchain: Music to Our Ears
Fair Trade Music: From Streaming Music to Metering Rights
Artlery for Art Lovers: Connecting Artists and Patrons
Privacy, Free Speech, and Free Press on the Blockchain

Getting the Word Out: The Critical Role of Education
Culture on the Blockchain and You

PART III: Promise and Peril

CHAPTER 10: Overcoming Showstoppers: Ten Implementation
Challenges
1. The Technology Is Not Ready for Prime Time
2. The Energy Consumed Is Unsustainable
3. Governments Will Stifle or Twist It
4. Powerful Incumbents of the Old Paradigm Will Usurp It
5. The Incentives Are Inadequate for Distributed Mass Collaboration
6. The Blockchain Is a Job Killer
7. Governing the Protocols Is Like Herding Cats
8. Distributed Autonomous Agents Will Form Skynet
9. Big Brother Is (Still) Watching You
10. Criminals Will Use It
Reasons Blockchain Will Fail or Implementation Challenges?

CHAPTER 11: Leadership for the Next Era
Who Will Lead a Revolution?
The Blockchain Ecosystem: You Can’t Tell the Players Without a Roster
A Cautionary Tale of Blockchain Regulation
The Senator Who Would Change the World
Central Banks in a Decentralized Economy
Regulation Versus Governance
A New Framework for Blockchain Governance
A New Agenda for the Next Digital Age
The Trust Protocol and You

Notes
Index

ACKNOWLEDGMENTS

This book came from the meeting of two minds and two life trajectories. Don had
been leading a $4 million syndicated research program called Global Solution
Networks (GSN) at the Rotman School of Management, University of Toronto. The
initiative was investigating new, networked models of global problem solving and
governance. He researched how the Internet was governed by a multistakeholder
ecosystem and became interested in digital currencies and their governance.
Meanwhile, Alex was an executive with the investment bank Canaccord Genuity. He
noticed the growing enthusiasm for early-stage bitcoin and blockchain companies in
2013 and began leading his firm’s efforts in the space. During a father-son ski trip to
Mont-Tremblant in early 2014, we brainstormed over dinner about collaborating on
this topic, and Alex agreed to lead a research project on the governance of digital
currencies, culminating in his white paper, titled A Bitcoin Governance Network. The
more we dug into the issues, the more we concluded that this could be the next big
thing.

Meanwhile our agent, Wes Neff at the Leigh Bureau, along with Don’s publisher
Adrian Zackheim at Portfolio/Penguin (Wikinomics, Macrowikinomics), was
encouraging Don to formulate a new book concept. When Alex’s paper became
widely recognized as leading thinking in this area, Don approached Alex to be his
coauthor. Adrian, to his credit, made us an offer we couldn’t refuse and the book
never went to auction, as is normally the case.

We then made what in hindsight was a smart decision. We approached the best
book editor we knew, Kirsten Sandberg, formerly of Harvard School Press,
and asked her to edit our book proposal. She did a spectacular job and our
collaboration was so effortless that we asked her to be a full-time member of the book
research team. Kirsten participated with us in more than one hundred interviews and
collaborated in real time as we tried to understand the myriad issues on the table and
develop helpful formulations to explain this extraordinary set of developments to a
nontechnical audience. She helped us bring the story to life. In that sense, she was our
coauthor and this book would not have appeared, at least in its current comprehensible
form, without her. For that, and for all the stimulation and laugh lines, we are very
grateful.

Our heartfelt thanks to the people below who generously shared their time and
insights with us and without whom this book would not be possible. In alphabetical
order:

Jeremy Allaire, Founder, Chairman, and CEO, Circle
Marc Andreessen, Cofounder, Andreessen Horowitz
Gavin Andresen, Chief Scientist, Bitcoin Foundation
Dino Angaritis, CEO, Smartwallet
Andreas Antonopoulos, Author, Mastering Bitcoin
Federico Ast, CrowdJury
Susan Athey, Economics of Technology Professor, Stanford Graduate School of

Adam Back, Cofounder and President, Blockstream
Bill Barhydt, CEO, Abra
Christopher Bavitz, Managing Director, Cyberlaw Clinic, Harvard School
Geoff Beattie, Chairman, Relay Ventures
Steve Beauregard, CEO and Founder, GoCoin
Mariano Belinky, Managing Partner, Santander InnoVentures
Yochai Benkler, Berkman Professor of Entrepreneurial Studies, Harvard School
Jake Benson, CEO and Founder, LibraTax
Tim Berners-Lee, Inventor, World Wide Web
Doug Black, Senator, Canadian Senate, Government of Canada
Perriane Boring, Founder and President, Chamber of Digital Commerce
David Bray, 2015 Eisenhower Fellow and Harvard Visiting Executive in Residence
Jerry Brito, Executive Director, Coin Center
Paul Brody, Americas Strategy Leader, Technology Group, EY (formerly IoT at IBM)
Richard G. Brown, CTO, R3 CEV (former Executive Architect for Industry

