In a conversation with Amit Kapoor, Don Tapscott shares his insights on the blockchain technology and on how we are going through the second era of the internet. He talks about the internet of value as different from the internet of information.
A vast global distributed ledger where anything of value could be stored, managed, transacted in a secure and a private way is what blockchain essentially is.
It is blockchain that can prove useful to create a platform that helps defend the basic human right to privacy because it is you who is going to own your virtual image and monetize it in whichever ways that you like while the data remains portable.
Looking at your ideas, you have been talking about the internet of value, the internet of information and the internet of assets. What do you mean by such ideas?
When we send a PDF or PowerPoint in an e-mail, it is not the information that is being sent- it is a copy that is being sent. Similarly, if we send a million rupees to someone -may be a friend- it is important that he still does not have that money to give to somebody else. Obviously, no one wants that a stranger should copy my vote, my identity or cultural assets like art, music or other things of value like money, stocks, bonds, intellectual property, loyalty points etc. So, to manage this problem of what cryptographers have called the “double spend problem” and establish trust, intermediaries like banks, governments, credit card companies, social media companies are introduced. They perform all the business transaction logic for almost every type of commerce, identify who you are and keep records. Overall, they are doing well but increasingly and inherently are in trouble. The above agencies are all centralized and hence can be hacked. Moreover, they still exclude two billion people from the global economy. In this digital age where it takes a second for an e-mail to go around the world, it can take days or even weeks for digital assets to move up the street for example in Mumbai. Being the creators of our data, we do not get to use this data to plan our lives and that is where the big problem is. In the entire process, privacy gets undermined and it is too expensive. For instance, someone from the Indian diaspora living in Toronto might be charged 10 or 20 percent by Western Union when they send money back home to their families anywhere in India which is the same thing as that of cross-border e-mail payments. So, what if there were not just an internet of information but an internet value! A vast global distributed ledger where anything of value could be stored, managed, transacted in a secure and a private way is what blockchain essentially is.
You are saying that commerce will simply disrupt itself and information flows will be disrupted too. Then industries getting disrupted can mean something like bitcoin. What do you think about it per se?
Bitcoin and other shiny cryptocurrencies are a new asset class for speculators. They are not fiat currency meaning they are not owned by a nation’s state. Although, that someone in Toronto sending money back to his or her parents in India can now do so using a cryptocurrency base for just 1 percent rather than for 15 percent. The underlying technology here that enables them all to work is blockchain. So, for the first time in human history, people and organizations can transact, do business, manage assets peer to peer without an intermediary. Trust, which is native to the medium is not then achieved by some bank or government or Facebook but by cryptography, by collaboration and by some clever code. In theory, what banks currently do can be replaced by a distributed ledger and some applications on that so that the payment and the settlement would mean the same thing. While some are struggling hard to figure out as to how to avoid being disintermediated, there are smart ones who see this as a huge opportunity to speed up the whole banking system and deliver new value to consumers.
How is blockchain going to get applied to various sets of industries? Finance, as we know, is changing but what about education?
Right now, we have a model of education exemplifying one size that fits all making the student relatively passive in the learning experience. A model that is customized to an individual learner and promotes interactive learning is what is needed. One of the many foundations of such a model can be a student record. This educational identity will be one of the 50 parts of your overall identity that you own consisting of educational information that is attested to by the institution and is portable. You will be able to move this identity around and take courses from any institute world over like computer science from MIT, artificial intelligence from Stanford, etc. So, that can be a beginning of the desegregation of post-secondary education where we can create a more student-focused model of learning rather than an ivory tower of transmitting data to the students. Another example could be your health record. This whole idea can indeed apply to every industry and every institution which is up for transformation. You can monetize your information as according to your needs and through this way, we can also protect our privacy. Since privacy is the foundation of freedom, I strongly believe that we need to get our identities back so that we can manage them responsibly. We talk more about the internet of information today than we did in 1995 because of the confusion it created back then that it could be used wrongly. Now today it is being used wrongly! Henceforth, three decades from now we will be talking more about blockchain than we are doing today. Perhaps we tend to fear what we do not understand initially.
Talking about privacy, how do you think protection of privacy gets taken care of here?
