Blockchain para No Tecnologos

JOURNEY TO BLOCKCHAIN
A Non-Technologist’s Guide to the Internet of Value
Hilary Carter
Blockchain Research Institute
November 2019
A BLOCKCHAIN RESEARCH INSTITUTE BIG IDEA WHITEPAPER

Realizing the new promise of the digital economy
In 1994, Don Tapscott coined the phrase, “the digital economy,” with his
book of that title. It discussed how the Web and the Internet of information
would bring important changes in business and society. Today the Internet
of value creates profound new possibilities.
In 2017, Don and Alex Tapscott launched the Blockchain Research Institute
to help realize the new promise of the digital economy. We research the
strategic implications of blockchain technology and produce practical
insights to contribute global blockchain knowledge and help our members
navigate this revolution.
Our findings, conclusions, and recommendations are initially proprietary to

our members and ultimately released to the public in support of our mission.
To find out more, please visit www.blockchainresearchinstitute.org.
Blockchain Research Institute, 2020
Except where otherwise noted, this work is copyrighted 2020 by the

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This document represents the views of its author(s), not necessarily those
of Blockchain Research Institute or the Tapscott Group. This material is for
informational purposes only; it is neither investment advice nor managerial
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Contents
Preface 3
My own journey into blockchain 3
Why I’m inspired by blockchain 4
From the Internet of information to the Internet
of value 6
Joining the Blockchain Research Institute 7
Part 1: Blockchain begins 8
Solving the double spend problem 10
The big deal about bitcoin 11
A new kind of digital economy 12
Part 2: Climbing the wall of jargon 12
Bitcoin as a three-layer cake 13
Unpacking those bitcoin terms 14
Part 3: What is blockchain? 23
Decentralized 24
Immutable 26
Public or private 26
Permissioned or permissionless 27
Transparent 27
Part 4: Enterprise-grade blockchains 28
The strengths of open source 28
Where to from here? 30
Conclusion and recommendations 31
Appendix 31
Internal activities 32
External activities 34
Experiential activities 34
About the author 36
About the Blockchain Research Institute 37
Notes 38
Preface
If you’re reading this guide, you’re likely new to blockchain
technology. And either you selected yourself or you were appointed
to help lead your organization through the second generation of the
Internet. That’s a big challenge!
This guide can help you get started. This will explain the blockchain
jargon that confuses everyone at first. I’ll stick to things any
professional person needs to know … and not go down any rabbit
holes into arcane technical details. I promise!
Whatever your interest, profession, or role in your organization; no

matter if you live in Albania or Zimbabwe; whether you manufacture
precision parts or host a ride-sharing platform; I believe you must
pay attention to blockchain.
It’s time for you to
understand blockchain’s It’s time for you to understand blockchain’s likely role in our digital
likely role in our digital future. It’s time to uncover the role of blockchain as a disruptive
future. force for your industry, your organization, and your own career.
I’ve never been disappointed with my decision to go all in on this

technology. I sincerely hope that my own journey to understand
blockchain will inspire you to continue yours. And if I can do it, you
can do it too. So, let’s begin.
My own journey into blockchain

I grew up in a time that was decidedly analog. My phones all
had cords. I did all my high school projects with pen and paper.
I completed all my research by going to a library to look up
information in printed journals and textbooks. When I took a photo,
I used film that had to be sent away to be developed and printed. Do
you remember those days?
In the spring of 1995, the final year of my undergraduate degree, I

first used an e-mail account from my university. Since then, like most
adults, I’ve learned to use PCs and software and apps as our world
quickly went digital.
3 © 2019 BLOCKCHAIN RESEARCH INSTITUTE

But as you know, simply using a PC or smartphone isn’t enough to

help anyone understand something as innovative as blockchain. I
hold a bachelor’s degree in political studies and a master’s degree in
management, so I’m certainly no software coder. And the good news
is that you need not be a computer scientist to learn more about
blockchain.
Here’s how I look at it: only a fraction of Google users understands

