The Business Blockchain. Mougayar William

a contagiously positive (yet slightly naive, at the time) determination and optimism about a better world out there. I sensed that this wasn't just about technology. It was more profound. It was about society, government, business, old and new beliefs. It was about all of us. There was a human element to this technology that proposed more equitable solutions to our already complex and unjust world.

      Two weeks later, I sat down with Vitalik and almost forced him to draw up an architecture of how Ethereum would work in the context of a deployment framework. I created my own hand drawn primitive version and showed it to him. He looked at it for three seconds, got agitated, opened Inkscape on his Windows PC, and frenetically started drawing the first version of a blockchain-based architectural framework with Ethereum in it. That architecture drawing was later iterated upon, and appeared in one of Vitalik's blog posts, titled “On Silos.”2

      Over the next several months, and up to this day, we became reverse mentors. He taught me a lot about blockchains, and I advised him on business matters and growing Ethereum. I may never comprehend a fraction of Vitalik's blockchain dreams on a given night, but one thing I am certain about, is that Vitalik Buterin is emerging as a savvy business person, following the ranks of other bright technologists, while continuing to lead the Ethereum core technology and its Foundation.

      I proceeded to write 50 blog posts on Bitcoin, blockchains, and Ethereum, and immersed myself with global creators, innovators, pioneers, leaders, entrepreneurs, startups, enterprise executives and practitioners who were at the leading edges of blockchain technology and its implementation.

      Much of this book is marked by the historical perspective I hold, which is based on 34 years of experience in the technology sector. The first phase of this journey included 14 formative years at Hewlett-Packard, followed by a second phase of 10 years as an independent consultant, author and influencer in the Internet space (1995–2005). In 1996, I authored one of the first business books on Internet business strategy, Opening Digital Markets, allowing me to exhaustively analyze the significance of the Web on business, and work with small and large companies who were implementing it. In 2005, I learned how to become a professional analyst at Aberdeen Group, then followed that stint by three years at Cognizant Technology Solutions, where I became exposed to the true meanings of a borderless organization, with global arbitrage at the center of it. In 2008, and for another five years, I dived into the startup world as a founder of two mildly successful startups (Eqentia, and Engagio). They say you learn as much from failures as from successes.

      My passion for the blockchain's peer-to-peer (P2P) technology was not a coincidence. In 2001, I had launched PeerIntelligence. com, a site that chronicled the first wave of P2P technologies. During this time, P2P was primarily about file sharing, and I gained an early appreciation of the power of this new technology. Sadly, these first attempts at P2P died on the vine, after legal assaults killed Napster, but in return, we gained the BitTorrent protocol as its valiant remnant.

      All these experiences helped shape my thoughts about the blockchain, and influenced the preparation of this book.

      In 2013, when I discovered Bitcoin and the world of blockchains, it brought me back to the early excitement of 1995, when some of us knew that the Internet was going to be transformational, coupled with flash backs about the early P2P days of 2001. Luckily, P2P was getting a shot in the arm in 2009 when the Bitcoin blockchain took its first breath.

      When I was first exposed to the blockchain, I was reminded of Andy Grove's words in his 1996 book, Only the Paranoid Survive. He wrote, “There's wind and then there's a typhoon. In this business you always have winds. But a 10x force is a change in an element of one's business of typhoon force.” Of course, Andy was talking about the Internet, as a typhoon force that fundamentally alters one's business. Today, the blockchain is that 10x typhoon force that is going to alter many businesses, and the journey is just starting.

      I will admit that I went through great pains trying to understand the many facets of the blockchain. Many of its smart visionaries were technically inclined people who didn't focus on succinctly explaining its business implications, or intersections. My early quest to understand the blockchain required a lot of teeth pulling and tea leaves reading to connect the dots and find clarity. It was an agonizing encounter, and the source of my impetus for writing this book. I was determined to make it less dreadful for the rest of us to understand this technology and its ramifications.

      The blockchain is part of the history of the Internet. It is at the same level as the World Wide Web in terms of importance, and arguably might give us back the Internet, in the way it was supposed to be: more decentralized, more open, more secure, more private, more equitable, and more accessible. Ironically, many blockchain applications also have a shot at replacing legacy Web applications, at the same time as they will replace legacy businesses that cannot loosen their grips on heavy-handed centrally enforced trust functions.

      No matter how it unfolds, the blockchain's history will continue to be written well after you finish reading this book, just as the history of the Web continued to be written well after its initial invention. But here's what will make the blockchain's future even more interesting: you are part of it.

      I hope that readers will find The Business Blockchain as useful as I found it exhilarating to write.

William MougayarToronto, Ontario [email protected]MARCH 2016

      INTRODUCTION

      IF THE BLOCKCHAIN has not shocked you yet, I guarantee it will shake you soon.

      I have not seen anything like this since the start of the Internet, in terms of capturing the imagination of people, a small number first, but then spreading rapidly.

      Welcome to the new world of the blockchain and blockchains.

      At its core, the blockchain is a technology that permanently records transactions in a way that cannot be later erased but can only be sequentially updated, in essence keeping a never-ending historical trail. This seemingly simple functional description has gargantuan implications. It is making us rethink the old ways of creating transactions, storing data, and moving assets, and that's only the beginning.

      The blockchain cannot be described just as a revolution. It is a marching phenomenon, slowly advancing like a tsunami, and gradually enveloping everything along its way by the force of its progression. Plainly, it is the second significant overlay on top of the Internet, just as the Web was that first layer back in 1990. That new layer is mostly about trust, so we could call it the trust layer.

      Blockchains are enormous catalysts for change that hit at governance, ways of life, traditional corporate models, society and global institutions. Blockchain infiltration will be met with resistance, because it is an extreme change.

      Blockchains defy old ideas that are locked in our minds for decades, if not centuries. Blockchains will challenge governance and centrally controlled ways of enforcing transactions. For example, why pay an escrow to clear a title insurance if the blockchain can automatically check it in an irrefutable way?

      Blockchains loosen up trust, which has been in the hands of central institutions (e.g., banks, policy makers, clearinghouses, governments, large corporations), and allows it to evade these old control points. For example, what if counterparty validation can be done on the blockchain, instead of by a clearinghouse?

      An analogy would be when, in the 16th century, medieval guilds helped to maintain monopolies on certain crafts against outsiders, by controlling the printing of knowledge that would explain how to copy their work. They accomplished that type of censorship by being in cahoots with the Catholic Church and governments in most European countries that regulated and controlled printing by requiring licenses. That type of central control and monopoly didn't last too long, and soon enough, knowledge was free to travel after an explosion in printing. To think of printing knowledge as an illegal activity would be unfathomable today. We could think of the traditional holders of central trust as today's guilds, and we could question why they should continue holding that trust, if technology (the blockchain) performed that function as well or even better.

      Blockchains liberate the trust function from outside existing

2

“On Silos,” https://blog.ethereum.org/2014/12/31/silos/.