29 Jan “We Need Microsurgery on This New Economy”, Don Tapscott
Cointelegraph interviewed one of the world’s leading consultants on social and economic impact of technologies, co-founder at the Blockchain Research Institute, Canadian business executive Don Tapscott – about the World Economic Forum, Blockchain, regulations, and digital economy.
Cointelegraph had the opportunity to meet Don Tapscott, one of the world's leading experts on the economic and social impact of technologies and innovations, at the World Economic Forum in Davos.
Don has been an advocate of Blockchain and the digital economy for many years. This year at the World Economic Forum is the first year he was not in the minority. Blockchain was talked about more than every other topic (with the exception of Donald Trump attending the Forum at Davos) this year. Don Tapscott sat down with Cointelegraph to talk about the evolution of the digital economy and the impact blockchain has had and will continue to have on our lives.
Cointelegraph (CT): I’m here with Don Tapscott, CEO of Tapscott Group, co-founder at the Blockchain Research Institute and one of the most influential voices of blockchain and the digital economy. Thank you for being with us today.
Don Tapscott: Happy to be here.
CT: You are a senior advisor for the World Economic Forum. What are your thoughts on how big a role Blockchain and the digital economy are playing in Davos this year?
DON: It’s interesting. First of all, I don’t speak for the forum, I speak for myself, but I was interviewed recently by the Wall Street Journal television here and the guy said to me, “You know, this is the third year that we’ve interviewed you about Blockchain and this year everybody’s talking about it in Davos. Describe how it’s changed over the three years.”
I thought about it for a second and replied, “Three years ago the main person I was talking about was me and I was certainly talking about myself, maybe a few other people. Last year we had big financial institutions that we talked about and also some entrepreneurs around the congress, central bankers, ministers of finance. I spent some time with them. This year this is the Blockchain Davos.”
Blockchain – number two word at Davos
Apparently Blockchain on the formal program as a word appears more than the United States and Europe combined. Someone did an analysis of the language used at the World Economic Forum and they found that “Blockchain” was the number two word at Davos, number one being “Trump”. Anyway, be it as it may, it’s an extraordinary thing; it’s not just integrated into the formal program and not only powerful people are talking about it. I estimate that around 1000 entrepreneurs, investors, social activists, social entrepreneurs, academics and so on – have come to Davos and are not inside the Congress Center. They’re outside doing all kinds of things. So you’ve got the Global Business Blockchain Council holding whole days of programming, hosting a dinner with 200 people, with hundreds of people lined up hoping to get in. Then there was the Crypto HQ – I wondered what that was for days. I couldn’t get in there because there were lines up there all the time. Everywhere there were activities related to Blockchain. For example, i’m walking on the street, someone recognizes me and says “We’re having a big Blockchain meeting upstairs. Would you come and speak to us?” And I go upstairs and there’s a hundred people in the room and I do a panel discussion and answer a bunch of questions. So this is very reflective of what is happening more broadly in the world. Finally, this technology has not just come of age. It’s really becoming a part of the vernacular and everyone is trying to figure it out.
CT: Thank you. You are from Canada. How do you feel the Canadian government piloting Ethereum blockchain to create more transparency?
DON: Canada is a pretty interesting story. When you think about where this whole [Blockchain] thing is going to be centered in the world, there are a few candidates; Switzerland is obviously one. I don’t think it’s going to be Silicon Valley, basically because leaders of all paradigms have difficulty embracing the new. But Canada’s going to govern it. It’s pretty interesting – particularly including the fact that the Prime Minister was here. He was totally into Blockchain and all the things.
As a part of our Blockchain Research Institute we have organizations such as the Bank of Canada, the Federal Government, the Provincial Government and the City of Toronto, but there’s also 5, not 95, big banks who are working on reinventing the payment system. We also have Ethereum that was created by a university dropout from the University of Waterloo. We’ve got a thought leadership with our Research Institute. The two biggest incubators in North America are in Toronto. MaRS alone is 1.9 million square feet.
