What should the new Biden-Harris administration do? And that’s really the question in focus for Blockchain Research Institute’s latest strategic report. This is a 122-page report on strategy, policy and action for the Biden-Harris administration. This is a report co-authored and led by multi-best-selling author and Blockchain Research Institute think tank Executive Chairman Don Tapscott, whose face is very familiar to many of you whose TED talk in 2016 on how blockchain is changing the world has now surpassed 5.2 million views. Don, welcome to the show.
Don Tapscott: Great to be here.
Lau: Now, if you could add two more viewers — assuming they haven’t already been watching — what would you like President Biden and Vice President Harris to understand about the potential of blockchain?
Tapscott: Well, I think that the first thing I’d like them to understand is that there’s a new paradigm in technology that’s emerging, and for 40 years, we’ve had an internet of information. And now, we’re getting something new — an internet of value, or anything of value, from money, securities, intellectual property. The data in our identities, art, music, government contracts, deeds, votes, can be managed, stored, transacted in a secure and private way. And the word trust, which is deeply needed in American society, is not achieved by an intermediary. It’s achieved by technology. It’s the foundation of trust, by cryptography and some clever code. So we have an internet of value now, and that’s an extraordinary thing.
Tapscott: And secondly, that this is part of a broader shift towards the second era of technology. For 40 years, we’ve had mainframes, minicomputers, PCs, the internet, the web, the mobile web, social media, the cloud, big data. And now technology is infusing itself in everything, [in terms of] trillions of physical objects that have become animated. We have technologies that learn and do things that they were programmed. To us, the foundation of that is this internet of value — blockchain. So, because now for the first time in history, people can trust each other — peer to peer — to do transactions and all kinds of things in the economy. So, this is not something that is used fundamentally by criminals, as many people think in the U.S. Janet Yellen recently was quoted in a hearing as saying that she thought ‘the key,’ or at least a key purpose for bitcoin was for nefarious criminal activity, including terrorism.
This is just not true. Sure, there are criminals that use this platform — and they’re always the first to adopt any exciting new technology, but 3% of all cash transactions is used for crime, maybe a percent for bitcoin. And in fact, smart law enforcement agencies use bitcoin and other technology, things like that, to catch the bad guys. So this is a historic opportunity. And the opportunity is not just to have better government and to embrace this technology to better operations in government. The opportunity is to change the way that the economy works, to embrace this technology’s uses of currency, to use this next generation of technology to build a true innovation economy, to enable America to be the first country in the world where citizens have a self-sovereign identity. And that would be a truly extraordinary thing. And in many ways to change the whole model of democracy from a traditional model that we’ve had for centuries, arguably, into a very different model. And technology, of course, can’t do that but it’s a key enabler for a new model of citizens who are engaged. So that’s why we wrote this report. We want them to step back, think big and to make a turn, because right now the country doesn’t understand this opportunity — and it does a whole number of things related to this technology which are dumb and which hurt prosperity and the basic rights of citizens. So now is the time for some fresh thinking.
Lau: Let’s talk about the IT issue. You know, we have seen, even just legacy code, really be obstacles for even the last stimulus checks where we’ve had to bring in armies of old IT guys and computer systems analysts that remember the original programing language that most people have left to, you know, left behind because there’s so much more better out there. And yet — even just the basics of that has not been improved upon. Is this a political intransigence? Is it an inability or possibly a disregard that this is even important?
Tapscott: Well, I think that there are a number of problems here, and it’s long been hoped that technology can help create [a] better, cheaper government. That was the mantra of a report in the early 1990s by Al Gore was called Reinventing Government. But I think if you ask any American today if technologies somehow enabled a fundamentally more responsive or lower-cost government, they’d scratch their heads. And there are problems that are sort of endemic, to the whole ways that not just governments, but organizations operate. Governments grew up in the Industrial Age and they, in their architecture, remodeled the traditional Industrial Age corporation — which was hierarchical, and it was vertically integrated in its command and control. And as they became bigger, corporations became more bureaucratic. But at least corporations had the tonic of the market to force them to respond and change, whereas that hasn’t happened so much with government.