We can think of a virtual image that knows more about us than becoming just like a trail of digital crumbs as we proceed. This sounds good but not when the same virtual image is owned by intermediaries and not yourself. Back in feudalism when you were given a little plot of land, it was the landlord who expropriated almost all the fruits while you did all the work and got something leftover. The same is true today and one can think of this situation as “digital feudalism”. It is blockchain that can prove useful to create a platform that helps defend the basic human right to privacy because it is you who is going to own your virtual image and monetize it in whichever ways that you like while the data remains portable. Consider selling watches. Here we do not need to know who the other person is; all we need to know is that we have a cryptographic proof that we were paid. This would be a real breakthrough in terms of truly defending your basic human right to privacy.
How quickly can blockchain change the way in which information is controlled?
Future is not something to be predicted but is something to be achieved. However, it is no doubt that there can be existential issues for companies like Facebook as their very existence is based on the data that they collect. Therefore, it seems inexorable that a situation is going to be presented in front of us. What we need to do is to create an awakening amongst the people from all around the world regarding such an opportunity and start moving towards this platform. The key thing here is that it is the citizens who need to own their identities and benefit their own lives through a distributed model rather than governments and intermediaries using the technology to serve the purpose.
What is your take on a unique identification code like there is one in India called as Aadhaar?
While governments have a legitimate need to have certain kinds of information by law the whole idea of a unique identifier in a big government mainframe can be scary. This is because the identifier in question can be linked to any other data and ultimately everything about you can be known; from who you are to what you buy. A different model of identity is the one where citizens own their identity. Viewing one’s identity as a credit score then there will be no fake or public or third-party credit rating companies because you yourself will be your own credit rating and this identity will reflect all about your transaction history and your ability to pay. It is a whole new paradigm but unfortunately, many people do not understand it yet.
Do you think democracy can get undermined this way?
Democracy is in a deep trouble. Imagine moving towards a new model of accountable representation whereby a vote is smart meaning it is inside a smart contract so that a politician abides by all the terms of the contract or else does not get paid and so on. Again, if you are a songwriter then your song can be inside a smart contract posted on a blockchain which can perform all your business making sure you get paid as the true creator of your song. So, there can be a whole new era of democracy where the culture of public deliberation is such that the citizens are active rather than passive. As far as corruption is concerned, you are going to be naked if you get government operations running on a blockchain because it becomes hard to be corrupt in this kind of environment.
How can we manage the pushback which is inevitable arising from huge transformative technologies like blockchain?
The leaders of old paradigms face difficulties in embracing the new ones which cause dislocation and uncertainty. This is because vested interests are threatened continuously and hence arises the pushback. So, to create an awakening in India as to the opportunity of the second era of the internet I am here to help establish the blockchain research institute in the country. Then if you are a bad person, this is perhaps the faultiest time in human history to be alive because transparency is the new force and sunshine is the best disinfectant.
Can blockchain help reducing disparities?
Yes, it certainly can. Economies, as we see, are growing worldwide but the middle class essentially is shrinking where prosperity for most is stagnant or falling behind. The only solution so far, we have is redistribution which means taxing the rich more. With blockchain, we could effectively redistribute wealth and make economies more democratic. All we need to ensure is that the creators of value get compensated for the value that they create and build a true sharing economy where a company is not some billion-dollar corporation but a cooperative where everything can be done by a distributed application on a blockchain. In India where there are close to 100 million people with no identity, blockchain could bring these people into the mainstream economy overnight by rolling out financial services instantly. Similarly, you can put land titles onto a blockchain where no one would know even in theory on how to hack it let alone in practice. Therefore, the application of blockchain here can showcase the potential to settle disputes in a country where nearly 75 percent of the titles are not enforceable. There can be numerous other examples where we do not tax people increasingly. Rather it is about changing the way in which wealth gets created in the first place so that the ultimate effect is to have a more direct participation in the economy of the citizens.
These ideas are truly engaging but are you not presenting a utopian picture of our world?
In a digital economy, technology has a lot of potentials. However, there are always multiple viewpoints over the plausible uses that technologies enable us to perform. As for the internet, it was thought that it will bring everything together while at the same time could wipe out some of the most important sectors of an economy. Data that gets created over time could well be captured by powerful forces leading to loss of privacy and so on and so forth. Now we see the same kind of statements being made today because as such there is nothing inherent in a technology that says that we will get everything right this time. Since in present times, it is no more about information but about the distribution of value there comes a kick to rewrite the whole economic power grid and it is entirely upon us! Join the blockchain resurgence because we are going to help companies and governments to figure this out and get things in order.