Blockchain: Blueprint for a New Economy

world is through computing paradigms,

with a new paradigm arising on the

order of one per decade (Figure P-1).

First, there were the mainframe and PC

(personal computer) paradigms, and then

the Internet revolutionized everything.

Mobile and social networking was the

most recent paradigm. The current

emerging paradigm for this decade could

be the connected world of computing

relying on blockchain cryptography. The

connected world could usefully include

blockchain technology as the economic

overlay to what is increasingly

becoming a seamlessly connected world

of multidevice computing that includes

wearable computing, Internet-of-Things

(IoT) sensors, smartphones, tablets,

laptops, quantified self-tracking devices

(i.e., Fitbit), smart home, smart car, and

smart city. The economy that the

blockchain enables is not merely the

movement of money, however; it is the

transfer of information and the effective

allocation of resources that money has

enabled in the human- and corporate-

scale economy.

With revolutionary potential equal to that

of the Internet, blockchain technology

could be deployed and adopted much

more quickly than the Internet was, given

the network effects of current

widespread global Internet and cellular

connectivity.

Just as the social-mobile functionality of

Paradigm 4 has become an expected

feature of technology properties, with

mobile apps for everything and sociality

as a website property (liking,

commenting, friending, forum

participation), so too could the

blockchain of Paradigm 5 bring the

pervasive expectation of value exchange

functionality. Paradigm 5 functionality

could be the experience of a

continuously connected, seamless,

physical-world, multidevice computing

layer, with a blockchain technology

overlay for payments—not just basic

payments, but micropayments,

decentralized exchange, token earning

and spending, digital asset invocation

and transfer, and smart contract issuance

and execution—as the economic layer

the Web never had. The world is already

being prepared for more pervasive

Internet-based money: Apple Pay

(Apple’s token-based ewallet mobile

app) and its competitors could be a

critical intermediary step in moving to a

full-fledged cryptocurrency world in

which the blockchain becomes the

seamless economic layer of the Web.

Figure P-1. Disruptive computing

paradigms: Mainframe, PC, Internet,

Social-Mobile, Blockchain8

M2M/IoT Bitcoin Payment

Network to Enable the Machine

Economy

Blockchain is a revolutionary paradigm

for the human world, the “Internet of

Individuals,” and it could also be the

enabling currency of the machine

economy. Gartner estimates the Internet

of Things will comprise 26 billion

devices and a $1.9 trillion economy by

2020. 9 A corresponding “Internet of

Money” cryptocurrency is needed to

manage the transactions between these

devices,10 and micropayments between

connected devices could develop into a

new layer of the economy.11 Cisco

estimates that M2M (machine-to-

machine) connections are growing faster

than any other category (84 percent), and

that not only is global IP traffic forecast

to grow threefold from 2012 to 2018, but

the composition is shifting in favor of

mobile, WiFi, and M2M traffic.12 Just as

a money economy allows for better,

faster, and more efficient allocation of

resources on a human scale, a machine

economy can provide a robust and

decentralized system of handling these

same issues on a machine scale.

Some examples of interdevice

micropayments could be connected

automobiles automatically negotiating

higher-speed highway passage if they

are in a hurry, microcompensating road

peers on a more relaxed schedule.

Coordinating personal air delivery

drones is another potential use case for

device-to-device micropayment

networks where individual priorities can

be balanced. Agricultural sensors are an

example of another type of system that

can use economic principles to filter out

routine irrelevant data but escalate

priority data when environmental

threshold conditions (e.g., for humidity)

have been met by a large enough group

of sensors in a deployed swarm.

Blockchain technology’s decentralized

model of trustless peer-to-peer

transactions means, at its most basic

level, intermediary-free transactions.

However, the potential shift to

decentralized trustless transactions on a

large-scale global basis for every sort of

interaction and transaction (human-to-

human, human-to-machine, machine-to-

machine) could imply a dramatically

different structure and operation of

society in ways that cannot yet be

foreseen but where current established

power relationships and hierarchies

could easily lose their utility.

Mainstream Adoption: Trust,

Usability, Ease of Use

Because many of the ideas and concepts

behind Bitcoin and blockchain

technology are new and technically

intricate, one complaint has been that

perhaps cryptocurrencies are too

complicated for mainstream adoption.

However, the same was true of the

Internet, and more generally at the