Then we brought in all this technology and what it tended to do was encode old processes and old structures and old ways of doing things. So today we have the organization of today locked into the technology of the past and vice versa, where technology locks us into old models. So this tinkering is not going to fix this problem. We need to do — what we call for in the report — is to have a sort of digital Marshall Plan, where we apply technology in a completely new way with the goals of not just reducing costs, streamlining and so on, but fundamentally changing the way that services are created and delivered to citizens. And in doing so, to actually finally — after decades now — achieve that initial vision of our government years ago, which was to reinvent the model of government, to make it more open, more transparent, more responsive. More like a network, as opposed to an old command and control bureaucracy. And we outlined some ideas in the report on how that can be done.
Lau: So you’ve got five digital priorities for the Biden-Harris administration. So just to list them out here for everyone, it’s: cybersecurity and protecting identity — that’s one — privacy and individual autonomy, embracing the digital dollar and other cryptocurrencies, retooling government services, engaging citizens and holding officials accountable. And that all leads up to rebooting America’s innovation economy. Briefly explain these five priorities for the audience. Why is blockchain technology your recommendation for the Biden administration to explore, addressing all of these issues?
Tapscott: Well, we started out quite intentionally with number one, being solving the problem of data in American society. And for that matter, in all advanced societies today, which is that data is the new asset class of the digital age. It’s created largely by citizens through our interaction. We leave this trail of digital crumbs as we go throughout life. And we create this data, but we don’t own it. We don’t even have access to it. We can’t control how it’s used.
Lau: You’re talking about the individual, you and me.
Tapscott: Yeah, the individual.
Lau: The person. Yeah.
Tapscott: And this data is swept up by these so-called digital conglomerates, which, by the way, I think is a fantastic term. We wrote a paper at least 15 years ago arguing that companies like Google and Amazon and so on were a new species of business — that the problem is not today, that they’re monopolies, the problem is that they own the asset class of the digital age and the virtual Angie may know more about you than you do. Because you can’t remember, what you bought or said a year ago, or your exact location, what medication you had, or what diagnosis you had and so on. But even though it’s this identity, this digital identity that you have is very powerful, you don’t know.
And most people think, “Well, that’s a big problem because of privacy. And it certainly is. You look at the social score in China and you can kind of see how that’s an issue where, if, you know, you don’t pay a traffic ticket or something — maybe your kid doesn’t get into a good school. And privacy is the foundation of freedom. We need to get our identities back, but it’s a much bigger problem than that, it means that you don’t have access to this data to plan your life. It means that you can’t monetize the data. And we’re creating the most powerful, wealthy institutions in history through ownership of our data. It means that the data is not scarce. It’s going to be hacked, some traditional servers and we’re all going to be picking up the pieces, as often occurs.
And the final one is that all this data is in silos, so it can’t be put to a social purpose, like, say, during a pandemic. We can’t access our medical data in an anonymized way for epidemiologists and others to help attack a big social problem. So the solution for this is not that these companies in their benevolence should give us data or that we should have laws like the GDPR to protect our privacy and so on. What we need is a self-sovereign identity that’s owned by us and where we can use it and get our digital identities back so we can manage this data responsibly for ourselves. We outlined the vision on how that can be done and it’s linked to the pandemic.
Now that’s one of the five. That’s actually part of one of the five big areas. So you can see the report covers a lot of terms. Under that section, we also deal with the autonomy of the individual, the problem of cybersecurity, which of course is paramount, and Russian hackers’ cyber attacks on the U.S. really need to serve as a wake up call. But we also argue that we need to close the digital divide. The term, the ‘digital divide’, I don’t know if you know. Actually, I coined that term in my 1997 book ‘Growing Up Digital,’ and there’s a whole chapter on it.
Lau: It’s an extraordinary thing. It’s what we’re seeing right now, Don. As Covid-19 has kept children at home and trying to attend school, you see it firsthand when you don’t have stable WiFi, when you don’t even have a laptop, when your electricity is about to turn off because your parents have lost their jobs. I mean, this is the crux of the digital divide.
Tapscott: Yeah, and it’s been exacerbated by the pandemic. As many problems are coming up, now the problems of race and color and poverty and even disabilities and so on. These problems have been brought to form very quickly and there may be a silver lining here — it’s that they’re causing us to step up and address these.
The digital divide — what did I say? 1997. That was a long time ago.
Lau: It’s prescient.
Tapscott: And these stories aren’t all around the world, including in the most powerful, wealthy country in the world.
