Unblocked Read online

  In November of 2000, CNN declared that an index of a few hundred internet stocks lost $1.7 trillion.1 Yet what came out of that bust changed all our lives. There are many similarities to this moment, although arguably with even higher expectations. While the mortality rate may eclipse that of the dot-com bust, keep in mind that many of the most powerful companies in the world today rose out of that bust. Buried in blockchains and their related family of technologies are seeds of change that could be powerful enough to repeat this history.

  This book will help you see around both the hype and decimation. It will help you tap into where the developers and executives working in this space have set their sights. It will help you see what they see.

  Come, let’s walk around that elephant blocking the view, and see what’s unfolding just around the corner.

  Introduction

  DAWN, RISING

  A mother and her two children hurry northward through the Eastern European countryside. They leave behind a region embroiled in civil war, its people devastated by mass genocide, crushing economic sanctions, political and religious persecution, and daily threats to their lives. Already 13-year-old Maja has been wounded in a mortar shell attack, while her father remains imprisoned in a concentration camp. The family has lost their jobs, their home, their possessions, any sense of security, and even their official identities: Yugoslavia is no more.

  For now, mother, daughter, and son have only one intention—to escape alive. But first they must make it through this land of warring republics and political upheaval, where rape has become common and many women and girls looking to escape are instead taken into prostitution. A succession of drivers is paid to take them as far as each is willing to risk. For much of the journey Maja’s mother hides her under a blanket.

  At the southern border of the Czech Republic, a border patrol guard searches the vehicle and interrogates them. After a short, tense discussion, he nods to the driver. “Their country no longer exists,” he says. “You can do with them what you like.”

  Formerly protected citizens of a sovereign nation, the family is now stateless, vulnerable to abuse from anyone in power. With no proof of their names, birth dates, educational or professional histories—with no official data at all—they have, for all intents and purposes, ceased to exist.

  The driver speeds onward, and dumps them out in the middle of Prague with a warning: “I never saw you, I never drove you.”

  Years later, Maja Vujinovic, now an executive working in mobile technology in Uganda, opens a cryptic email from a friend. It contains only one line of text—you must read this—followed by a link to a whitepaper with an inscrutable title: “Bitcoin: A Peer-to Peer Electronic Cash System.”

  “I’m just sitting there in my office, minding my own business and eating some papaya,” Maja recalls, “when this thing comes across my desk. I called my friend and asked him to explain. He said, ‘Imagine being your own bank. You can transfer money anywhere to anyone, with your phone and in an instant, with no one in between.’ Working and living in Africa, I’d seen firsthand just how difficult and expensive transferring money could be. I got that this was important.”

  The whitepaper, which was written by a pseudonymous author called Satoshi Nakamoto and published in the wake of the 2008 financial crisis, described a technology that could allow a new kind of digital money to be transferred anywhere around the world as directly as handing someone you meet on the street paper currency. To the first cryptographers who picked up on the idea, it was a tantalizing way to circumvent financial institutions.

  It took a few years, but soon, technologists realized that the underlying technology Satoshi described—which they called blockchain for the way data is recorded in files called blocks, and then chained together—could propel the decentralization of not just money, not just financial institutions, but every industry. That’s because blockchains enable parties that don’t have an existing trusted relationship to agree on any type of shared digital history, not just monetary transactions, without a middleman. This means anything of value could be securely recorded and transferred through the blockchain.

  Meanwhile, Maja was carefully watching the space evolve from its early focus on money to something larger. The more she learned, the more she saw in blockchains a powerful catalyst, what she calls “a forcing mechanism for change” for large organizations, governments, and society to move to greater transparency and to create a more equitable world. She recognized that blockchains could be a solution to questions she’d long been exploring in her quest to develop business models that drove value for both business and society. With this inspiration, she took on the role of Chief Innovation Officer of emerging technology at GE Digital to lead initiatives in artificial intelligence, machine learning, and of course, blockchains.

  It was here that she had what she calls “a massive aha moment.” In one of the pilots she was leading, her team had been exploring how a blockchain could establish a reliable, trustworthy identity for the billions of connected devices used by industry. Suddenly, Maja realized those same technological attributes could be used to give anything an identity.

  “Not just every piece of equipment and every machine,” she says, “but every human.” And everything—equipment, machines, humans—could, with blockchain technology, carry not just an immutable identity but the reputation uniquely associated with that identity. In a rush of insight she understood how a blockchain could have made a difference all those years ago. It could be possible to develop a portable, permanent, and universally accepted form of digital identity—owned and controlled by the individual, and not subject to war, natural disaster, or theft. “If we had our identity digitally during the war, we would not have had to start over from the beginning. Imagine,” she says, “if our identity could be currency.”2

  ***

  While Maja Vujinovic was learning about Satoshi’s whitepaper, Sheila Warren was across the globe in San Francisco. Over dinner one night Sheila’s husband mentioned that he had come across an interesting whitepaper describing a new form of digital money called bitcoin. The couple discussed whether this new thing could function as a store of value, like a digital form of gold. “But it had a shady undertone,” said Sheila, a lawyer, “and I didn’t want to be associated with that.” For a while she ignored the whole subject—“at least until the helicopters started circling my neighborhood,” she said with a laugh. That afternoon in 2014, as the noise overhead grew louder, Sheila and her husband searched Twitter to figure out what was happening.

