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The digital revolution is bringing a new and radically different platform for business and other institutions that can take us through the next quarter-century of human progress. At the core is the biggest innovation in computer science in a generation. It is blockchain -- the technology underlying the digital currency Bitcoin. This technology platform is open and programmable.
For the last few decades, we have had the internet of information. Blockchain is bringing the internet of value. As such, it has the potential to unleash countless new applications and as-yet unrealised capabilities that could transform everything in the next 25 years.
At its most basic, blockchain is a global database -- an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions, but virtually everything of value and importance to humankind: birth and death certificates, marriage licences, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, transactions between smart objects, and anything else that can be expressed in code. This ledger represents the truth because mass collaboration constantly reconciles it.
We will not need to trust each other in the traditional sense, because the new platform ensures integrity. Think about it like this: trust achieved through clever code and mass collaboration. Collective self-interest, hard-coded into this new native digital medium for value, would ensure the safety, security and reliability of commerce online. Trust is programmed into the technology, which is why we call blockchain the "trust protocol".
Some scholars have argued that the invention of double-entry book-keeping enabled the rise of capitalism and the nation state. Today, the new platform enables a reconciliation of digital records -- call it the digital reconciliation. The "internet of everything" needs a "ledger of everything". Business, commerce and the economy need a digital reckoning.
Building 21st century companies
It turns out that every business, institution, government and individual can benefit in profound ways.
How about the corporation -- a pillar of modern capitalism? With the rise of a global peer-to-peer platform for identity, trust, reputation and transactions, we will be able to re-engineer deep structures of the firm, for innovation and shared value creation. We are talking about building 21st century companies that look more like networks than the vertically integrated hierarchies of the industrial age. The whole financial service industry is already being reinvented by blockchain, and others will soon follow.
How about the internet of things? In the not-too-distant future, billions of smart things in the physical world will be sensing, responding, communicating, sharing important data; and generating, buying and selling their own electricity, doing such things as protecting our environment, charging our homes and managing our health. It turns out that this internet of everything needs a ledger of everything.
"A new model of the IT function is emerging, and one that makes the CIO more important than ever"
Don Tapscott and Alex Tapscott
As with major paradigm shifts that preceded it, blockchain will create winners and losers. But if we do this right, blockchain technology can usher in a halcyon age of entrepreneurship, empower us to reinvent our institutions for the better and create a fairer and more prosperous world.
This creates significant opportunities and challenges for the CIO. Like other big innovations, such as the PC, the web, mobility and the social web, blockchain experimentation often starts outside the IT function. Thoughtful CIOs should view this as positive because every business will become a blockchain business and every business leader needs to explore opportunities for transformation.
Read more about blockchain
- Blockchain will bring a radical rethink of banking -- but not yet.
- Want to adopt Blockchain? Better start playing, say financial services experts at the Innovate Finance 2016 Summit.
- Financial firms will spend more than $1bn on blockchain technology projects over the next two years, according to researchers.
- What is a smart contract and how is it used?
- Blockchain industry is hashing out how to determine good blockchain use cases
The trouble is that IT challenges are enterprise challenges. Companies need to have an integrated enterprise architecture to have a single version of the truth and to harness the power of blockchains. They need to have security standards and systems to protect them from bad actors. They need backup capabilities to ensure business continuity. They need an enterprise strategy for the next generation of blockchain collaboration tools and systems to cut across business silos. They need to have elite IT talent to deal with the many complexities of becoming a blockchain business.
A new model for IT
There is a solution to this dilemma. A new model of the IT function is emerging -- one that makes the CIO more important than ever.
Call it the "blockchain services supermarket". Here's how it works: the CIO anticipates business needs and provisions a rich supply of services, from standards for blockchain application development and architecture-compliant applications, to elite talent with expertise in blockchain architecture and development -- all in the "shelves" of a supermarket.
The business customer goes to the supermarket -- a self-service portal or catalogue -- and pulls up the available services. They choose the services, the level of service required, and combines them to meet their technology needs.
How can a CIO get started? Here are some suggestions:
- Personal use of this technology is a precondition to comprehension. Get a digital wallet on your mobile phone and buy something with digital currencies.
- Takes steps to ensure you are informed about the blockchain revolution.
- Hire or transition key blockchain IT talent to get going.
- Initiate a next-generation blockchain architecture project. Every firm will need a target architecture and a migration strategy so that new investments contribute to a desired future, rather than perpetuating the past.
- Launch a pilot where your company can learn, gain experience and make initial successes. Think big, but start small.
Start fast, too. It is likely that the second era of the internet will happen much more quickly than the first, because many of the technological preconditions for it to take off already exist.
Don Tapscott is the author of 15 books about the digital revolution in business and society, dating back to 1981. Alex Tapscott is the CEO of North West Passage Ventures, an advisory firm building early-stage companies in the blockchain space. Together, they are authors of Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World, published by Portfolio Penguin.