Lau: Yeah, and that leads us to the other thing, which is education, right? How do you create an environment for innovation beyond the policy level? And, you know, foundationally, all of those things on the enterprise side, on the government side?
But when you draw it back and you’re trying to nurture talent, you’re trying to nurture the next generation — where this is more than apparent, it’s critical to our future. When you don’t have that education, that’s going to be a problem. And you discuss that in your report?
Tapscott: We do, in a number of ways. One is that we said that government leaders need to get up to speed on this. If you think bitcoin is something that exists mainly to help criminals, it shows that you lack knowledge. Big time. And that’s reflected throughout all of these institutions. We have all of our regulatory bodies that were designed for an old paradigm and thinking about what is a digital asset and what is money and so on. And the precondition for any kind of change here — is that people wake up and they get themselves informed. Now, Angie, the broader issue of education was one I was itching to attack as a whole sixth area in this report. And we just — it’s such a big one. But I think that American education is in a total crisis. The difference between the good public schools and the terrible public schools is so vast because it’s all based on funding, in terms of the neighborhoods.
Lau: I’ve reported it. I’ve reported from inner city schools where the property taxes were not high and so the schools were not funded. It’s beyond Third World. It’s really embarrassing.
Tapscott: You’ve got class sizes of 55 students, and in that situation, the role of the teacher is sort of custodial — just trying to keep order really. And then, the difference between the public schools and the private schools — there’s that massive gap again. So this is a really big problem. And secondly, we’ve got this old paradigm in learning, an old model of learning where the teacher stands in the class or lectures in the university to students who are often sort of passive recipients in a one way model.
Now, I’m a little hard on lectures, which is sort of ironic because before the pandemic, I probably gave a hundred of them. But to me, the lecture was the process whereby the notes of the teacher go to the notes of the student without going through the brains of either. It’s a good model of pedagogy for the 15th century, but today it doesn’t make a lot of sense. So, it’s not that computers should replace humans in education. It’s for certain classes of learning — mastery — where there’s a right or wrong answer. Nobody should be sitting in a class in their first year of university, a statistics class with 600 other students with a prof explaining what an analysis of variance is. They should do that in an interactive and self-paced way, preferably with a human too but no one can afford all that. So we do with technology and that frees up everybody else to do all the important stuff in learning, which is about group discovery and projects and small class debate and discussions and so on.
So reinventing the model of pedagogy around education in blockchain would be critical to that because it’s at the heart of the credentialing of systems and of teachers and of schools. That’s just such a juicy topic. But we decided we’re not going to boil the entire ocean. We’ll just boil the Pacific, the Atlantic and the Indian Ocean, and we’ll leave it at that.
Lau: Let’s talk about competition too. Where we’re based here in Asia, we see it. I mean, the innovation gap is widening. You just take a look at China, for example. You’ve got Chinese inventors filing close to 59,000 patents in 2019. This is pre-Covid. Compare that to 57,000 from the U.S. And for China, it’s just leapfrogged really to what we’re seeing now. We’ve got a seven-year lead now on the central bank-backed digital currency that now, probably 80%of central banks are now considering.
[The] United States, I’ll note, is still in the research phase. You’ve got incredible organizations like the Digital Dollar [Project] and [the] Chamber of Digital Commerce, and it’s led by some really great intellects, essentially.
But you still have the policy voices from Jay Powell saying, you know, ‘first we must understand’ — when challenged about whether or not the U.S. would embrace a digital dollar. To Janet Yellen, to your point. That whether or not cryptocurrency is something that the United States even wants to embrace. But it’s coming. So, how would you advise the Biden-Harris administration on a digital currency?
Tapscott: Well, this is one of the five sections of the report. And we point out that there are these three classes of currencies and they need to change their attitude on each of them. There are all of the traditional, sort of, if you like, community-based currencies like bitcoin — I’m sure lots of people watching this are having a happy dance right now with the price. Thank you, Elon Musk. And we need a complete rethinking of that. This is not ‘meme work.’ It’s something for which there are all kinds of use cases — which can contribute to building an innovation economy.
Second are the corporate currencies, like Facebook’s Diem (formerly known as Libra). And they’re wrong to completely shut that out or to say that because we have got issues with Facebook, we’re not even going to look at the question of the corporate currency, because — considered with caution — these things could play a role. And then there’s the issue of central bank digital currencies, which… this is like a train.