How to manage brain drain
We used to have a brain drain in Canada where entrepreneurs would leave the country and move to the U.S., but now thanks to two things that’s been reversed. One of them is Donald Trump. A lot of people, especially Canadians, want to move back to Canada, but the second one is: there is a funding problem when you would get to a certain point where your company would make maybe 20 million in revenue and you will need to do a series A and some big venture capitals in Silicon Valley would say, “Great. We will fund you, but you’ve got to move to the Valley.”
As a result of this there was a company drain as well. That’s been turned around now because of ICOs and the people who don’t have to go the venture route to fund the company. The other thing is that we have a pretty easy regulatory environment in Canada too. We surely have crazy stuff going on like in some countries in the world. I’m also very hopeful that the Bank of Canada is going to be a real leader in the space because ultimately every country needs to embrace Blockchain for the fiat currency.
So we need the digital dollar, digital pound, digital yen and so on. That would give central bankers powerful tools to manage the money supply, and change the inflation rate. You can see what’s happening instantly. You have a crisis, and rather than give the money to a bank, you could helicopter onto the mobile devices and save the poorest people. There’s a lot going on in Canada right now.
CT: Thank you. You already mentioned this, but maybe you can tell us more. Do you think other governments will be as open to these technologies as Canada?
DON: Well, all around the world it’s very uneven in terms of government understanding and comprehension of this whole secondary era of the Internet. Because that’s what we’re talking about here. We have had the internet of information for 40 years and now we’re getting the internet of value or anything that value can be moved, stored, transacted in a secure and private way. Trust is achieved by cryptography and collaboration and code rather than by intermediaries. That’s is a very, very powerful thing. It will be the center of any building and innovation economy, but governments…
Many don’t understand it, you know. I was recently in Korea. Here’s the country that created a miracle around the whole first era and they created these amazing manufacturing facilities – they call it the miracle on the Han. Now the Korean government is trying to figure what to do with them. They banned ICOs and now looking at restricting or even banning cryptocurrency exchanges. I was there meeting with the government leaders and doing a lot of press conferences and stuff saying, “This is going to hurt you. You don’t want to do that. There is a public interest here. It’s not like the internet of information where I would say, “Just leave it alone.”
But you know, if you’re doing an ICO and the token represents a share in the company that’s called a security, it should fall under securities legislation. But we need microsurgery on this new economy. We don’t need to bring a chainsaw to it. This would be one of the three most important rate determining factors in terms of what countries emerge not just with the Blockchain industry, but with the whole new innovation economy. Do governments do the right thing and implement sensible legislation or did they mess it up?
CT: Thank you. What are the ways you have seen blockchain and the digital economy mature throughout 2017?
DON: It was pretty an extraordinary year. Of course the biggest thing that’s caught everybody’s attention is the crypto craze, right? Just a word on that, you know, this is the tulip bubble, like in Holland. I don’t think those kinds of analogy is quite right, actually. Yes, there will be all kinds of volatility and there will be bubbles, but think about it: in the first era of the Internet, information was placed in the commons by Tim Berners-Lee; in the second era the actual protocols are going to be owned by investors and people.
So the first era was worth how much – tens of trillions of dollars? The second era is probably going to be bigger. An alternative way of looking at this is the biggest investment opportunity perhaps in human history. Now, are a lot of these ICO’s garbage? Yeah, well, but in 1995 a lot of those “dot coms” were garbage too. Are a lot of people going to lose money? You bet! Will there be all kinds of speculation? For sure. Is there hype? Yeah! There’s hype, there’s that much hype! But there was that much hype about the Internet in 1995 and we’ve talked more about the internet today than we did in 1995. So that hype it’s not going to go up and burst, it’s just going to continue (probably for decades) as we understand that this is the new operating platform for firms and for the economy at large.
But what we have here is a sort of crypto asset class tail wagging the Blockchain dog, you see. Because the real pony here is not all these asset stuff, although maybe a big opportunity. The pony in this pile is that we have a new platform emerging that’s going to change the deep architecture and structure of the firm. That’s going to fundamentally transform every industry in our economy and over the last year we’ve seen some really big developments. I could talk all day about this, but I’ll just give you one example.