Learning a few basics will exactly how its search algorithms work. Yet we all use search every
help you understand more day at home and at work. And I think we can all agree that Google
about how blockchain search transformed our lives.
works and why it’s so
different and so powerful. In the same way, very few people understand exactly how Bitcoin or
any other blockchain works, but understanding its utility is a different
requirement. So far, very few of us use blockchain every day at home
and at work, but I believe that this will change. In the meantime,
learning a few basics will help you understand more about how
blockchain works and why it’s so different and so powerful. Then you
can begin to envision how blockchain could transform your industry
and your own organization along the way.
Why I’m inspired by blockchain

While computer science is not a requirement, I believe that
inspiration is. My inspiration came from reading Blockchain
Revolution by Don and Alex Tapscott in 2016. I was immediately
captivated by the book’s description of the transformative potential
of this ground-breaking technology.
Figure 1: Meeting Don Tapscott
Source: Hilary Carter @TweetFromHilary, Twitter post, 5 May 2016 (4:19 PM).

Who among us believes that business has evolved as far as it ever

will? That our global financial systems and supply chains cannot
possibly be refined, streamlined, or rationalized? That the Internet
has fully delivered on its promise? That every age-old problem that
faces humankind has already been solved?
This is what inspires me: the thought that blockchain represents a

profound innovation that can help every business evolve, transform
The thought that blockchain the Internet to reach its full potential, and solve many nagging
represents a profound problems that face our world.
innovation that can solve
many nagging problems My first career: Finance
that face our world inspires
me. I believe that my worldview and my professional experiences led
me to blockchain sooner than most. I was always interested in the
world beyond Canada’s borders. I studied at the London School of
Economics and worked in finance in that city, where I was exposed to
business opportunities in Europe, Africa, and South America.
Looking back, it’s clear that before I became immersed in blockchain,

my career had two distinct chapters—both in fields that were about
to be reshaped by technology.
In the first chapter, I worked in finance. Through the late 1990s and
early 2000s, I spent years buying and selling investment products
denominated in more than six different currencies for clients all over
the world. This gave me plenty of experience with asset classes,
foreign exchange, global markets, international wire transfers, and
the regulatory bodies that strictly govern all of these transactions.
As a signing officer of a bank, I had to make sure that every sizable

transaction was compliant. I also had the pleasure of communicating
with clients in Latin America in Spanish, a language I love. And most
of all, I learned how banks make money.
It was an exciting career, but I took a pause from it once my first

child was born. What I didn’t anticipate was how long a pause that
would be!
Looking back, it’s clear that
before I became immersed
in blockchain, my career
My second career: Communications
had two distinct chapters— Soon after starting my family, I began to work as a freelance writer
both in fields that were in Toronto. I wrote articles for magazines and website copy for
about to be reshaped by clients. This gave me the freedom to work from my home office and
technology. the flexibility to be with my kids when they needed me most.
This was a big transition for me, but I wasn’t the only one going
through big changes. With the rise of the web as a publishing
medium, all my clients were too.
And they were facing a double-whammy. As soon as they managed

to move their content from print to the web, they had to move it
again, from the web to mobile phones. As social media apps went

mainstream, publishers had to start giving away content online to

stay relevant.
As a result, advertising revenues plummeted. Printed newspapers

and magazines shrank and laid off thousands of people. Many shut
their doors forever. According to editor Paul Steiger, the publishing
industry saw “a total collapse of the business model.”1 After all, who
can compete with online content available 24/7 for free?
it became clear to me that
the entire business world— But these wrenching changes touched more than just traditional
as well as my own career— publishers. Many of my clients had started entirely virtual online
was at the mercy of the businesses. I saw first-hand how much they depended on Google
search results. The rollout of any new Google algorithm, such as
Internet and the centralized
Panda in 2011, hurt any site with repetitive key words or duplicate
players who now controlled content. But even reputable websites were affected, and several
it. clients and bloggers in my circles could not recover.
In the years that followed, for any business to rank high in Google
search results, they had to build a mobile-friendly website, buy
Google AdWords, generate lots of fresh content, and make other
costly investments in digital marketing.
When the web first emerged in the mid-1990s, it was difficult to