They’re looking for the light at the end of the tunnel and the train is the light. You know, it’s coming right at them. And, you know, if China wins with its central bank digital currency, they’ll roll it out across One Belt, One Road into Africa, into Southeast Asia. The RMB becomes the de facto —
Lau: The currency of trade choice.
Tapscott: Yeah, the currency of record, replacing the U.S. dollar, and that’s the end of the American hegemony in the world. So people like, as you mentioned, Chris Giancarlo with the Digital Dollar Project — who also contributed to our report as the others you mentioned, the Chamber of Digital Commerce. The report was done in collaboration with the Chamber. They’re trying to get a wake up call on this. But, you know, the trouble is that old paradigms die hard. And [the] leaders of old paradigms have great difficulty embracing the new because vested interests fight against change and new paradigms cause dislocation and conflict and uncertainty. They’re often received with coolness or worse, you know, mockery, hostility. And so, there’s this problem of paradigms. And that’s the way I’ve been calling it over the years. The late great (Harvard Business School Prof. Clayton) Christensen talked about the ‘Innovator’s Dilemma.’ You know people, it’s talked ‘in-the-box’ and ‘outside the box.’ Malcolm Gladwell talked about ‘The Tipping Point.’ All of these are sort of pushing the same idea. I wrote the ‘Paradigm Shift‘ in the early 90s.
But the idea is a good one. And I think that, again, this is the problem in America — it’s that all these people are locked into this old model. I’m reading a very good book right now about how when you have an old empire sort of replaced by a new empire, that these changes in human history are punctuated by wars. And the author goes through and makes the case that in most of the big transformations, there was a war. And trying to argue that ‘can we avoid a war between the United States and China?’ Because according to all the data, it’s pretty much inexorable that China will be the largest economy in the world. It was supposed to be 2050 and now we’re looking at 2031 —
Lau: 30 — yeah.
Tapscott: So, America has got to wake up. It’s got to do the right things to be relevant in the world and to provide some thoughtful leadership rather than just reacting badly to all kinds of things in the last four years. Talk about reacting badly — it’s been a school in how you could do almost everything wrong to undermine the strength, not just of America as a powerful force, but as a democracy that cares about its citizens, that engages its citizens in the electoral process, and that treats people with any kind of justice.
Lau: I mean, there’s so much to work here, but that competition divide is as clear as day. You’ve got China’s Blockchain Services Network. This is technology infrastructure that is onboarding practically every blockchain protocol that we’re seeing. And it’s adding new ones every day. It’s got the big ones on board and it’s creating this fabric of functionality that will allow it to work with governments and enterprises around the world. Now, China’s building that right now. This is a couple of months old, but this is how fast it is moving forward with this. It’s not to say the United States or the West can’t do something similar.
Tapscott: The trouble is —
Lau: Fact is, we’re not seeing it.
Tapscott: Yeah, [the United States] can do something similar, but it’s got to do it more through consensus and good leadership. It can’t force it. And one of the odd, sort of bizarre benefits of having a planned or partially planned economy is [that] you can decide. We’re going to move 10 million people from here to there, we’re going to create a bunch of new cities over here bada, bada-bing. You just do it. Or we’re going to adopt blockchain.
The last time I was in China, which was a while ago, pre-pandemic, obviously, I gave a speech. I was introduced by the Vice Chair of the Communist Party and he read greetings from Xi Jinping, welcoming everyone to the conference and so on. I was giving a talk. And he said, ‘I want to underline this theme of blockchain because to me and to us, this is one of the two technologies in the next decades for China.’ And so, wow! A billion dollars goes into Hangzhou or to Hainan to create the pre-island that’s going to be the blockchain pilot center and these future changes. In the United States, you’ve got people saying, “Hm, bitcoin. Isn’t that what criminals use?” So the contrast is glaring and it’s getting worse.
Lau: There’s a hopeful note, right? We could talk about this but I would absolutely encourage — and we’ll have this on our site — to go through that 122-page report and just pick up on some of the themes here that Don, you’ve just really brought about sharing. But let’s talk about what is hopeful, which is there are a number of new policy leaders that are getting into place. Like Gary Gensler, who’s been picked to lead the SEC, who is not of the class of, ‘What is blockchain?’ He’s very well-versed.
And there are other officials and policymakers who are increasingly reaching those roles, but with a really fantastic background. Like Gensler, they might have taught blockchain or crypto. He did it at MIT. How do you envision incoming leaders of regulatory agencies to really kind of address some of the things that you think are critical to that vision?
