Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World

by Don Tapscott

Moore’s law of the annual doubling of processing power doubles the power of fraudsters and thieves—“Moore’s Outlaws”1—not to mention spammers, identity thieves, phishers, spies, zombie farmers, hackers, cyberbullies, and datanappers—criminals who unleash ransomware to hold data hostage—the list goes on.

Around that time, one of Chaum’s associates, Nick Szabo, wrote a short paper entitled “The God Protocol,” a twist on Nobel laureate Leon Lederman’s phrase “the God particle,” referring to the importance of the Higgs boson to modern physics. In his paper, Szabo mused about the creation of a be-all end-all technology protocol, one that designated God the trusted third party in the middle of all transactions: “All the parties would send their inputs to God. God would reliably determine the results and return the outputs. God being the ultimate in confessional discretion, no party would learn anything more about the other parties’ inputs than they could learn from their own inputs and the output.”4 His point was powerful: Doing business on the Internet requires a leap of faith. Because the infrastructure lacks the much-needed security, we often have little choice but to treat the middlemen as if they were deities.

This protocol established a set of rules—in the form of distributed computations—that ensured the integrity of the data exchanged among these billions of devices without going through a trusted third party. This seemingly subtle act set off a spark that has excited, terrified, or otherwise captured the imagination of the computing world and has spread like wildfire to businesses, governments, privacy advocates, social development activists, media theorists, and journalists, to name a few, everywhere.

It may not be the Almighty, but a trustworthy global platform for our transactions is something very big. We’re calling it the Trust Protocol. This protocol is the foundation of a growing number of global distributed ledgers called blockchains—of which the bitcoin blockchain is the largest. While the technology is complicated and the word blockchain isn’t exactly sonorous, the main idea is simple. Blockchains enable us

to send money directly and safely from me to you, without going through a bank, a credit card company, or PayPal.

Every ten minutes, like the heartbeat of the bitcoin network, all the transactions conducted are verified, cleared, and stored in a block which is linked to the preceding block, thereby creating a chain. Each block must refer to the preceding block to be valid. This structure permanently time-stamps and stores exchanges of value, preventing anyone from altering the ledger. If you wanted to steal a bitcoin, you’d have to rewrite the coin’s entire history on the blockchain in broad daylight. That’s practically impossible.

Like the World Wide Web of information, it’s the World Wide Ledger of value—a distributed ledger that everyone can download and run on their personal computer. Some scholars have argued that the

This new digital ledger of economic transactions can be programmed to record virtually everything of value and importance to humankind: birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, provenance of food, and anything else that can be expressed in code.

The new platform enables a reconciliation of digital records regarding just about everything in real time. In fact, soon billions of smart things in the physical world will be sensing, responding, communicating, buying their own electricity and sharing important data, ...

This Internet of Everything needs a Ledger of Everything. Business, commerce, and the econom...

Pundits often refer to Airbnb, Uber, Lyft, TaskRabbit, and others as platforms for the “sharing economy.” It’s a nice notion—that peers create and share in value. But these businesses have little to do with sharing. In fact, they are successful precisely because they do not share—they aggregate. It is an aggregating economy. Uber is a $65 billion corporation that aggregates driving services. Airbnb, the $25 billion Silicon Valley darling, aggregates vacant rooms. Others aggregate equipment and handymen through their centralized, proprietary platforms and then resell them.

Imagine instead of the centralized company Airbnb, a distributed application—call it blockchain Airbnb or bAirbnb—essentially a cooperative owned by its members. When a renter wants to find a listing, the bAirbnb software scans the blockchain for all the listings and filters and displays those that meet her criteria. Because the network creates a record of the transaction on the blockchain, a positive user review improves their respective reputations and establishes their identities—now without an intermediary. Says Vitalik Buterin, founder of the Ethereum blockchain: “Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.”

Property rights are so inexorably tied to our system of capitalist democracy that Jefferson’s first draft of the Declaration of Independence listed the inalienable rights of man as life, liberty, and the pursuit of property, not happiness.

Abra and other companies are building payment networks using the blockchain. Abra’s goal is to turn every one of its users into a teller. The whole process—from the funds leaving one country to their arriving in another—takes an hour rather than a week and costs 2 percent versus 7 percent or higher. Abra wants its payment network to outnumber all physical ATMs in the world. It took Western Union 150 years to get to 500,000 agents worldwide. Abra will have that many tellers in its first year.

