Block Party

An interview with Tomicah Tillemann

Tillemann: The best portal into the future that I've seen is the country of Estonia. Estonia has the world's most advanced e-governance systems. Every citizen has a digital identity that exists alongside their analog identity. And they're able to use that digital identity to engage in virtually all of the transactions and processes that we all spend time pursuing on a day-to-day basis. What that means is that for an Estonian, the idea that you would have to stand in line and physically visit the Department of Motor Vehicles to get your driver's license renewed is laughable. The idea that you would have to go to a polling place to cast your vote is adorable to them. They vote from their mobile phones.

Estimates are that Estonians save hundreds and hundreds of lifetimes of time by virtue of having these systems in place. And the beauty of blockchain is that like Estonia's systems, which are used not only by the government — and governments will be among the largest users of blockchain systems going forward — is that you're able to decrease the price of trust and reduce the amount of friction that citizens encounter in their day-to-day lives.

Every time you fill out a form to validate your identity, in the future you instead will be able to rely on a nearly instantaneous blockchain solution. Every time you have to gather up documents to prove something to a lender or a financial institution, you'll be able to rely on a nearly instantaneous blockchain solution. Every time you need to use or share medical records, rather than having to wait through an arduous process of having those records shipped from one service provider to another, you'll be able to use a nearly instantaneous blockchain solution. Citizens should experience the improvements in their lives pretty quickly.

OR:  How will all this change the global economic and security terrain?

Tillemann: Let's take the economy first. I would say that if your organization profits off of efficiency and accountability, blockchain could be the best thing that ever happens to you. And there will be really profound opportunities for companies and firms that derive their profits from improving efficiency and accountability to harness this technology in ways that we haven't even imagined yet.

The flip side of that is that if your company or organization is based on friction — and there are a lot of great organizations that are based on friction, serving as the middleman or taking a transaction fee on someone else's business — then you need to start looking at your business model pretty quickly and ensuring that you have a strong value proposition that will hold up. Because this a technology that will significantly reduce the amount of friction that is acceptable in any business process or any supply chain.

On the security front, this could be one of the most important tools ever developed for combating corruption. If you look at the numbers provided by the United Nations, corruption is roughly a three-trillion-dollar-a-year industry. It's also one of the world's primary drivers of political instability. As blockchain systems are adopted, the increased level of accountability and transparency that they provide should make it dramatically more difficult for actors to engage in malfeasance or for the regular inefficiencies of government to get in the way of doing their work.

I'll give you one domestic example from the U.S. The Treasury Department, by its own admission, makes about $144 billion in improper payments annually. That's money that goes out the door that should not go out the door for a variety of reasons. And they've looked at this and started to recognize that blockchain solutions could address the preponderance of that improper spending. This is a technology that will have huge implications in frontier and emerging market settings. But it will also, I think, play a pretty important role in restoring efficiency and trust in institutions and countries like the United States where confidence in our existing structures is waning. And it could help reverse that decline.

OR: What are the major misconceptions about blockchain that you see in analysis of it?

Tillemann: A friend of mine was speaking at the World Bank recently and said, "There is a misconception that all of this is going to happen soon. The reality that it's happening right now." For those governments and organizations that are taking a wait-and-see approach, it is now time to get off the sidelines and to engage because this is moving much more rapidly than the development of the internet did a generation earlier. You don't want to be left behind.

The second misconception is that you need to understand every technical detail surrounding blockchain before you can understand how it can help your organization. Like many of the internet protocols that emerged a generation earlier, what stakeholders and citizens will ultimately care about is the ability of this technology to improve their lives and deliver higher levels of security, accountability, efficiency, and transparency. And once you get the basics, then you're going to be in a pretty good position to identify ways in which blockchain can help your company or your country pursue those objectives.

The biggest hurdle to adoption of blockchain technology is a lack of education. And there is a bit of a high barrier to entry around blockchain: it does require a leader to take an hour to and sit down and read a few articles to understand what the technology is and what it can do for them. But with the investment of an hour or two, they can be in a position to really harness one of the most important new tools that's emerged since the founding of the internet.