BOOK REVIEW – Will the Blockchain Change the World?

blockchain-revolution-smallThe blockchain is the technology underlying the Bitcoin digital currency. It is a distributed ledger that you can use to record anything of value and importance. Renowned futurists Don and Alex  Tapscott believe that the blockchain will have a greater impact on our lives than any other technology that exists today. Considering the activity in mobile, big data, virtual reality and artificial intelligence, that’s an extraordinary belief. The Tapscotts’ book, “Blockchain Revolution,” is a great introduction to the blockchain and where it may take us. The father-son team assert that today’s Silicon Valley disrupters, such as Airbnb and Uber, are vulnerable to being disrupted themselves by blockchain-based business models.

This book review is organized into four parts: (1) some insights that I gained from Blockchain Revolution; (2) things that I liked about the book; (3) a few nitpicky criticisms; (4) my recommendations for people who are considering this book; and (5) some links that may help you explore the subject further.

Insights Gained

Here are a few things I learned from Blockchain Revolution:

The blockchain is a shared distributed ledger – In one sense, the blockchain is a different kind of database. Instead of being located behind a corporate firewall on proprietary servers, the blockchain is distributed across nodes in a network. In the case of Bitcoin, the network is the public Internet and the ledger is available to anyone. Entries in the ledger are timestamped. The algorithms the blockchain employs to create those timestamps greatly reduce the possibility that someone could tampered with a ledger entry without everyone knowing it. Each timestamp depends on previous timestamps, hence the “chain.” If you mess with one timestamp, the chain will be invalid.

The blockchain is more hack-resistant – An inherent advantage that the blockchain has over other databases is that since traditional databases are centralized, they’re easier to hack. And as the folks at Yahoo, Home Depot, Target and a number of other companies have experienced, these centrally controlled databases are being hacked. In contrast, security and privacy is built into the blockchain protocol.

The double-spend problem – The blockchain is particularly suited to support digital currencies since it solves a big problem related to transferring value in a digital world. If someone pays me with a $100 bill, then I physically take possession of the cash. Consequently, I can be very confident that the person who paid me cannot spend that money somewhere else. But when you send someone data on-line, you don’t actually send the original data; you send a copy. This aspect of the digital world brings about what is know as the “double-spend” problem. With Bitcoin, the transfer of value (i.e., digital money) is recorded and timestamped in a public ledger. The blockchain makes it possible to transfer money on a peer-to-peer basis with a high degree of confidence that there will be no double spending. This is why the Tapscotts refer to the blockchain as the “trust protocol.”

Blockchain technology is accessible to all – Nobody “owns” the blockchain and its implementations are typically “open source,” meaning anyone can download the source code, modify and build upon it. Moreover, transactions are performed peer-to-peer rather than through a centralized clearinghouse.  Consequently, you don’t need a bank account to transact on the blockchain. While this initially might not seem like such a big deal if you already have a bank account, it is an absolute game changer for billions of people throughout the world who are still unbanked.

The blockchain can increase efficiency and lower transaction costs – I run an on-line business that collects small amounts ($2 to $10) from consumers over the Internet. I have to pay a credit card processor about 6% in fees to process those transactions. Even after a consumer payment appears in my company’s account at our credit card processor, a consumer can (and sometimes will) dispute a charge for up to several months after the transaction takes place. When that happens, we have to refund the money and pay a $25 dispute fee. It can take several days to withdraw money to my company’s bank account. And when I cut myself a check, it can take several days more to transfer money to my personal account, which is at a different bank in the same town. In contrast, Bitcoin transactions can be confirmed (and become immutable) in minutes. And because blockchain transactions do not involve a fee-charging clearinghouse, Bitcoin payments can be much cheaper to execute.

The blockchain puts individuals in charge of their personal information – The world is creating data at an unprecedented and accelerating rate. Many organizations have realized that this data can be extremely valuable. What and how individuals purchase is among the most prized information. That is why organizations are so keen to acquire consumer transaction data, and are determined to use that information for their own benefit.  The privacy safeguards built into the blockchain protocol puts individuals in charge of their personal information. In other words, individuals decide how much or how little personal information they want to disclose.

Things I Liked About the Book

Don Tapscott has written or co-authored well over a dozen highly-acclaimed books, including Wikinomics (2010),   The Digital Economy (1995) and Digital Capital (2000). That gives him significant credibility. The cover and beginning of Blockchain Revolution include quotes praising the book from dozens of business luminaries, such as Steve Wozniak and Marc Andreessen. While some other reviewers have taken issue with the Tapscotts for name dropping, the fact that so many well-respected people had such effusive praise for the book gave me a decent degree of confidence that I would not be wasting my time reading it.

If you’re familiar with Don Tapscott’s work, then, like me, you may get a strong sense of his basic decency. It seems to me that he not only cares about how technology will impact peoples’ lives, but that he also strongly wants that impact to be a positive one. The Tapscotts are true believers in the blockchain and it’s potential to improve the human condition. It is important to me that they are not just a couple of guys who wrote a book to cash in on the latest trend.

My favorite part of the book is the chapter devoted to potential “showstoppers,” which addresses ten implementation challenges that will likely have to be addressed before blockchain technology can fulfill its potential. Far too many books overhype new technologies. The showstoppers chapter is extremely valuable in that it highlights how the blockchain still has a way to go. Moreover, the blockchain’s stumbling blocks also represent opportunities for innovators who find ways to address those issues.

Nitpicks

Futurists often have an incentive to convey more excitement about their subject matter than is called for. If the future doesn’t seem exciting, fewer people would want to learn about it. So even though the book covers blockchain show-stoppers, much of the rest of the text tends to flirt with techno-utopianism. In my experience, many technologies are extremely promising, and fun to prognosticate about; however, those technologies only become established after somebody does the heavy lifting required to overcome implementation problems. But while the chapter on blockchain’s challenges stopped short of proposing detailed solutions to those challenges, it did rescue the book from being a little too optimistic, at least in my opinion.

The other quibble I have with the book is that, after reading it, I still felt like I had very little knowledge about how the blockchain works on a technical level. That may have been intentional since the target audience was probably not software engineers. Still, I would have found a technology primer very useful.

Recommendations

I highly recommend this book for anyone interested in understanding the potential for the blockchain. This book will not, however, help you gain an in-depth technical understanding of how the blockchain works, which is probably OK for most people.

Further Investigation

If you are interested in this book, then you may also find the following links useful:

Don Tapscott’s TED Talk, “How the blockchain is changing money and business”

Alex Tapsott’s Talks at Google presentation

The original paper by Satoshi Nakamoto (a pseudonym) defining the Bitcoin cryptocurrency

Princeton Univerity’s “Bitcoin and Cryptocurrency Technologies” textbook

Blockchain Revolution on Amazon


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