predict how it would evolve. Few people foresaw the rise of the
digital conglomerates like Amazon, Facebook, and Google, nor the
aggregators that followed like Airbnb and Uber. Within 10 years, it
became clear to me that the entire business world—as well as my
own career—was at the mercy of the Internet and the centralized
players who now controlled it.
From the Internet of information to the Internet of

value
At the launch of Blockchain Revolution, I was thrilled to hear Don
and Alex Tapscott describe blockchain technology as “nothing short
of the second generation of the Internet.” They expected blockchain
to unleash profound changes on society, just like the first generation
did.
At the launch of Blockchain
Revolution, I was thrilled to The first generation of the Internet enabled the rapid and widespread
hear Don and Alex Tapscott exchange of information. That covers anything that can be
describe blockchain transformed into a digital file, such as documents, photos, music, TV
technology as “nothing shows, or movies. This shift created remarkable success for some
innovative start-ups that jumped on board the new paradigm. And
short of the second
it delivered crushing defeats to firms that clung to their outdated
generation of the Internet.” business models, now-defunct Blockbuster Video being one example.
Working in communications, I saw how the first generation of the
Internet disrupted any business that published information, especially
newspapers, magazines, and music companies.
The second generation of the Internet, the Tapscotts explained, will

enable rapid and widespread exchange of value. That covers anything
that can be listed on a tamper-proof blockchain: cash, collectibles,

intellectual property, paintings, products in a supply chain, real

estate, stocks and bonds, even our votes. Again, this shift will create
remarkable success for some innovative firms that jump on board.
And it will drown any firms that cling to outdated business models.
My background in finance helped me see that blockchain could

render many current functions—such as end-of-day reconciliations—
completely unnecessary. I could imagine the profound disruption
The best thing that I could this would cause. And I began to doubt that the same opportunities
do to prepare my kids for that gave me my professional start would exist for my kids once they
the future was to prepare were ready to join the workforce. The best thing that I could do to
myself for it too. prepare my kids for the future was to prepare myself for it too.
Joining the Blockchain Research Institute

It was clear to me that the Internet had already come for my second
field of publishing, and now it was coming for my first field of finance.
I didn’t want to get caught unprepared a second time. So, I was
determined to discover all that I could as fast as I could. You could
say I read the tea leaves, took a deep breath, and dug in. And I’ve
never regretted it.
To begin, I played to my strengths, as anyone should, leveraging

my writing skills along with my finance background. In the summer
of 2016, I wrote a column in Canada’s national newspaper, The
Globe and Mail, on the idea that blockchain was an empowering
technology that would create new opportunities for female leaders
and stakeholders.2
For centuries, men have been financial intermediaries to women—

just look at the phrase “middleman”! I argued that blockchain could
upend that model, giving women greater financial independence in
the same way that blockchain could expand banking services for
the unbanked. I collaborated with Don and Alex Tapscott on the
article and interviewed Perianne Boring from the Chamber of Digital
Commerce in Washington, DC. In the months that followed, I kept in
touch with all of them.
In the spring of 2017, I Time was on my side. Just after Blockchain Revolution was published,
I attended a training conference in Toronto, and along with my
was fortunate to be hired husband, earned the Certified Bitcoin Professional designation. I am
to build our community fortunate to have my life partner engaged in blockchain too!
of subject matter experts
who create the research I also regularly attended bitcoin and blockchain industry meetups,
reports at the heart of our where I encountered some of the earliest blockchain innovators in
program. Canada. Through them, I sought speaking and other professional
opportunities at every turn. I actively used social media to network
with the most interesting people in this emerging space.
When the Blockchain Research Institute was announced, I reached

out to the new team and attended a content strategy session with
Don, Alex, and others. In the spring of 2017, I was fortunate to be
hired to build our community of subject matter experts who create
the research reports at the heart of our program.

