Nov. 9, 2016
The latest disruptive technology could change the way consumers interact with service providers and cut out middlemen across industries
The technology likely to have the greatest impact in the next few decades has arrived. It is not social media. It is not Big Data. It is not robotics. It is not even artificial intelligence,” says technology futurist Don Tapscott. “You’ll be surprised to learn that [the technology that will have the greatest disruption] is the underlying technology of digital currencies like Bitcoin. It is called the blockchain.
“It is not the most sonorous word in the world,” continues Tapscott in a recent TED Talk. “But I believe this next generation of the internet holds vast promise for every business, for every society and for all of you.”
As a marketer with an eye on innovation, technology and disruption, I’ve learned to pay attention to Tapscott. His books—including Paradigm Shift: The New Promise of Information Technology (1993), Growing Up Digital: The Rise of the Net Generation (1997) and Wikinomics: How Mass Collaboration Changes Everything (2006)—have always given me a leg up on disruptive technology trends that will soon confront me as a marketer. Marketers need to be ahead of the next wave of technology, not behind it.
If you are a financial services marketer, you need to know about blockchain technology in the same way marketers from hospitality and transportation companies needed to know about the so-called platform technologies that power Airbnb, Uber and Lyft before they went to market.
I picked up a copy of Tapscott’s book Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World and read it twice. To be honest, to understand it, I had to read it twice.
Blockchain Revolution is not the easiest tome to comprehend, digest and internalize. It helps to both read his book and go to the web, download one of his TED Talks and do some online research. You’ll learn that Bitcoin is a crypto-currency, but there’s a difference between blockchain technology, the technology that enables Bitcoin, and blockchain. Bitcoin is an application of blockchain technology. There are many other kinds of applications or solutions that can be developed relying on blockchain technology.
You’ll learn that, “A blockchain is a distributed database that maintains a continuously growing list of records called blocks secured from tampering and revision. Each block contains a timestamp and a link to a previous block.”
You’ll discover that in the future, this technology could enable individuals to securely conduct financial transactions without costly intermediaries such as banks or securities exchanges. If you’re trying to send money to a developing nation, you won’t need Western Union or an intermediary that takes a big commission.
Blockchain might empower entertainers to distribute their content legally—peer-to-peer, as Napster envisioned—earning royalties that they, not music companies, create. It might enable the creation of complex contracts that can be relied upon and cannot be contravened.
Or, if you’re concerned about the provenance of raw materials—like avoiding blood diamonds from conflict zones in Africa or tainted wallboard from a poor producer in Asia—this technology could pave the way to authentication.
The wildest thing you’ll learn from Tapscott’s book is that blockchain technology could even disrupt and put out of business the current aggregator platforms: Uber, Lyft and Airbnb. Right now, the backers of those companies earn fortunes, says Tapscott, but they are ultimately centralized databases and intermediaries, not truly distributed, democratic enablers.
In time, Tapscott believes individual riders of taxis or renters of rooms could trade peer-to-peer using secure blockchain technology. Customers could avoid paying the aggregator, agent or intermediary their percentage because the technology will promote trust between individuals. Wouldn’t it be nice if you could hail an Uber electronically and the fare was lower and all the fees went to the driver? Tapscott believes this is coming.
If you think these ideas are outlandish, do some research on Linus Torvalds, the Finnish software engineer who decided to upend the Microsoft Windows operating system by inventing Linux and creating a movement toward open-source solutions. What Tapscott predicts has happened before.
Blockchain technology is complex and hard to fathom. In Blockchain Revolution, Tapscott explains the core ideas of blockchain were “defined by a pseudonymous person or persons named Satoshi Nakamoto,” following the financial crisis of 2008. Nakamoto (or a group of writers using that moniker) laid down the protocols for blockchain technology but have not been heard from since.
You’ll read about how Nakamoto’s principles inspired an ecosystem of geeks to experiment and create new technology that just might alter our future society. You’ll discover the power of a globally shared ledger of data that can be accessed anywhere, at any time and never be erased. Once a transaction is entered in a blockchain, it can never be altered.
Tapscott describes how blockchain technology might eliminate the so-called “double spend” problem, where fraudsters try to spend their money more than once online. Tapscott suggests blockchain technology might even reduce cybercrime and lower cyber risk.
I interviewed Tapscott and asked him why blockchain technology might be important to marketers. He says, “This second generation of the internet is going to be a big deal for every function within the corporation. We’ve had the “internet of information” for a few decades and now we’re getting the “internet of value.”
“Blockchain creates a whole new set of opportunities and challenges for marketing executives,” he writes. “Blockchain will change the structure of our firms. It will alter the cost of transacting and doing business. And blockchain will lower the cost of establishing trust outside the boundaries of a firm. Trust between buyer and seller is the sine qua non—the indispensable and essential ingredient—of marketing in the digital age.”
In the past we’ve needed intermediary institutions such as banks, insurance agents, brokers, stock exchanges and title companies to assure trust. “We will have a new global technology platform where trust is achieved not by powerful institutions but by cryptography, collaboration and clever code,” he says. “And the implications are pretty staggering for every marketing executive.”
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