Blockchain and supply chain
The supply chain industry globally is a $64 trillion industry and supply chains are going to move to Blockchain. You can see that with Foxconn doing this now, we’ve done a case on that. On the Walmart food sale they use Blockchain for food safety. The biggest supply chain in the world ever is the ‘One Belt One Road’ project linking Hong Kong and Rotterdam. All the trade and finance and a lot of the supply apps on that are being done via Blockchain.
Blockchain is perfect for situations where you have a buyer and a seller and escrow agent, and governments, and various shippers, and tax authorities and so on. Instead of passing pieces of paper and faxing, and emails and so on, they have a single shared network state where they can all instantly see what’s going on. It turns that supply chain into something we call an asset chain. And ultimately, this thing becomes cognitive. It really becomes a new cognitive computer. That’s where the supply chain will be.
CT: Thanks. In what ways do you think cryptocurrencies will impact the way we understand and use money?
DON: It’s a good question. I don’t think that non-fiat currencies will replace fiat currencies. Lots of people may disagree with me. I’d be surprised if Bitcoin got to more than 1% of transactions in a major country five years from now. There is a rule for these currencies, but more as a tool for creating new apps. For example, the global diaspora. People who left their lands and they send money back home. It’s called remittance. It’s a trillion dollar market. For example, If you’re a Filipino nanny in Toronto, you don’t have to pay Western Union 15% to send money to your mom in Manila. You can use a platform for remittance, but that platform actually uses Bitcoin as the underlying tool to enable that to occur. So that’s not the actual currency. The currency is a sort of a transition between the two fiat currencies. And as I said before, the biggest opportunity is to turn the fiat currency into a cryptocurrency.
CT: Like national or…?
DON: Yeah. I think that every country should have its cryptocurrency for the next period of human history. Ultimately, I’m like John Lennon who said “Imagine there’s no countries. It’s easy if you try.” You know, the whole idea with all these nation states is that they are an interesting idea that were developed in a certain period in the human history. We have these areas and there were a bunch of cities that consolidated together and they had a common currency and borders. They created institutions, the rule of law and bureaucracy and so on. So there were nation states for national economies, but increasingly the economy is becoming multinational.
You know, it’s not withstanding Donald Trump and “America first”. No country can succeed in a world that’s failing and increasingly we have regional economies like North America and Europe and increasingly they are going to need some kind of global economy. So it’s fun to speculate about stuff like that in the future, but I think it’s probably not in my lifetime.
CT: It’s very interesting! Could you tell us about what you personally will be focusing on in 2018?
DON: In the Blockchain Research Institute we’re doing 75 projects right now and these are all looking at the strategic implications of Blockchain to transform corporations in 10 different industries we’re looking at. We are also looking at seven functions of management. What is the triple-entry accounting for the CFO? What do smart contracts mean for the Chief Legal Officer? What does Blockchain mean for enterprise architectures? It’s a fine bunch of pilots, but, you know, the companies are not a bunch of divisions, it’s an enterprise ultimately and we do need enterprise architectures.
We have got a great group of about 60 of the world’s leading thinkers that are leading these projects. And over the next year we’re going to complete these projects and then our management team will be out in all these companies doing executive briefings. These typically consist of the CEO and the executive committee of some of the biggest companies in the world. I’m pretty excited that that’s going to bring about some big changes.
The other thing is, both my son Alex and I are spending a lot of time around the world speaking to big conferences and also to the small and more important events. In three weeks I’m speaking to… I don’t want to mention the name, but it’s 150 CEOs of 160 largest corporations in America. They’re very curious about this. Most of them haven’t quite figured it out, so we’re serving the business of bringing clarity to the market. We partner with Hyperledger enterprise, Ethereum, Chamber of Digital Commerce and other organizations. They are affiliates. We’re not duplicating what they are doing. We are trying to address these strategic issues. That’s going to keep me busy for the next year.
CT: Thank you so much!
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