The blockchain can improve the delivery of foreign aid by eliminating the middlemen who take the aid before it reaches its destination. Second, as an immutable ledger of the flow of funds, blockchain holds institutions more accountable for their actions. Imagine if you could track each dollar you gave to the Red Cross from its starting point on your smart phone to the person it benefited. You could park your funds in escrow, releasing amounts after the Red Cross reached each milestone.

And so it is ironic—or totally fitting—that one of the first decentralized peer-to-peer computational platforms to guarantee user privacy is called Enigma, also the name given to the machine developed by German engineer Arthur Scherbius to transcribe coded information. Scherbius designed Enigma for commercial use: through his device, global companies could quickly and safely communicate their trade secrets, stock tips, and other insider information.

Satoshi also distributed the mint by linking the issuance of bitcoins to the creation of a new block in the ledger, putting the power to mint into all the hands of the peer network. Whichever miner solved the puzzle and submitted proof of work first could receive a number of new bitcoins. There is no Federal Reserve, central bank, or treasury with control over the money supply. Moreover, each bitcoin contains direct links to its genesis block and all subsequent transactions.

Why is it so inefficient? According to Paul David, the economist who coined the term productivity paradox, laying new technologies over existing infrastructure is “not unusual during historical transitions from one technological paradigm to the next.”10 For example, manufacturers needed forty years to embrace commercial electrification over steam power, and often the two worked side by side before manufacturers finally switched over for good. During that period of retrofitting, productivity actually decreased. In the financial system, however, the problem is compounded because there has been no clean transition from one technology to the next; there are multiple legacy technologies, some hundreds of years old, never quite living up to their full potential.

Augur is building a decentralized prediction market platform that rewards users for correctly predicting future events—sporting events, election results, new product launches, the genders of celebrity babies. How does it work? Augur users can purchase or sell shares in the outcome of a future event, the value of which is an estimate of the probability of an event happening. So if there are even odds (i.e., 50/50), the cost of buying a share would be fifty cents. Augur relies on “the wisdom of the crowd,” the scientific principle that a large group of people can often predict the outcome of a future event with far greater accuracy than one or more experts.82 In other words, Augur brings the spirit of the market to bear on the accuracy of predictions. There have been a few attempts at centralized prediction markets, such as the Hollywood Stock Exchange, Intrade, and HedgeStreet (now Nadex), but most have been shut down or failed to launch over regulatory and legal concerns. Think assassination contracts and terrorism futures. Using blockchain technology makes the system more resilient to failure, more accurate, and more resistant to crackdowns, error, coercion, liquidity concerns, and what the Augur team calls euphemistically “dated jurisdictional regulation.” The arbiters on the Augur platform are known as referees and their legitimacy derives from their reputation points. For doing the right thing—that is, correctly stating that an event happened, who won a sporting match,...

Prediction markets are useful for investors who want to place bets on the outcome of specific events such as “Will IBM beat its earnings by at least ten cents this quarter?” Today the reported “estimate” for corporate earnings is nothing more than the mean or median of a few so-called expert analysts. By harnessing the wisdom of the crowds, we can form more realistic predictions of the future, leading to more efficient markets. Prediction markets can serve as a hedge against global uncertainty and “black swan” events: “Will Greece’s economy shrink by more than 15 percent this year?”84 Today, we rely on a few talking heads to sound the alarms; a prediction market would act more impartially as an early warning system for investors globally.

Prediction markets could complement and ultimately transform many aspects of the financial system. Consider prediction markets on the outcomes of corporate actions—earnings reports, mergers, acquisitions, and changes in management. Prediction markets would inform the insurance of value and the hedging of risk, potentially even displacing e...

much,6 and pointed out the negative effects on productivity: “Suffice it to observe here that the move from autonomous supply (by the collection of small firms) to unified ownership (in one large firm) is unavoidably attended by changes in both incentive intensity (incentives are weaker in the integrated firm) and administrative controls (controls are more extensive).”7 Peter Thiel, cofounder of PayPal, wrote in praise of monopolies in his enormously readable and equally controversial book, Zero to One. A Rand Paul supporter, Thiel said, “Competition is for losers. . . . Creative monopolies aren’t just good for the rest of society; they’re powerful engines for making it better.”8 While Thiel might be right about striving to dominate one’s industry or market, he provided no real evidence that monopolies are good for consumers or society as a whole. To the contrary, the entire body of competition law in most democratic capitalist countries derives from a contrary notion. The idea of fair competition dates back to Roman times, with the death penalty for some violations.9 When firms have no real competition, they can grow as inefficient as they want, raising prices in and outside the firm. Look at governments. Even in the technology industry, many argue that monopolies may help with innovation in the short term but may harm society in the long term. Companies may amass monopoly power through cool products and services that customers love, but the honeymoon eventually ends. It’...