Many of these reports are now freely available in the Creative

Commons. These non-technical reports help inform your
organization’s blockchain strategy. They illustrate blockchain use
cases; sum up the implementation challenges facing governments,
enterprise, and start-ups; and describe the competitive landscape of
tomorrow.
In a few short years, the Blockchain Research Institute has built

In a few short years, the a research-centered community respected around the world. To
Blockchain Research witness this community coming together to share its expertise,
Institute has built a to see people working together to develop industry standards, to
research-centered attend our world-class member summits and conferences, has been
mesmerizing. And to know that I played a part in that makes me very
community respected proud.
around the world.
This is my journey into blockchain. Having gone down the rabbit hole,
I’m here to stay. And I hope that the following sections of this report
give you both the tools and the inspiration to join me!
Part 1: Blockchain begins

I’ve always thought anyone who wants a solid understanding of
blockchain should start by understanding the basics of Bitcoin. After
all, that’s where it all began. So this is the best place to set off on
your journey.
You’ve probably heard that Bitcoin was invented by Satoshi

Nakamoto. That’s the pseudonym used by the author(s) of a white
paper published in the fall of 2008—just as the world’s entire financial
system looked set to collapse. That paper was called "Bitcoin: A Peer-
to-Peer Electronic Cash System." You can still find it online, and it’s
well worth a read.3
This document has been called “the most influential white paper in
history.”4 And why not? In just nine pages, this paper described not
one, but two amazing breakthroughs:
Anyone who wants a » A new form of digital cash, the world’s first “cryptocurrency”
solid understanding of
blockchain should start by » A secure way to handle electronic transactions with no central
understanding the basics of authority like a bank
Bitcoin.
But this wasn’t all just theory. A few months later, the Bitcoin
network actually went live. The first “coins” were “minted” on 3
January 2009. Later that year, one coin was valued at a tiny fraction
of a penny. At first, these strange new concepts interested only a
small band of cryptographers and libertarians.
But the new cryptocurrency—and the blockchain technology (or

structural framework) that supports it—gradually attracted a

following around the world. The Bitcoin white paper was such a
seminal work that it’s been cited in more than 6,650 other academic
papers.5 Software developers began to build related systems
using the same design principles, where blocks of transactions are
cryptographically linked together to form a chain. Entrepreneurs
began to jump in with business ideas, and investors realized
something promising was unfolding.
The blockchain technology Then in 2017, Bitcoin exploded into front-page news in publications
behind bitcoin has created like The Economist, Forbes, The New York Times, The Wall Street
thousands of jobs, and it Journal, and hundreds more. Propelled by a frenzy of interest, the
may destroy thousands value of a single coin rose to an all-time high of $19,783.6 Look at
everything else that has happened (Figure 2):
more—especially relatively
low value-added jobs » One survey showed nearly four out of five Americans have
that involve a lot of paper heard of bitcoin, a remarkable level of awareness.7
shuffling or filing.
» More than 2,500 more alt-coins have been devised with names
from ABBC Coin to ZoZo Coin, and a handful of these have
caught on.8
» Between 2013 and 2018, investors poured $22.5 billion into

hundreds of initial coin offerings for new cryptocurrencies.9
» At press time, bitcoin itself has a market cap of $185 billion.10

» The blockchain technology behind bitcoin has created
thousands of jobs, and it may destroy thousands more—
especially relatively low value-added jobs that involve a lot of
paper shuffling or filing.
Figure 2: The impact of the Bitcoin blockchain in its first decade
Data as of 19 July 2019. Bitcoin icon: Bitcoin Blockchain Currency Coin Gold by Sinisa Maric (sinisamaric1), 2018, used under
Pixabay license, accessed 2 Nov. 2019. Recolored.

