Blockchain Revolution
The high-water mark of enterprise blockchain enthusiasm.
Summary
Don and Alex Tapscott argue that distributed ledgers will restructure economic organisation by allowing strangers to transact and record agreements without a trusted intermediary. They call this the internet of value, distinguishing it from the internet of information.
The applications they set out cover payments and remittances, identity and personal data ownership, property registries in countries with weak record systems, supply chain provenance, intellectual property and artist royalties, corporate governance and shareholder voting, distributed autonomous organisations, and machine-to-machine transactions. They also propose that individuals could own and license their own data rather than surrendering it to platforms, and they treat smart contracts as a general mechanism for automating agreements.
The underlying claim is institutional. The Tapscotts apply Coase's theory of the firm, arguing that if a distributed ledger reduces the cost of contracting and verification, firms should shrink and market transactions should replace internal coordination.
The book was written at the peak of enthusiasm and predicted adoption that has not occurred. Nearly a decade later, the applications outside cryptocurrency trading and speculation remain limited. Supply chain provenance projects, notably several the authors highlight, were abandoned. Land registry pilots did not scale. The self-sovereign identity proposals remain proposals. The book also treats the technology's constraints lightly, saying little about throughput, energy consumption in proof-of-work systems, the difficulty of connecting on-chain records to off-chain reality, and the fact that a ledger cannot verify the truth of what is written to it. Readers should treat it as a record of what the technology's advocates expected rather than as an analysis of what it does.
Key takeaways 7
- A distributed ledger allows parties who do not trust each other to agree on a record without a trusted intermediary.
- If verification and contracting costs fall enough, firm boundaries should contract and market transactions should replace internal coordination.
- Individuals could hold and license their own identity data rather than surrendering it to platforms that monetise it.
- Smart contracts automate the execution of an agreement, which removes enforcement cost but also removes discretion.
- Property registries in countries with weak record-keeping are a natural application because the incumbent system is untrusted.
- Cross-border payments and remittances carry intermediary costs that a distributed ledger could in principle eliminate.
- A ledger can guarantee that a record was not altered but cannot guarantee that the record was true when written.
Who should read it
Readers who want the maximal case for distributed ledgers as stated in 2016, useful mainly for comparing predicted adoption against what actually happened.
About Don Tapscott
Canadian business author and consultant, co-founder of the Blockchain Research Institute, who wrote The Digital Economy and Wikinomics.
The Digital Economy set out early how networks would redraw firm boundaries, and Wikinomics documented mass collaboration - open source, peer production, crowdsourced research - as a working production model rather than a curiosity. Blockchain Revolution extends the argument to distributed ledgers and their business applications.
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