  Moments before and just blocks away, a 26-year-old programmer named Blake Benthall was pulling out of his driveway when 20 FBI agents surrounded him, guns drawn. From the social media stream, the couple learned that their neighbor, going under the pseudonym Defcon, had been running an anonymous narcotics marketplace called Silk Road 2.0— fueled by a digital currency called bitcoin. With the chop of the helicopter blades still whirring above, Sheila’s husband turned to her and raised an eyebrow. “It looks like bitcoin just went on sale,” he said.

  Now she was curious. Sheila sat down and read the whitepaper. She could see that bitcoin was an interesting alternative form of money, and how it could be used as a tool in a hyperinflationary economy, or for censorship-resistant spending, whether illicit or not. “I thought, ‘well, this thing has some legs, I can see where it would be used, but it looks like it’s got a limited market,’” she said. “I didn’t see anything particularly transformative about it.”

  But when a former colleague casually mentioned over lunch that the underlying technology that powered bitcoin was being explored across industries to drive transparency and accountability, something clicked. “In fact,” Sheila told me, “I became obsessed.” She dove into research, reading and talking to as many people as she could about how this technology could be used. On a long-planned trip with family friends, she spent hours sitting by the pool completely immersed in a book on the technology. While her family and friends relaxed and en
joyed the sunshine, she was furiously annotating charts, filling the margins with scribbled questions, and dog-earing pages.

  At her job as the General Counsel of a data-driven nonprofit spanning 200 countries, she started to ask questions about whether this technology could help protect data privacy. And she began waking up in the middle of the night “with lightbulbs popping off.” First, she saw philanthropic applications. The humanitarian disaster following the Haitian earthquake of 2010 was still fresh in her mind, “and I had seen money that was earmarked for reconstruction diverted or used for things that didn’t really help,” Sheila said. “I wondered, ‘Could blockchain technology trace if money was going where it was intended? Could this make it possible to tie funding to the completion of discrete milestones?’”

  Then, she saw “blockchains everywhere—travel, insurance, it felt like every industry. I could see so many places where the technology could be useful.” Sheila would be walking down the sidewalk and suddenly stop short, overtaken by a new idea for how the technology could have impact. “When you really start to think about what it means to eliminate a central authority, there is a boundless list of areas that could be made more fair and more efficient,” she explained. It was during this time that the media started recycling footage from the O.J. Simpson trial in recognition of the 10-year anniversary. “I even started to wonder if you could have put that bloody glove on a blockchain!” Sheila said. “Sure, you couldn’t solve whether it had been planted, but at least if you had put a chip on that thing and registered it on the blockchain there could be no question if it was the same glove. Then this got me thinking about IoT plus blockchain, and supply chain, then human labor and trafficking, forced migration . . .” She paused and smiled at me. “You know what this is like—all of a sudden you see the possibility for a better future in everything.”

  Ultimately, Sheila thinks that “everyone is going to be interacting with a blockchain in some fashion, whether they know it or not, in some aspect of their civic or business life. But this technology will not change the psychological make-up that we’ve had from the dawn of humanity. It does give us an opportunity to build transparency, accountability, and fairness into the system, but this isn’t necessarily the case that this is what we will build. If we are going to build systems for billions of people, we need to be intentional about how we do it.”3

  This is why, from her dramatic initial exposure to the technology, Sheila accepted a job in 2017 to become the first head of blockchain and distributed ledger technology for the World Economic Forum.

  ***

  “I don’t know anyone who is in the space that didn’t get whiplash when they finally got what it could do,” laughed investor Ken Seiff when I asked about “that moment” he understood what blockchains made possible. For Ken, it was when he sat down in March of 2014 with Gavin Wood, the CTO and cofounder of Ethereum, the second-largest blockchain project to date.

  “He very patiently walked me through it,” said Ken, a multi-time CEO who also launched retail pioneer Bluefly.com and consulted for Amazon. “And once I finally got it, I recognized that this could create disruption of the same magnitude as the internet. It’s not clear what will ultimately be built with blockchains. But that feeling mirrors the early days of the internet—we couldn’t envision Facebook or Amazon back then. From where we are standing now, we can’t envision the big thing that will be built on the blockchain. It might come from a mashup of a blockchain plus something—artificial intelligence, virtual reality, augmented reality, or some other enabling technology. But what is clear now is that it is going to be big, and this technology is going to change all our lives with the same force that the internet did.”4

  Wall Street veterans have refocused their careers on the space. Long-time CEOs like Patrick Byrne of Overstock are making major moves in the technology. Sandy Pentland, who helped create the MIT Media Lab and is one of the most cited scientists in the world, cofounded a blockchain company. Founders from Web 2.0 standouts like LinkedIn and Wikipedia are building new blockchain-first companies. Even the creator of the World Wide Web, Sir Tim Berners-Lee, has left work at MIT and the World Wide Web Consortium to found a blockchain-first company that aims to “take the world to a new tipping point.”5

  A massive shift has begun, and it is steadily gathering force. What, exactly, is happening here?