Tapscott: Well, that’s one of the reasons we wrote the report, is we hope that the new administration will select people like Gensler and we’ll see how it pans out. But, boy, if there’s anybody who ought to understand what this is all about, it’s him. And if they get leaders that are knowledgeable in all kinds of these key regulatory positions, there’s a hope. And I don’t mean to sound too negative here. If anything, the report talks about how you have a demand pull and a technology push for change. And the demand pull comes from this extraordinary need to rebuild the economy.
First of all, to use technology to fight the pandemic, but to rebuild the economy, to rebuild American democracy, to start getting innovation happening and funding of entrepreneurship in a more equal way and to bring about a whole series of profound changes in our institutions. And that’s pulling for change. Then, you’ve got this push from this historic thing. This doesn’t happen that often. You get a whole new paradigm in technology. It’s been 40 years in the making. With AI and blockchain and the Internet of Things — the ‘trivergence’ is a term I’ve been using recently. And these two are creating a lot of real momentum, I think, where you have people again or being considered for a top post.
Tapscott: The second thing I’d mention is that American innovation is historic and the ability and adaptability of the economy, and its people, and its innovators to come up with new things and to think outside of the old paradigms. This is something that’s very deep and it’s very part of the culture. And so I’m quite hopeful that these five big things — embracing the whole blockchain and the crypto revolution, moving towards a self-sovereign identity, reinventing the model of government around new technology, creating a powerful innovation economy that sort of benefits everybody, and rethinking the whole model of government itself — that these are five things that the administration would be wise to pick up on. I didn’t mention that last theme, but I’ll just say a word on it.
That, again, for centuries, we’ve had an old model of representative democracy. And it’s pretty good compared to what existed before, when kings and queens and nobles made all the decisions. We created these elected or representative institutions, but there was a weak public mandate. Citizens were inert. Politicians are often beholden to powerful interests and there’s no opacity.
And the model was: you vote, I rule. Its citizens are pretty passive. And Donald Trump — sort of… everyone talks about how effectively he used technology. Well, he did, but it was in aid of that old model of making citizens passive. I mean, he tweeted and ran the government by Twitter, hired and fired people by Twitter and everyone out there was a recipient of all of this. So the challenge facing President Biden and Vice President Harris is not to have more followers on Twitter than Trump or something like that. It’s to turn the whole use of technology on its head and use technology rather than to broadcast, to engage citizens in co-creating government.
And we identify a dozen ways that he could be doing so. The report is a direct and very personal call to the President and the Vice President in terms of how they use technology themselves to engage with citizens and to maybe turn the situation around, where there’s a complete crisis of legitimacy for American democracy today.
Lau: As you were speaking, I’m just envisioning. Imagine a political smart contract, where you give your vote only when some of the policies are executed on this smart contract.
Tapscott: Sure. Why not?
Lau: Imagine how that would change policy and politics in one fell swoop.Technology exists, it’s just how we apply it.
Tapscott: Yeah. At the core of this crisis of legitimacy is that politicians are not accountable to citizens. They’re accountable to the big funders that put them in power. I mean, 94% of Americans want background checks for firearms. Congress can pass a law reflecting the will of 94% of the population. So, government for the people, by the people, of the people. But if your vote was in a smart contract, you’d be specifying not just who you’re voting for, you’d be specifying a policy. And if the elected representative does not act in an accountable way, then there are consequences as determined by the contract. Maybe they don’t get paid, maybe funds don’t flow. Maybe they get removed. We’re a little ways off from doing something like that but it’s not unthinkable. And now’s the time to start looking at these.
Lau: Thinking about it. Yeah, especially when the power hopefully returns to us and we have self-sovereign rights to our own data. And our own decisions. And our own money — and our own value. But you are a valuable asset to all of us. Thank you, Don Tapscott, for these ideas. It’s always a pleasure to explore these visions of the future with you. And, you know, always, always good to talk to you. Thanks for coming on the show.
Tapscott: Thanks very much. I read Forkast.News every week. You guys are doing a great job, so keep it up.
Lau: Thank you, Don. And thank you, everyone, for joining us on this latest episode of Word on the Block. I’m Angie Lau, editor-in-chief of Forkast.News. Until the next time.
