Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business and the World by Don Tapscott and Alex Tapscott, Portfolio Penguin/Random House, 2016
This 348-page panoramic view shows how fintech is disrupting traditional finance and how bitcoin's underlying blockchain technology is changing the global economy. If you are in an incumbent bank, insurance company, pension fund or managing assets, Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business and the World is required reading. Co-authors Don and Alex Tapscott are deeply knowledgeable, based on Don Tapscott's Wikinomics (2006) and Macrowikinomics (2010), while Alex Tapscott is CEO of Northwest Passage Ventures, a former investment banker now advising and building blockchain companies. His 2014 report on governing digital currencies for the Global Solutions Network was published by the Rotman School of Management at the University of Toronto.
I became deeply immersed in this book in preparation for the expert workshop on Fintech for Sustainable Development of the UN Inquiry on Sustainable Finance to which Ethical Markets contributed a paper on Reforming Electronic Markets and Trading (2014). I was not surprised to see Canadian experts and market players punching above their weight as they have at the United Nations for decades. For example, we followed the development of fintech firms including IEX and supported its successful application to the SEC as now the nation's 13th national stock exchange. The same kind of technology-based market reforms as IEX's famous "speed bump" also are explored along with the current 1,379 fintech startups with combined funding of $33 billion now disrupting legacy finance.
Today's list of the Fintech 100 are only the tip of the iceberg. Big incumbent banks are now rushing to buy out, partner or coopt these fintech startups they see as taking some 25% of their business in banking, payments, loans and remittances as these information platforms and cell phones simply bypass old money circuits. There are 5,000 blockchains on Microsoft (NASDAQ:MSFT) servers and banks, including Citi (NYSE:C) and Barclays (BCS), are developing in-house capabilities and facilitating fintech startups. Regulatory bodies including the UK's Financial Conduct Authority are helping with their "regulatory sandbox" and many startups are now in the Regtech field.
Blockchain Revolution surveys applications in the key area of trust, without which markets cannot operate. Chapters cover applications in finance, business models (including Airbnb (AIRB), Uber (UBER) along with cloud providers Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG) but most still startups and pre-IPO), IoT, international remittances, art, music and culture - all disintermediating "middlemen" and empowering peer-to-peer relationships among individuals and small enterprises.
The most enlightening and important chapters are in part III "Promise and Peril" outlining the need for basic organization of a robust infrastructure for blockchain systems with ethical principles, standards and international governance - similar to that of the Internet, such as ICANN for domain names. The authors see blockchain as the next wave of global information, similar to the Internet in scope. But only if the technology design challenges are met, along with reducing the massive energy use and cooling needs of servers! Critical to success will be the creation of appropriate legal innovations, standards, principles and protocols for a new global governance network of multi-stakeholders such as the Global Solutions Network and that which fostered the Internet. Must reading, or as suggested by the upcoming conference: Finance Disrupted: Collaborate or Die! (The Economist, NYC, October 13, 2016).
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