The third distinction is value: where information on the Internet is abundant, unreliable, and perishable, it is scarce, tamperproof, and permanent on the blockchain. To this last characteristic, Antonopoulos notes: “If there is enough financial incentive to preserve this blockchain into the future, the possibility of it existing for tens, hundreds, or even thousands of years cannot be discounted.” What an amazing concept. The blockchain as part of the archaeological record, like the original stone tablets of Mesopotamia. Paper records are ephemeral and temporary, whereas (ironically) the oldest form of recording information, tablets, is the most permanent. The implications for corporate architecture are considerable. Imagine a permanent, searchable record of important historical information, like the history of finance. Corporate staff responsible for developing financial statements, annual reports, reports to governments or donors, marketing materials for prospective employees, clients, and consumers—will start with this public, indisputable view of their firm, maybe even creating a filter that enables stakeholders to see what they see at the press of a button.

Companies like ConsenSys are developing identity systems where job prospects or prospective contractors will program their own personal avatars to disclose pertinent information to employers. They can’t be hacked like a centralized database can. Users are motivated to contribute information to their own avatars because they own and control them, their privacy is completely configurable, and they can monetize their own data. This is very different from, say, LinkedIn, a central database owned, monetized, and yet not entirely secured by a powerful corporation.

Today, some erudite blockchain thinkers have picked up on this view. Ethereum inventor Vitalik Buterin argues that corporate agents (i.e., executives) could use corporate assets only for certain purposes approved by, say, a board of directors, who in turn are subject to shareholder approval. “If a corporation does something, it’s because its board of directors has agreed that it should be done. If a corporation hires employees, it means that the employees are agreeing to provide services to the corporation’s customers under a particular set of rules, particularly involving payment,” Buterin wrote. “When a corporation has limited liability, it means that specific people have been granted extra privileges to act with reduced fear of legal prosecution by the government—a group of people with more rights than ordinary people acting alone, but ultimately people nonetheless. In any case, it’s nothing more than people and contracts all the way down.”18

A smart contract is a computerized transaction protocol that executes the terms of a contract. The general objectives of smart contract design are to satisfy common contractual conditions (such as payment terms, liens, confidentiality, and even enforcement), minimize exceptions both malicious and accidental, and minimize the need for trusted intermediaries. Related economic goals include lowering fraud loss, arbitration and enforcement costs, and other transaction

With blockchain technology causing the costs of searching, contracting, coordinating, and creating trust to plummet, it should be easier for firms not just to open up, but also to forge trusting relationships with external parties. Acting in one’s self-interest serves everybody’s interests. Cheating the system costs more than using it as designed.

Strategist Michael Porter has an implicit view that competitive advantage stems from activities, in particular from networks of reinforcing activities that are hard to replicate in their totality. It’s not the individual parts of the business that matter, but how they are strung together and built to reinforce one another in a unique activity system. Competitive advantage comes from the entire system of activities; while any individual activity within the system may be copied, competitors cannot produce the same benefit unless they manage to duplicate the entire system.

The computer virus is the most cited example of an autonomous agent; the virus survives by replicating itself from machine to machine without deliberate human action. Unleashing a virus on the blockchain could be more difficult and certainly costly because it would likely have to pay the other party to interact with it, and the network would quickly identify its public key, crash its reputation score, or not validate its transactions.

An autonomous agent could pay for its own Web hosting and use evolutionary algorithms to spread copies of itself by making small changes and then allowing those copies to survive. Each copy could contain new content that it discovers or even crowdsources somewhere on the Internet. As some of these copies become very successful, the agent could sell ads back to users, ad revenue could go into a bank account or posted on a secure place on the blockchain, and the agent could use this growing revenue to crowdsource more ad content and proliferate itself. The agent would repeat the cycle so that appealing content propagates and hosts itself successfully, and unsuccessful content basically dies because it runs out of money to host itself.

