Blockchain and Cryptocurrencies

Chapter 9 introduces blockchain advantages in the artistic content creation and delivery business. Do you create or acquire artistic content? (art, music, etc.) Discuss how the changes covered in chapter 9 would affect you personally. Would adopting blockchain technology change your art production or consumption practices?

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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 Business Webs (2000) Coauthors, David Ticoll and Alex Lowy

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

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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 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; 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 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

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