Shutterstock photo By Michael Scott
2016 has been a year of significant advancement for blockchain technology, a globally distributed ledger with digital application for industries ranging from investments and banking to healthcare and government. Today the trajectory of these milestones is the subject of the recently released Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World — among the first books to examine the current and future impact of blockchain technology.
This book is the collaborative creation of Don and Alex Tapscott, a Canadian father-son duo who are on a mission to champion blockchain’s value-proposition to the world. Its 368 pages examine the massive shifts taking place as blockchain is increasingly recognized worldwide as a key strategic technology for business and commerce.
In this exclusive interview for Nasdaq, co-author Alex Tapscott, the founder and CEO of the innovation advisory firm Northwest Passage Ventures, takes a look at the blockchain’s recent evolution while offering his assessment of what’s ahead for 2017.
What sort of new blockchain trends did the much-anticipated release of your book unearth?
I wouldn’t say we unearthed new discoveries about the blockchain. Rather we described how they’ve sprouted and blossomed in plain view! When we wrote Blockchain Revolution, there was much speculation about what this technology could achieve, and we did our best to capture those possibilities — for the economy, sure, but also for government and society. But we’ve certainly been surprised by the breadth of innovation happening today.
For example, central banks have emerged as a key element in discussions regarding the future of digital currencies, with the Bank of England and others talking about issuing blockchain-enabled fiat currencies to reduce friction, cost, and risk, add transparency and accountability, and improve oversight of the financial system. All of this was mere speculation when we began writing the book, but it’s actually happening today and if anything, is gaining momentum.
Are there any other industries that have gained traction?
Yes. In my view healthcare has emerged, in earnest, as one of the most exciting areas, with companies working to unclog bottlenecks in everything from clinical trial data to personal health records. It’s cool to reflect on how far things have come with all of this. What started as a spark has caught on like wildfire to capture the imagination of all sorts of thinkers, leaders and innovators in virtually every industry and institution, not just healthcare.
What about the world of financial services?
There’s no doubt that the financial services industry will be utterly transformed by this technology. In fact, I view blockchain as the big enabler to reimagine basically every single aspect of financial services — from payment processing and investment banking to insurance and accounting. This is all playing out now and if anything, it’s accelerating.
And banking?
Some observers have been surprised to see banks so open to blockchain when in the past they’ve not been as receptive to new technology innovation. I’m not. Blockchain represents both a once-in-a-generation opportunity to fix problems, improve efficiencies, reduce risk and democratize many financial services. It’s also emerging as a serious existential threat to the role of incumbent intermediaries in many aspects of the industry. To be sure, there are barriers like legacy culture, deadening bureaucracy, regulations, and entrenched incumbent factors that make change challenging. This will no doubt slow things down with respect to bank industry adoption, but only to a degree.
Do you believe that progress in this space will be adversely impacted by the R3 blockchain consortium shakeup?
The shakeup at R3 is not surprising. I’ve always said that such a large group of institutions, each at different levels of development, many of them competitors and more than a few in different areas of the industry, would struggle to collaborate effectively and reach consensus. I don’t think consortia models are a bad idea, ipso facto, but they should target small, well-defined goals with tangible objectives. If anything, the shakeup more than anything else is a sign of a maturing banking industry.
In general, what sort of trends are you currently seeing with respect to blockchain investment dollars?
Well, the money keeps flowing! 2016 was the biggest on record. But things have shifted. Initially (in 2012-2014) it was mostly VC funded, B2C bitcoin-centric solutions for common banking problems (such as cross-border money transfer or retail payments). Today we’re seeing money flowing into private blockchain opportunities providing asset tracking, wholesale banking, insurance, accounting, risk management and myriad other solutions for businesses. While this will likely continue in 2017, the pendulum I believe will swing back somewhat to the public blockchain space. Where do you see the world of digital currencies headed?
Bitcoin has quietly been chugging along, breaking records in everything from new wallet additions to total BTC traded. If the Bitcoin community can get its act together and solve some basic governance issues, investors will again see it as an attractive place to play. And for a good reason — it’s still the biggest, most secure, most liquid blockchain to date. Ethereum has similar governance issues too, which limits its credibility for big corporate investors, but I think they’ll get through it.
As you look into your “blockchain crystal ball” for 2017, what three trends do you see emerging?
Great question. First, I believe this will be the year when a major central bank will live test a digital fiat currency that will end up working very well, leading to broader adoption.
Secondly, look for large banks to begin shifting major amounts of over-the-counter transactions to real-time settlements on privately distributed ledgers. Here JPMorgan, Goldman Sachs, Barclays and Santander will lead the charge.
Third, companies large and small and in every industry will begin developing a blockchain strategy, hiring key IT talent and launching pilots. I’m talking insurers, healthcare providers, music labels, defense contractors, you name it.
Finally, what’s on tap for Tapscott and Tapscott in 2017? (no pun intended)
In January, my father Don and I are launching what we hope will be the definitive research study on the impact of blockchain on business. We are staffing up our team with the world’s leading thinkers and tackling 7 industries: financial services, healthcare, retail, manufacturing, telecommunications and media, technology, and government while also looking horizontally at enterprise functions, encompassing everything from supply chain management, to HR, to IT.
Also in January, the firm I run, Northwest Passage Ventures, is launching its first blockchain fund. We view this as another key element of our efforts to move the blockchain ecosystem forward.
I’ll also continue to contribute to the World Economic Forum’s Emerging Technologies/Blockchain Council, where I am a member.
And of course, we’ll continue to do our part to make sure Blockchain Revolution continues its success globally. So far, the book has been translated into a dozen languages, with more to come. Don and I will be spending some time on the road in 2017 making inroads into some new exciting markets, like Korea and Japan, for example. We both believe that the blockchain revolution is just beginning, and couldn’t be more jazzed about the New Year.