Peer production communities can be “commons-based peer production,” a phrase coined by Harvard Law professor Yochai Benkler.18 Sometimes called social production, also Benkler’s term, this system means that goods and services are produced outside the bounds of the private sector and are not “owned” by a corporation or individual. Among the countless examples are the Linux operating system (owned by no one but now the most important operating system in the world), Wikipedia (owned by the Wikimedia Foundation), and the Firefox Web browser (owned by the Mozilla Foundation). Peer production can also refer to activities in the private sector where peers collaborate socially to produce something but the good is not socially owned. Peer production as a business model matters for two reasons. First, sometimes peers collaborate voluntarily to produce goods and services where a corporation acts as curator and achieves commercial benefit. Readers create the content on the Reddit discussion platform, but they don’t own it. Reddit is the tenth-biggest site in the United States in terms of traffic. Second, companies can tap into vast pools of external labor. IBM embraced Linux and donated hundreds of millions of dollars’ worth of software to the Linux community. In doing so, IBM saved $900 million a year developing its own proprietary systems and created a platform on which it built a multibillion-dollar software and services business.

What if Wikipedia went on the blockchain—call it Blockapedia. In addition to the benefits of entries time-stamped into an immutable ledger, there could be more formal measures of one’s reputation that could help incent good behavior and accurate contributions. Sponsors could fund, or all editors could contribute money to, an escrow account. Each editor could have a reputation linked to the value of her account. If she tried to corrupt an article, stating for example that the Holocaust never happened, the value of her deposit would decline, and in cases of defamation or invasion of privacy, she would lose it and even face civil or criminal action. The true events of the Second World War could be established in many ways, for example, by accessing unchangeable facts on the blockchain or through algorithms that show consensus regarding the truth.

This can work for physical assets too. For example, we’ve heard a lot about autonomous vehicles. We can build an open transportation network on the blockchain where owners each have a private encrypted key (number) that lets them reserve a car. Using the public key infrastructure and existing blockchain technologies like EtherLock and Airlock, they can unlock and use the car for a certain amount of time, as specified by the rules of the smart contract—all the while paying the vehicle (or its owners) in real time for the time and energy that they use—as metered on a blockchain. Because blockchain technology is transparent, the group of owners can track who is abiding by their commitments. Those who aren’t take a reputational hit and eventually lose access altogether.

As for a company managed by software agents, Ronald Coase must be high-fiving up there somewhere in Economists’ Heaven (although some might dispute that such a place exists). Remember the reverse of Coase’s law? A corporation should shrink until the costs of transactions inside are less than the costs of transactions outside its boundaries. As technology continues to drop costs in the market, it’s conceivable that corporations could and should have very little inside—except software and capital. Think about it.

How would you go about designing a distributed autonomous enterprise? Such an entity could have rich functionality—agents executing ranges of tasks or more broadly business functions all based on a preapproved charter. Individuals, organizations, or collectives of potential shareholders or users will design them by defining the following: 1. Conviction: a belief about the world and what needs to be done to create value or change things. 2. Purpose: its reason for existence. Why are we creating this enterprise in the first place? 3. Constitution: outlines the overall objectives of the enterprise and the rules by which it will create value. 4. Modus operandi: for example, how it will go about creating this value. How it will fund itself—through crowdfunding, traditional early-stage investment, or using revenue. How it will acquire resources. 5. Division of labor between humans and technology: for the foreseeable future, perhaps humans should be in charge. 6. Application functions: how the enterprise will sense and respond to changing conditions. 7. Moral guidelines: Google’s promise to “Do No Evil” is not going to be good enough. The DAE needs some clear guidelines about what is and isn’t acceptable behavior.

That’s just the beginning. Using emerging software and technologies associated with the Internet of Things, we can instill intelligence into existing infrastructure such as a power grid by adding smart devices that can communicate with one another. Imagine creating a new flexible and secure network quickly and relatively inexpensively that enables more opportunities for new services, more participants, and greater economic value. This configuration is known as a mesh network, that is, a network that connects computers and other devices directly to one another. They can automatically reconfigure themselves depending upon availability of bandwidth, storage, or other capacity and therefore resist breakage or other interruption. Communities can use mesh networks for basic connectivity where they lack access or affordable service. Mesh networks are alternatives to traditional top-down models of organization, regulation, and control; they can provide greater privacy and security because traffic doesn’t route through a central organization.