Solving the double spend problem

Why all the attention? What’s so special about Bitcoin? Let me give
you one example.
When you send an e-mail to a colleague over the Internet, your

colleague gets a copy and you keep a copy in your “Sent” folder.
That’s fine for information, but it’s no good for value.
Bitcoin was not the first
form of digital cash ever If a friend sends you a payment over the Internet, you should get the
devised. But it was the money but they shouldn’t get to keep a copy of that money. If they
first that solved the double did, they could turn around and spend it again, and the system would
spend problem effectively. collapse.
This is called “the double spend problem.” It’s a nagging problem in

the world of online payments and digital cash, because hackers are
constantly looking for some way to accomplish it. If there’s a bug or
loophole in the payments software, a bad guy will find it and exploit
it.
Bitcoin was not the first form of digital cash ever devised. But it was
the first that solved the double spend problem so effectively. The
network’s ingenious design prohibits anyone from spending the same
bitcoin twice.
Here’s how: Bitcoin enables people to buy, sell, or trade directly

with each other because of its unique design, which includes a
decentralized network of participants who ensure that no one is
double-spending (more on that network later).
Bitcoin is different. As Satoshi wrote, “A purely peer-to-peer

version of electronic cash would allow online payments to be sent
directly from one party to another without going through a financial
institution.”11 Now you can do that as easily as hitting “Send” for an
e-mail.
By downloading a free app called a “wallet,” anyone can access the

Bitcoin blockchain and begin exchanging bitcoin with anyone else in
the world. That’s how I was first introduced to Bitcoin. I downloaded
a wallet and was sent a micropayment of bitcoin by a Bitcoin expert
What’s also unique about as a means of demonstrating how it works (more on that later too).
Because of Bitcoin’s unique design, that micropayment did not go
Bitcoin is that the network through a middle man—an intermediary—such as a bank, a credit
keeps a record of all the card company, or PayPal. It went from one person to another person
transactions that have ever via the Bitcoin blockchain.
taken place.
And what’s also unique about Bitcoin is that the network keeps a
record of all the transactions that have ever taken place. These
are not stored in a folder, such as your “Sent” folder for e-mail,
but on the blockchain software itself. What’s more, anyone can
see transactions and verify that they are valid. They just can’t
necessarily readily attribute transactions to any one individual.

I mentioned previously that Bitcoin includes a network of

participants. Indeed, it does. This network consists of voluntary
participants from all over the world. The most active participants are
called “miners,” who use their computing power to validate Bitcoin
transactions and make sure no one does any double-spending. In
return, the fastest miner to validate a set of recent transactions—by
solving a cryptographic puzzle that assembles those transactions into
a “block”—is rewarded with new bitcoins. This reward is the economic
Today’s e-commerce incentive needed for participants to sustain the network and power
and bank transfers may the Bitcoin blockchain.
work, but they’re far from
perfect. All this makes Bitcoin unique among inventions, and a major
advancement in digital technology. Are you with me?
The big deal about bitcoin

“Okay,” you may be thinking, “but shopping online or sending
e-payments is no problem for me, or anyone else I know. What’s the
big deal about Bitcoin? Why would I ever need it?”
Here’s the deal: Today’s e-commerce and bank transfers may work,
but they’re far from perfect. They’re just an electronic version of
yesterday’s paper transaction. To arrange such a transfer, you need a
bank account or a credit card. You must pay whatever fees the banks
or e-commerce sites deduct. And your money can be “in transit” for
a long time. Just look at PayPal’s three- to five-day waiting period to
sweep money into your bank account—and that’s for those of us in
developed countries.
These transactions are far more difficult for someone in the

developing world, where two billion people don’t have any bank
accounts or credit cards. When they want to send money to family
or friends, they get charged exorbitant fees, as much as 22.7
percent between some African countries. Even for people sending
remittances from United States to Mexico, the average fee is 7.26
percent for a transaction that’s essentially risk-free.12
Alex Mashinsky, an inventor of voice over Internet protocol (aka

