What is Blockchain?

Everyone is talking about blockchain, but does anyone really know what it is? In this episode, we sit down with blockchain guru Don Tapscott, the co-author of Blockchain Revolution and co-founder of the Blockchain Research Institute to help us answer that key question and why Canada is at the heart of this emerging industry. Also, Don gives us a surprise update about his critically acclaimed bestseller.

A portion of our conversation with Don Tapscott is transcribed below. Subscribe here to have the Navigator’s latest insights delivered right to your inbox.

Clare: Let’s kick things off with a question on all of our listeners minds what is block chain?

Don: A block chain is just a technology to allow individuals and organizations to share information in a way that everybody can rely on the way the information is shared to be accurate. Mostly it’s a network in which get a lot of different people to agree on something when they might not necessarily trust each other.

Most people would say it’s a distributed ledger technology and we think of it quite differently, as the second era of the internet. For four decades we’ve had an Internet of information. But when I send you some information a PowerPoint or e-mail, I’m actually sending you a copy, even with a website I keep the original. When it comes to assets things of value like money, or stocks, or loyalty points, or carbon credits, or music, or art, or identity’s, or intellectual property, or you know votes which are now capital, value that belongs to somebody, sending a copy is a terrible idea. This has been called the double spend problem by cryptographers for a long time. And the problem got solved by an anonymous person or persons named Satoshi Nakamoto they came up with the bitcoin protocol. Bitcoin is an asset, a crypto currency, but what really makes it important to all of us is none of that. It’s the underlying blockchain technology.

For the first time ever now people can handle assets to transactions, communicate and manage them peer to peer and trust between people is not achieved by a big intermediary like a bank, government, credit card company, social media company, whatever. It has achieved by cryptography, by collaboration, and by clever code.

Clare: There are a few challenges still for blockchain adoption such as scalability and sustainability and there are many disagreements within development communities about these two topics. I read that bitcoin can process somewhere around 7 transactions per minute and Visa and Mastercard can obviously do thousands and thousands of transactions a second, so are we going to see a solution soon to that scalability challenge?

Don: Ironically speed is going to be one of the biggest benefits of blockchain not just in terms of number of transactions but speed from the financial industry. Think about it. You tap your card at Starbucks and a bunch of messages go through half a dozen companies each with ancient technology and then three days later clearing the settlement occurs where someone actually gets paid. Well ifall of that we’re based around a distributed ledger. There would be no three day settlement period because the payment in the settlement would be the same activity, just a change in the ledger.  So over time I think it’s inexorable that not just technology will get better but the payment system will move to blockchain.