While campus microgrids have been around for a while, they aren’t common in residential areas. Most home owners, businesses, governments, and other organizations in urban North America get their power from regulated utilities at regulated prices. Currently, we have more variety in locally generated renewable energy from, say, solar panels on rooftops. The local utility captures excess power in its supply for redistribution at wholesale rates, often with considerable leakage. The consumer, who may be located across the street from a local power source, still must go through the utility and pay full retail for renewable energy generated by their neighbor. It’s ridiculous.

“Instead of the command-and-control system the utilities have now where a handful of people are actually running a utility grid, you can design the grid so that it runs itself,” said Lawrence Orsini, cofounder and principal of LO3 Energy. “The network becomes far more resilient because all of the assets in the grid are helping to maintain and run the utility grid.”5 It’s a distributed peer-to-peer IoT network model with smart contracts and other controls designed into the assets themselves (i.e., the blockchain model).6 When a hurricane destroys transmission towers or fire cripples a transformer substation, the grid can quickly and automatically reroute power to prevent a massive blackout.

In the developing world, the digital revolution has done little to clear the entrepreneurial path of red tape and corruption. Where it costs only 3.4 percent of per-capita income to start a business in OECD countries, it costs 31.4 percent in Latin America and a shocking 56.2 percent in sub-Saharan Africa. In Brazil, an entrepreneur has to wait almost 103 days to incorporate his company versus 4 days in the United States and half a day in New Zealand.13 Exasperated by government bloat and inefficiency, many would-be developing-world entrepreneurs instead choose to operate in the so-called informal economy. “There are a bunch of things taken for granted in the West. Property records are fine-tuned, for example. In the Global South, entrepreneurs would rather the government not know they exist. We need to make identity a profitable proposition,” said Hernando de Soto. For now, staying in the shadows frees these entrepreneurs from meddlesome and corrupt officials, but it also profoundly limits their ability to grow their business, limits rights, and makes “dead capital” of money that could otherwise be deployed more efficiently.14 Moreover, even for those who operate their businesses in the open, laws of many countries do not provide for limited liability. If your business fails, you’re personally on the hook for all liabilities. If you bounce a business check in many Arab countries, you go straight to jail—“do not pass go” or any other institutions of due process on the way.15

Financial inequality is an economic condition that can quickly morph into a social crisis.18 In 2014, the World Economic Forum, a multistakeholder organization whose members include the largest companies and most powerful governments in the world, argued that growing inequality posed the single biggest risk globally, beating out global warming, war, disease, and other calamities.19 Blockchain could be the solution. By lowering barriers to financial inclusion and enabling new models of entrepreneurship, the tonic of the market could be brought to bear on the dreams and ideas of billions of the unbanked.

But the blockchain can radically improve the transparency of how those organizations, and other institutions in the foreign aid value chain, function. Every dollar donated to the Red Cross could be tracked from its starting all the way through the value chain to the individual it directly benefits. Recall our hypothetical in chapter 1—the Red Cross could run crowdfunding campaigns for each of its most important initiatives—delivering medical aid and fighting the spread of disease, water purification, the rebuilding of homes—and when you donate you would know whether your dollar went to a plank of wood, a gallon of water, or a gauze Band-Aid. If funds went missing, the community would know and could hold these organizations accountable. Smart contracts could be employed that hold the aid groups themselves accountable. The funds for major projects—from housing initiatives to the implementation of a water purification scheme—could simply go into escrow and be released only after the successful completion of key milestones—securing title for a site, importing raw materials, signing a contract with a local supplier, building the finished product, installing a certain number of clean water access points—is achieved. The result? Radically improved transparency and accountability in the delivery of foreign aid, and thus significant improvements in the end results.

In his Gettysburg Address in 1863, Abraham Lincoln said that society’s greatest goal was a “government of the people, by the people, for the people.” Twelve decades later, President Ronald Reagan said in his 1981 Inaugural Address, “Government is not the solution to our problem; government is the problem.” Many in the nascent blockchain ecosystem agree. In a 2013 survey, over 44 percent of bitcoin users professed to be “libertarian or anarcho-capitalists who favor elimination of the state.”