Bitcoin has sparked more VOIP), called Bitcoin and other cryptocurrencies a huge new
than 2,500 different innovation: money over Internet protocol, or MOIP.13 This innovation
is driving the creation of an entirely new industry.
iterations, tokens, and
platforms each designed to Bitcoin has sparked more than 2,500 different iterations, tokens, and
achieve different purposes platforms—new twists on this novel invention, each with different
and to serve different nuances, designed to achieve different purposes and to serve
communities. different communities.
Yet, its main purpose is to streamline the world of monetary

payments by getting rid of unnecessary middlemen and reducing
the costs of transactions in the process. The community most
immediately served by this innovation is the unbanked community,
who simply need access to a mobile phone and some Bitcoin to begin
transacting in a modern way. This is where Bitcoin can be a really big
deal. But wait, there’s more!

A new kind of digital economy

As Don and Alex Tapscott astutely noted in Blockchain Revolution,
“The genie is out of the bottle.” And that bottle has a strange
shape and a strange color. It’s nothing like any company, any
nongovernmental organization (NGO), or any government.
Unlike a public company, Bitcoin has no board of directors. It has

Bitcoin has a community no management team, and no employees. Unlike an NGO, Bitcoin is
of stakeholders, people not registered in any country. It does no fundraising. It sends out no
who own bitcoin, and mail asking for donations. And unlike any government, Bitcoin brings
people who generate it by down no budgets, has no departments, and runs no elections.
sustaining the network.
Instead, Bitcoin has a community of stakeholders, people who own
bitcoin, and people who generate it by sustaining the network. This
community also includes entrepreneurs who develop related services,
such as Bitcoin ATMs—or BTMs (Bitcoin Teller Machines)—bitcoin
wallets, and bitcoin point-of-sale systems.
This is a robust, living, breathing, global community of passionate

advocates who believe in an alternative to the traditional monetary
and financial system, and who are actively working to establish
Bitcoin as a global financial powerhouse.
Make no mistake about it: Bitcoin has paved the way for a new kind
of digital economy. This new economy is based on improving and
streamlining the world’s entire infrastructure for transferring value;
but this time, it’s being built as a digital-first creation. This new
industry is being led by pioneers focused on building new business
models, providing more inclusion for the unbanked, and driving a
more prosperous and democratic financial system for all.
Don’t worry if some of that sounds grandiose or impossible or far-

fetched. It certainly took time for me to grasp the significance of the
bitcoin innovation in the context of the global financial system. All
that big-picture stuff will sink in over time.
The next part of your journey is simpler and more down-to-earth: to

get a better handle on all the terms people use when they talk about
Bitcoin and blockchain.
Make no mistake about it:

Bitcoin has paved the way
for a new kind of digital Part 2: Climbing the wall of jargon
economy.
When I first started learning about Bitcoin, I was frustrated by
the jargon that surrounds it like a steep wall. This jargon includes
complex terms from wildly different worlds: database software,
finance, network design, and even cryptography.
Cryptography, by the way, is the art and science of encoding

information so that only authorized people can easily decode it.

Like most people, I knew some of these terms but not all of them.
From my experience in banking, I was already familiar with the
financial terms. But I’d never needed to study network design or
cryptography, so to me those terms were all new and bewildering.
You’re likely in the same fix: you may know something about
software but not much about finance; or something about networks
but not much about cryptography.
In the next two sections,
I intend to share some To get over that wall, I had to puzzle out what each of those terms
simple definitions for meant. I got help from other people and resources, but those were
many of the terms you limited when I was first introduced to blockchain. There was so single
will hear about Bitcoin and glossary of blockchain terms I could find that explained it all in nice,
simple, short words. There still isn’t.
blockchain in general.
That’s why I wrote this primer for professionals like you. In the
next two sections, I intend to share some simple—and I hope
memorable—definitions for many of the terms you will hear about
Bitcoin and blockchain in general.
Bitcoin as a three-layer cake

