THE BLOG
06/02/2016 04:07 pm ET Updated Jun 03, 2017

Blockchain in 20XX

By Bettina Warburg, Founder and Executive Director of the Blockchain Technologies Lab (BTL) and Tom Serres, Founder of DV Torque, BCG's first Startup Studio & Lead Partner on the strategic partnership with BTL.

Blockchain Technology can be this esoteric concept generally reserved as subject matter for academic elite and nerds with an IQ of 228...but not any more. Before we dive too deep into this rabbit hole of amazing and enlightening content, let's first take this concept to its most logical extreme. We will paint a picture of the euphoric future that our band of enthusiastic "blockheads" hope will someday come true.

It's 20XX. Distributed Autonomous Organizations (DAO) are no longer a relic of the past. It seemed like only yesterday that blockchain technology was in its infancy, and today it's as pervasive as the internet was back in the early 2000's. It's important to note that DAO's were essentially the holy grail of crypto-anarchist visionaries such as the 20 year old Canadian entrepreneur Vitalik Buterin who founded Ethereum. What does that really mean?

Blockchain is essentially a very basic set of protocols, or rules, if that's easier. Rules on how we interact and transmit information. No different than the internet was back in the day - only better. In fact, you can go as far back as some of the first agrarian tribes who created rules to barter and trade amongst their communities for various goods and services. However, as we've evolved and grown - exchange amongst different communities who inherently didn't trust each other had become more difficult. We needed a way to come together to engage in trade - among communities who didn't necessarily know or trust each other. Enter the trading post. A common ground, or common set of protocols, on how we interacted and traded between different communities.

Fast forward many hundreds of years, the early 2000's brought us platforms and marketplaces like Amazon, Airbnb, and Uber. Honestly, not a whole lot different than the old school trading post - just a lot bigger and more efficient. One of the north stars of the BTL is an American Economist and Nobel Laureate by the name of Douglas North. Mr. North was an advocate for something called New Institutional Economics. Institutions are the "rules of the game," both the formal legal rules and the informal social norms that govern individual behavior and structure social interactions.

Until blockchain became more pervasive in the late 21st century, we built institutions and platforms to dictate the rules of the game and relied on the state for the enforcement of the rules to reduce the inefficiencies of trust between firms. Lack of trust between firms is an enormous cost of doing business and only increases the cost of transactions. Blockchain essentially replaced these concepts by collapsing together both institutions and enforcement into a single set of technological protocols. Blockchain, inherently became a trust layered on top of the internet.

Even though it took nearly 30 years before blockchain became a common thread amongst firms - today we benefit from this through distributed autonomous corporations and governments - technology that both sets the rules through code and then enforces them through collateralized smart contracts. Case in point, Today Uber is no more. A $50B company that died so many years ago. Today we have autonomous vehicles self incorporated on the blockchain complete with shareholders operating its own P&L. In a few moments, one will come pick me up. I'll climb inside, and once arrived my bill will automatically be settled via payment with one of my 30 crypto-currencies (perhaps the one my personal AI "Darian" determines has the best exchange rate for that moment). From there, the autonomous vehicle will either continue on to pick up the next rider in its queue before driving to an autonomous maintenance shop to clean its windshield and fulfill minor repairs for optimal driving performance (to maintain its 5 star rating, of course). At the end of the month, myself and various other shareholders will receive our annual profit sharing statement with funds immediately deposited into our accounts - that,, of course, is if we don't decide to forgo our profits in exchange for allowing the DAO to purchase a new vehicle to add to its fleet for greater future profits.

Honestly, we don't even know how we functioned properly before blockchain. While attending the annual founders conference in Dublin, John Sculley, Fmr CEO of Apple, shared something with me I won't easily forget, "Technology should either be invisible or beautiful". In the early 21st century, blockchain was certainly invisible - after 20 years of maturity and investment - it sure is beautiful now.

Finally, we should be mindful of Amara's Law - the idea that we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run - Blockchain, it certainly falls into this category.

Yours Truly,
Tom Serres (DV Torque) and Bettina Warburg (The Blockchain Technologies Lab)