In July 2014, during one of the most contested presidential elections in Indonesian history, an anonymous group of seven hundred hackers created an organization called Kawal Pemilu, or “Protect the Vote.” Its mission was to publicly tally election ballots online to let voters verify results at each polling station. The principles of decentralization, transparency, and individual anonymity combined to ward off malicious cyberattacks and ensure a fairer election.

Clearly, the next-generation Internet provides profound new opportunities. The main challenges are not technological. One cautionary example: Obama’s 2008 campaign created an expansive Internet platform, MyBarackObama.com, that gave supporters tools to organize themselves, create communities, raise money, and induce people not only to vote but to get involved in the Obama campaign. What emerged was an unprecedented force: thirteen million supporters connected to one another over the Internet, and self-organized to build thirty-five thousand communities of people with common interests. When young people chanted “Yes We Can,” it wasn’t just a slogan of hope; it was an affirmation of collective power.

The Internet is a marvelous muse, both a medium of creativity and a channel for free speech. There’s no shortage of ideas for what talented artists, designers, and coders—and their many fans—can do with one another on the World Wide Web. Nor is there a dearth of ways to make money from all this creative collaboration. Creative industries such as music publishing and recording have been tapping new revenue streams like digital downloads and streaming audio. The problem is that, with each new intermediary, the artists get a smaller cut and have little say in the matter. David Byrne of Talking Heads fame summed up the situation in an op-ed piece: “It seems to me that the whole model is unsustainable as a means of supporting creative work of any kind. Not just music. The inevitable result would seem to be that the Internet will suck the creative content out of the whole world until nothing is left.”

To paraphrase Talking Heads, how did we get here? How do we work this?8 It starts with a basic problem for artists—that they signed contracts drafted for the vinyl age, when huge analog production and distribution costs stood between recording artists and their potential consumers. Heap told us, “When I first found a record label, I think I managed to get something like fifteen percent. My last record deal a few years ago, I got maybe nineteen percent. If people are lucky, they might get more now.”9 Artists may have assigned their rights to a label for the full term of copyright. In the States, that’s either ninety-five years or the life of the artist plus seventy years. Imagine all the unforeseen innovations that a contract would have to cover to keep the deal fair for artists and their heirs.

Consider smart contracts for literacy. “Why don’t we target financial aid toward personal development? Like Kiva, but Kiva for literacy,” Swan said, except that everything would be super transparent and participants would be accountable. Donors could sponsor individual children, put money toward learning goals, and pay out according to achievement. “Say I wanted to fund a schoolchild in Kenya’s literacy program. Every week this child would need to provide proof of completion of a reading module. Perhaps it’s all automated through an online test where the blockchain confirmed the child’s identity and recorded progress before disbursing the next week’s worth of funding into what we might call the child’s ‘smart wallet for learning’ so that the child could continue payment for school without interference. Money toward a girl’s education couldn’t be diverted to her brother’s schooling,” she said.

He learned that he could manipulate the pitch by the precise position and motion of his hands. He called his device the “etherphone,” known today as the theremin, an anglicized version of his name. The other app was a larger-scale version of this apparatus, one that was sensitive to movement within a radius of several meters. It was the first motion detector—sentry of the ether. He demonstrated both of these instruments at the Kremlin, playing his etherphone with abandon for Comrade Lenin. While Lenin delighted in the etherphone, he put the motion detector immediately to work in watching over the Soviet stashes of gold. If anyone crossed the electromagnetic line around the gold, they’d set off a silent alarm. Big Brother suddenly had electric eyes.

Ten minutes is also too long for financial transactions where timing matters to get an asset at a particular price, and where latency exposes traders to time-based arbitrage weaknesses such as market timing attacks.6 The immediate solution for entrepreneurs has been to fork the bitcoin code base, that is, to modify the source code by tweaking a few parameters, and to launch a new blockchain with an altcoin in place of bitcoin as incentive to participate. Litecoin is a popular altcoin with a block time of 2.5 minutes, and Ripple and Ethereum are entirely reengineered blockchain platforms that have latency of seconds, not minutes.

The energy is what it is, and it’s comparable to the cost incurred in securing fiat currency. “All forms of money have a relationship to energy,” said Stephen Pair of BitPay. He revisited the gold analogy. “Gold atoms are rare on earth because an intense amount of energy is needed to form them.” Gold is precious because of its physical properties, and those properties derive from energy. Pair mused that artificially manufacturing gold would require nuclear fusion.