Innovation and Development, IBM)
Vitalik Buterin, Founder, Ethereum
Patrick Byrne, CEO, Overstock
Bruce Cahan, Visiting Scholar, Stanford Engineering; Stanford Sustainable Banking

Initiative
James Carlyle, Chief Engineer, MD, R3 CEV
Nicolas Cary, Cofounder, Blockchain Ltd.
Toni Lane Casserly, CEO, CoinTelegraph
Christian Catalini, Assistant Professor, MIT Sloan School of Management
Ann Cavoukian, Executive Director, Privacy and Big Data Institute, Ryerson

University
Vint Cerf, Co-creator of the Internet and Chief Internet Evangelist, Google

Ben Chan, Senior Software Engineer, BitGo
Robin Chase, Cofounder and Former CEO, Zipcar
Fadi Chehadi, CEO, ICANN
Constance Choi, Principal, Seven Advisory
John H. Clippinger, CEO, ID3, Research Scientist, MIT Media Lab
Bram Cohen, Creator, BitTorrent
Amy Cortese, Journalist, Founder, Locavest
J-F Courville, Chief Operating Officer, RBC Wealth Management
Patrick Deegan, CTO, Personal BlackBox
Primavera De Filippi, Permanent Researcher, CNRS and Faculty Associate at the

Berkman Center for Internet and Society at Harvard School
Hernando de Soto, President, Institute for Liberty and Democracy
Peronet Despeignes, Special Ops, Augur
Jacob Dienelt, Blockchain Architect and CFO, itBit and Factom
Joel Dietz, Swarm Corp
Helen Disney, (formerly) Bitcoin Foundation
Adam Draper, CEO and Founder, Boost VC
Timothy Cook Draper, Venture Capitalist; Founder, Draper Fisher Jurvetson
Andrew Dudley, Founder and CEO, Earth Observation
Joshua Fairfield, Professor of , Washington and Lee University
Grant Fondo, Partner, Securities Litigation and White Collar Defense Group, Privacy

and Data Security Practice, Goodwin Procter LLP
Brian Forde, Former Senior Adviser, The White House; Director, Digital Currency,

MIT Media Lab
Mike Gault, CEO, Guardtime
George Gilder, Founder and Partner, Gilder Technology Fund
Geoff Gordon, CEO, Vogogo
Vinay Gupta, Release Coordinator, Ethereum
James Hazard, Founder, Common Accord
Imogen Heap, Grammy-Winning Musician and Songwriter
Mike Hearn, Former Google Engineer, Vinumeris/Lighthouse
Austin Hill, Cofounder and Chief Instigator, Blockstream
Toomas Hendrik Ilves, President of Estonia
Joichi Ito, Director, MIT Media Lab
Eric Jennings, Cofounder and CEO, Filament
Izabella Kaminska, Financial Reporter, Financial Times
Paul Kemp-Robertson, Cofounder and Editorial Director, Contagious

Communications
Andrew Keys, Consensus Systems

Joyce Kim, Executive Director, Stellar Development Foundation
Peter Kirby, CEO and Cofounder, Factom
Joey Krug, Core Developer, Augur
Haluk Kulin, CEO, Personal BlackBox
Chris Larsen, CEO, Ripple Labs
Benjamin sky, Former Superintendent of Financial Services for the State of New

York; CEO, The sky Group
Charlie Lee, Creator, CTO; Former Engineering Manager, Litecoin
Matthew Leibowitz, Partner, Plaza Ventures
Vinny Lingham, CEO, Gyft
Juan Llanos, EVP of Strategic Partnerships and Chief Transparency Officer,