  Part I. A MOVEMENT BUILDS

  Chapter 1. KINDLING, MEET MATCH

  Our world is now 30 years into its internet-driven, digital-centric life. This has changed us. It’s reshaped how we do the business of life—running a household or working a job. It’s dominated our leisure time. Altered our patterns of communication. Given us new ways to influence. Changed the architecture of our expectations—what we expect a friend, partner, colleague, or a business to be capable of.

  It has also given us unprecedented capability. Inspired by the higher bar set by disruptive, digital-first players, we learned to demand more. We have a voice. And we can use it around the clock, through a spectrum of channels, to give rise to our collective influence. This power has shaped markets, as businesses clamored to respond to the new customer we have become. It has challenged established institutions, playing a role in evolving social norms, influencing geopolitical dialogue, and even toppling dictators. And it has moved us, since the dawn of the web, to a steadily escalating desire for more accountability, transparency, participation, inclusion, and openness.

  But there is a dark underbelly to our digital transformation, and now, 30 years in, we are waking to a growing awareness of the implications of what we have created. Many people are realizing that the way the internet was built is costing us dearly. Power has become concentrated in the hands of a few internet giants, who now wield undue influence. Our digital lives generate heaps of data that propagate beyond our intent and control. It’s poorly protected by the companies on whose servers it sits, and time and time again these organizations demonstrate they are poor stewards. Malicious actors have found they can leverage our inability to distinguish real from fake in the digital world, to doctor our perception of reality with ease.

  This awakening is happening amid a backdrop of global discontent. We’re witnessing a backlash over economic inequality, plummeting trust in institutions to protect citizens and consumers, widening political divides, escalating knowledge of discrimination and exploitation, and anger over the reach of state surveillance. Like dry kindling, this discontent holds enormous potential energy—energy that, with the right catalyst, could ignite fast and spark broad, disruptive change.

  In this moment of amassing restlessness and discontent, we’re entering the dawn of the blockchain era. One by one, this new technology has promised a solution to each concern of our digitally driven lives: lack of transparency, accountability, verifiable identity, control of data, and security. The technology’s driving force, decentralization, has allowed its architects to envision an opportunity to topple institutional centers of power and address deep inequities—and to create a new era of entrepreneurism. They have envisioned moving anything of value securely and directly—as simply as handing a piece of paper currency to someone on the street—without a corporation or government sitting in the middle. And they can envision flexing it to attack unique challenges in every industry: energy, media, manufacturing, retail, telecommunications, agriculture, real estate, education, health care, transportation, and so on—even aspects of government.

  This rising discontent is the kindling. In blockchains we’ve found the match.

  Blockchains and the decentralization movement have now captured the hearts and minds and imaginations of an entire population of pioneers. They are many tens of thousands strong, hailing from well over 100 countries around the globe to join this movement. Among them you will find some of the best minds from lauded corporations, top academic institutions, think tanks, and government—not to mention plenty of burgeoning startups and scattered solo operators who’ve mastered the technology and are alread
y building things we couldn’t have dreamed of a mere decade ago. They seek no less than to remake the foundational systems that drive our world. They are forging an ethos to transform our digital lives with transparency, trust, and accountability that permeates walls, borders, and tribes.

  The loudest battle cry may be to scatter and decentralize today’s centers of power. But there is a twist that works symbiotically to foster blockchain investment from those very centers of power: it also holds the promise of making large organizations dramatically more efficient. From supply chain to finance, from marketing to operations, divisions across the corporation could find significant new efficiencies and cost savings from more mature blockchain solutions.

  Bridget van Kralingen, IBM’s Senior Vice President of Global Industries, Platforms and Blockchain, explains it this way: “Enterprises are not just experimenting with blockchains, but actually moving into production and scale with blockchains. It is early days of the technology in enterprises, but there are some very promising signs in terms of its uses and applications . . . We are seeing this move at a really fast pace toward industrial-strength.”6 International Data Corporation forecasts worldwide spending on blockchains to reach $11.7 billion in 2022.7 Hundreds of the world’s largest companies have joined consortia to collaborate on, learn, and experiment together. Deloitte’s 2018 survey of more than 1,000 “blockchain-savvy” executives around the globe found that 74% of executive teams believe there is a compelling business case for use of blockchain technology and 84% believe it will eventually achieve mainstream adoption. Enterprises are clearly starting to realize that blockchains hold the potential to become an automated, secure backbone for payments and for contracts that could eradicate the paper and inefficiencies that still plague corporate ecosystems. The Deloitte survey concluded that “the only real mistake we believe organizations can make regarding blockchain right now is to do nothing.”8