Don Tapscott
and Alex Tapscott


BLOCKCHAIN REVOLUTION

How the Technology behind Bitcoin and Other Cryptocurrencies is Changing the World

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ABOUT THE AUTHORS

Don Tapscott is one of the most influential living theorists about business and society. He is the author or co-author of fifteen widely read books about new technologies and new media in business and society including Wikinomics and The Digital Economy. In 2017 Don was named the world’s most influential digital thinker by Thinkers 50.

Alex Tapscott is the founder and CEO of NextBlock Global, a digital asset company. Previously he worked for seven years in investment banking in New York and Toronto. He is the author of Towards the Breaking Point: The Law and Political Emergency.

PORTFOLIO PENGUIN

UK | USA | Canada | Ireland | Australia

India | New Zealand | South Africa

Portfolio Penguin is part of the Penguin Random House group of companies whose addresses can be found at global.penguinrandomhouse.com.

Penguin Random House UK

First published in the United States of America by Portfolio/Penguin 2016

First published in Great Britain by Portfolio Penguin 2016

Published in this edition with a new preface and afterword 2018

Copyright © Don Tapscott and Alex Tapscott, 2016, 2018

The moral right of the authors has been asserted

Cover by Eric White

ISBN: 978-0-241-23787-8

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

BLOCKCHAIN REVOLUTION

‘This book has had an enormous impact on the evolution of blockchain in the world’ Satya Nadella, CEO, Microsoft Corporation

‘Occasionally a book comes along that changes the global discourse. This is likely to be one of those books. Blockchains are at the heart of the fourth industrial revolution and the Tapscotts lucidly explain why and how to capture the opportunity and avoid the dangers’ Klaus Schwab, Founder and Executive Chairman, World Economic Forum

‘A carefully researched and beautifully written book. Blockchain Revolution argues that the “Internet of value” will transform our lives. A must-read book for our disruptive times’ Dominic Barton, Global Managing Director, McKinsey & Company

‘Don and Alex brilliantly illuminate the technology that could profoundly impact the way we manage issues of trust, security and privacy for years to come’ Indra Nooyi, Chairman and CEO, PepsiCo

‘The great missing element in the Internet has been a “trust protocol”, a way of knowing that a transaction is verified and authentic. Blockchain technology could provide a foundation for that. It’s a revolutionary idea, and this lucid book explains why’ Walter Isaacson, author of Steve Jobs

‘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 of 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 Nineteen Eighty-Four 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 Law 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; co-author 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 Lawsky, Former Superintendent of Financial Services, State of New York; CEO of The Lawsky 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

‘What a spectacular book. Mind-blowing in its expansiveness and profundity. It makes me think we’re at one of those times in technological, economic and social history where the sky is the limit’ Steve Wozniak, co-founder, Apple Computer; chief scientist, Prime Data

‘The Tapscotts have written the book, literally, on how to survive and thrive in this next wave of technology-driven disruption. Likely to become one of the iconic books of our time’ Clay Christensen, Professor of Business Administration, Harvard Business School; author of The Innovator’s Dilemma

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 Business 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 Business

Adam Back, Cofounder and President, Blockstream

Bill Barhydt, CEO, Abra

Christopher Bavitz, Managing Director, Cyberlaw Clinic, Harvard Law 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 Law 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 Business 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 Law 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 Law, 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 Lawsky, Former Superintendent of Financial Services for the State of New York; CEO, The Lawsky 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 Business Initiative, Intel

Steve Omohundro, President, Self-Aware Systems

Jim Orlando, Managing Director, OMERS Ventures

Lawrence 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 Law School

Jutta Steiner, Ethereum/Provenance

Melanie Swan, Founder, Institute for Blockchain Studies

Nick Szabo, GWU Law

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 Law School, Yeshiva University

Jonathan Zittrain, Harvard Law 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

Acknowledgments for the Paperback Edition

As with the original edition, our most important collaborator was our editor-in-chief Kirsten Sandberg, who, in addition to leading our BRI editorial and production team, contributed substantively to the content and helped to make the words come alive.

We acknowledge the following people whose wisdom and insights shaped this new material: Brian Behlendorf, executive director, Hyperledger; Ethan Buchman, cofounder and CTO, Tendermint; Anthony Diiorio, cofounder, Ethereum, founder, Decentral; Olga Feldmeier, CEO, Smart Valor; David Jaffray, executive vice president, the University Health Network; Min Kim, cofounder, ICON; Trevor Koverko, CEO, Polymath; Jae Kwon, Founder and CEO, Tendermint; Joe Lubin, founder, Consensus Systems; Pete Martin, founder and CEO, Votem; Charlie Morris; Andrey Petrov; and Matthew Spoke, founder, Aion.

We thank our founding members—Accenture, Barrick, Bell, Capgemini, Centrica, CIBC, City of Toronto, FedEx, Fujitsu, Government of Canada, IBM, Interac, KPMG, Liberty Global, MKS, Nasdaq, PepsiCo, Province of Ontario, Raiffeisen Bank, SAP, Tencent, Thomson Reuters, TMX, and the University Health Network—and our affiliate organizations, namely the Chamber of Digital Commerce, COALA, Enterprise Ethereum Alliance, and Hyperledger, and the Illinois Blockchain Initiative.

We also thank our BRI contributors: Chami Akmeemana, Nolan Bauerle, Tom Baumann, Oliver Bussmann, Davide Cargnello, Michael Casey, Stephen Caswell, Soumak Chatterjee, COALA, Alan Cohn, Chloe Desmonet, Jeremy Epstein, Tommy Gardner, Vlad Gheorghiu, Bill Gillies, Sergey Gorbunov, Dom Guinard, Jennifer Han, Stefan Hopf, Tom Isaacson, Matt Jackson, Reshma Kamath, Christian Keil, Henry Kim, Marek Laskowski, Alan Majer, Massimo Morini, Bob Morison, Michele Mosca, Bill Munsun, Vineet Narula, Marcus O’Dair, Iliana Oris Valiente, Lawrence Orsini, Andreas Park, Mary-Jane Pilgrim, Abhishek Punia, Rachel Robinson, Jill Rundle, Axel Schumacher, Michael Scott, Tony Scott, Tom Serres, Prema Shrikrishna, Usman Sheikh, Mayank Singhal, Chase Smith, Andy Spence, Nick Szabo, Bob Tapscott, Joel Telpner, Tomicah Tillemann, Mark van Rijmenam, Bettina Warburg, Anthony Williams, Irving Wladawsky-Berger, and Alan Wunsche.

Last but not least, we thank the BRI staff—Carl Amorim, Daria Apelsinova, Joan Bigham, Luke Bradley, Hilary Carter, Roya Hussaini, Genia Mikhalchenko, Jenna Pilgrim, Jane Ricciardelli, Yuliya Samoylova, and Jody Stevens—and the chair of the BRI advisory board, Sanjay Tugnait.

—Don Tapscott and Alex Tapscott, April 2018