Bitreserve.org
Joseph Lubin, CEO, Consensus Systems
Adam Ludwin, Founder, Chain.com
Christian Lundkvist, Balanc3
David McKay, President and Chief Executive Officer, RBC
Janna McManus, Global PR Director, BitFury
Mickey McManus, Maya Institute
Jesse McWaters, Financial Innovation Specialist, World Economic Forum
Blythe Masters, CEO, Digital Asset Holdings
Alistair Mitchell, Managing Partner, Generation Ventures
Carlos Moreira, Founder, Chairman, and CEO, WISeKey
Tom Mornini, Founder and Customer Advocate, Subledger
Ethan Nadelmann, Executive Director, Drug Policy Alliance
Adam Nanjee, Head of Fintech Cluster, MaRS
Daniel Neis, CEO and Cofounder, KOINA
Kelly Olson, New Initiative, Intel
Steve Omohundro, President, Self-Aware Systems
Jim Orlando, Managing Director, OMERS Ventures
rence Orsini, Cofounder and Principal, LO3 Energy
Paul Pacifico, CEO, Featured Artists Coalition
Jose Pagliery, Staff Reporter, CNNMoney
Stephen Pair, Cofounder and CEO, BitPay Inc.
Vikram Pandit, Former CEO, Citigroup; Coinbase Investor, Portland Square Capital
Jack Peterson, Core Developer, Augur
Eric Piscini, Principal, Banking/Technology, Deloitte Consulting
Kausik Rajgopal, Silicon Valley Office Leader, McKinsey and Company
Suresh Ramamurthi, Chairman and CTO, CBW Bank
Sunny Ray, CEO, Unocoin.com

Caterina Rindi, Community Manager, Swarm Corp
Eduardo Robles Elvira, CTO, Agora Voting
Keonne Rodriguez, Product Lead, Blockchain Ltd.
Matthew Roszak, Founder and CEO, Tally Capital
Colin Rule, Chairman and CEO, Modria.com
Marco Santori, Counsel, Pillsbury Winthrop Shaw Pittman LLP
Frank Schuil, CEO, Safello
Barry Silbert, Founder and CEO, Digital Currency Group
Thomas Spaas, Director, Belgium Bitcoin Association
Balaji Srinivasan, CEO, 21; Partner, Andreessen Horowitz
Lynn St. Amour, Former President, The Internet Society
Brett Stapper, Founder and CEO, Falcon Global Capital LLC
Elizabeth Stark, Visiting Fellow, Yale School
Jutta Steiner, Ethereum/Provenance
Melanie Swan, Founder, Institute for Blockchain Studies
Nick Szabo, GWU
Ashley Taylor, Conensys Systems
Simon Taylor, VP Entrepreneurial Partnerships, Barclays
David Thomson, Founder, Artlery
Michelle Tinsley, Director, Mobility and Payment Security, Intel
Peter Todd, Chief Naysayer, CoinKite
Jason Tyra, CoinDesk
Valery Vavilov, CEO, BitFury
Ann Louise Vehovec, Senior Vice President, Strategic Projects, RBC Financial Group
Roger Ver, “The Bitcoin Jesus,” Memorydealers KK
Akseli Virtanen, Hedge Fund Manager, Robin Hood Asset Management
Erik Voorhees, CEO and Founder, ShapeShift
Joe Weinberg, Cofounder and CEO, Paycase
Derek White, Chief Design and Digital Officer, Barclays Bank
Ted Whitehead, Senior Managing Director, Manulife Asset Management
Zooko Wilcox-O’Hearn, CEO, Least Authority Enterprises
Carolyn Wilkins, Senior Deputy Governor, Bank of Canada
Robert Wilkins, CEO, myVBO
Cameron Winklevoss, Founder, Winklevoss Capital
Tyler Winklevoss, Founder, Winklevoss Capital
Pindar Wong, Internet Pioneer, Chairman of VeriFi
Gabriel Woo, Vice President of Innovation, RBC Financial Group
Gavin Wood, CTO, Ethereum Foundation
Aaron Wright, Professor, Cardozo School, Yeshiva University

Jonathan Zittrain, Harvard School

Also special thanks to a few people who really rolled up their sleeves to help.
Anthony Williams and Joan Bigham of the GSN project worked closely with Alex on
the original digital currencies governance paper. Former Cisco executive Joan
McCalla did deep research for the chapters on the Internet of Things and also
Government and Democracy. We received a lot of familial support. IT executive Bob
Tapscott spent many days downloading and getting under the hood of the entire
bitcoin blockchain to give us firsthand insights on some of the technical issues.
Technology entrepreneur Bill Tapscott came up with the revolutionary idea of a
blockchain-based personal carbon credit trading system, and technology executive
Niki Tapscott and her husband, financial analyst James Leo, have been great sounding
boards throughout. Katherine MacLellan of the Tapscott Group (conveniently a
lawyer) tackled some of the tougher issues around smart contracts as well as
managing the interview process. Phil Courneyeur was on the lookout daily for juicy
material, and David Ticoll provided helpful insights about the state of the digital age
so far. Wes Neff and Bill Leigh of the Leigh Bureau helped us craft the book concept
(how many books is this, guys?). As always (now more than twenty years), Jody
Stevens flawlessly managed the administration for the entire project including
databases, finances, and document management, as well as the proofreading and
production process—a full-time job, in addition to her other full-time jobs at the
Tapscott Group.

Special thanks to Dino Mark Angaritis, the CEO of blockchain company
Smartwallet; Joseph Lubin, CEO of the Ethereum development studio Consensus
Systems; and Carlos Moreira of fast-growing security company WISeKey—who each
spent considerable time with us brainstorming ideas. They are each brilliant and so
kind to help us out. Now we get to enjoy witnessing the success of each of their
businesses in this space. Also big thanks to the great team at Penguin Random House
led by our editor Jesse Maeshiro and overseen by Adrian Zackheim.

Most important, we’d like to give our heartfelt thanks to our wives, Ana Lopes
(Don) and Amy Welsman (Alex), who more than tolerated our obsession with
cracking this big nut over the better part of a year. We are both very fortunate to have
such wonderful life partners.

Writing this book has been a joyous experience for both of us and it’s fair to say
that we loved every minute of it. As someone famous once said, “If two people agree
on everything, one of them is unnecessary.” We challenged each other daily to test our
beliefs and assumptions, and this book is living proof of that healthy and vigorous
collaboration. Mind you, collaborating does seem effortless when you share so much

DNA and have a shared thirty-year history of exploring the world together. We do
hope you find the product of this collaboration important and helpful.

Don Tapscott and Alex Tapscott, January 2016

PART I

SAY YOU WANT A REVOLUTION

I

CHAPTER 1

THE TRUST PROTOCOL

t appears that once again, the technological genie has been unleashed from its
bottle. Summoned by an unknown person or persons with unclear motives, at an

uncertain time in history, the genie is now at our service for another kick at the can—
to transform the economic power grid and the old order of human affairs for the
better. If we will it.

Let us explain.
The first four decades of the Internet brought us e-mail, the World Wide Web, dot-

coms, social media, the mobile Web, big data, cloud computing, and the early days of
the Internet of Things. It has been great for reducing the costs of searching,
collaborating, and exchanging information. It has lowered the barriers to entry for
new media and entertainment, new forms of retailing and organizing work, and
unprecedented digital ventures. Through sensor technology, it has infused intelligence
into our wallets, our clothing, our automobiles, our buildings, our cities, and even our
biology. It is saturating our environment so completely that soon we will no longer
“log on” but rather go about our business and our lives immersed in pervasive
technology.

Overall, the Internet has enabled many positive changes—for those with access to
it—but it has serious limitations for business and economic activity. The New Yorker
could rerun Peter Steiner’s 1993 cartoon of one dog talking to another without
revision: “On the Internet, nobody knows you’re a dog.” Online, we still can’t reliably
establish one another’s identities or trust one another to transact and exchange money
without validation from a third party like a bank or a government. These same
intermediaries collect our data and invade our privacy for commercial gain and
national security. Even with the Internet, their cost structure excludes some 2.5 billion
people from the global financial system. Despite the promise of a peer-to-peer
empowered world, the economic and political benefits have proven to be
asymmetrical—with power and prosperity channeled to those who already have it,

even if they’re no longer earning it. Money is making more money than many people
do.

Technology doesn’t create prosperity any more than it destroys privacy. However,
in this digital age, technology is at the heart of just about everything—good and bad.
It enables humans to value and to violate one another’s rights in profound new ways.
The explosion in online communication and commerce is creating more opportunities
for cybercrime. Moore’s law of the annual doubling of processing power doubles the
power of fraudsters and thieves—“Moore’s Outlaws”1—not to mention spammers,
identity thieves, phishers, spies, zombie farmers, hackers, cyberbullies, and
datanappers—criminals who unleash ransomware to hold data hostage—the list goes
on.

IN SEARCH OF THE TRUST PROTOCOL

As early as 1981, inventors were attempting to solve the Internet’s problems of
privacy, security, and inclusion with cryptography. No matter how they reengineered
the process, there were always leaks because third parties were involved. Paying with
credit cards over the Internet was insecure because users had to divulge too much
personal data, and the transaction fees were too high for small payments.

…