The first thing you need to know will likely surprise you: how to spell
Bitcoin. This isn’t as simple as you might think. You may have noticed
in this primer that Bitcoin is sometimes written with an uppercase B
(Bitcoin) and sometimes with a lowercase b (bitcoin).
That’s not a typo. There’s a good reason, but not everyone knows it.
And not all the blogs and books on Bitcoin conform to this style.
A good way to explain this spelling dilemma is with a picture. I know

a couple of people often called on to explain new technologies. One
of their favorite methods is to sketch out a diagram in the form of a
three-layer cake (Figure 3).
The top layer, like the icing on the cake that everybody sees, is
“little-b” bitcoin. This refers to the units of value: the crypto-coins
created and stored on the network. Since bitcoin can be traded on
many online exchanges, it needs a unique identifier to avoid mix-
ups, the same way stocks do. So where Microsoft’s ticker symbol on
Bitcoin also has a character, Nasdaq is MSFT, bitcoin’s symbol on online exchanges is BTC.
most often shown as a
B with two vertical lines Bitcoin also has a character, most often shown as a B with two
vertical lines through it, like in a dollar sign: ₿. As this primer goes
through it, like in a dollar to press, it still isn’t easy to type the bitcoin symbol on a computer.
sign: ₿. Someday soon, the ₿ character will be included in every typeface,
just like the Euro’s € is now. But we’ll have to wait a little while longer
for that.
“Big-B” Bitcoin is like the middle layer of the cake. This doesn’t get
as much attention, because everyone is distracted by the decorative
icing on top. But without it, there would be nothing to put any icing
on.

This layer is the software protocol; the pre-programmed rules that

define how the network works. These were created by Satoshi
Nakamoto. The only way to change anything on this layer is to get
the support of at least 95 percent of the participants in the Bitcoin
network for a new Bitcoin Improvement Proposal.14 That can happen,
but not often.
At the bottom of the cake, the foundation that supports everything

You may have heard Bitcoin else, is the Bitcoin blockchain. This blockchain provides several vital
described as a “digital functions. Probably the most important of these is storing a record
currency” that is global, of every time anyone spends or receives any bitcoin. And no one can
secure, and fungible... tamper with this record, not even Satoshi Nakamoto.
Are you with me so far? Or did all that talk about cake make you
head to the kitchen to raid the fridge?
Unpacking those bitcoin terms

You may have heard Bitcoin described as a “digital currency” that is
global, secure, and fungible, with a fixed or finite supply, and that
serves as a “store of value,” a “medium of exchange, and even “a
public utility.”
Don’t worry if most of that doesn’t make much sense to you. I’m
going to unpack each of those terms as best I can. To keep things
light, I’ll even include some jokes. By the end of this section, I hope
you will understand the whole caboodle so well that you’ll never be
confused by any of the terms again.
Figure 3: Bitcoin as a three-layer cake
Bitcoin icon: Bitcoin Blockchain Currency Coin Gold by Sinisa Maric (sinisamaric1), 2018, used under Pixabay license, accessed
2 Nov. 2019. Recolored.

Digital currency
Human beings have used everything from seashells to giant stones
as forms of money. Over hundreds of years, people gradually
settled on metal coins—which had intrinsic value since they were
often minted from silver and sometimes gold. But that made coins
expensive to produce and cumbersome to carry in bulk.
A digital currency has no
Banks and nations gradually steered society to paper money without
physical form and doesn’t any physical value. Paper money is essentially a “promise” backed by
need one. Bitcoin is a national government, hence the term “fiat” for traditional money:
essentially software. “That money is worth something, because we say it is!”
A digital currency, on the other hand, has no physical form and

doesn’t need one. Bitcoin is essentially software. “Digital” means
anything expressed in numbers, so the closest you can get to seeing
bitcoin is looking at a string of numbers on a screen. When you buy
bitcoin, what you actually get is a “private key.” That’s a long string
of numbers you can use to prove that some amount of bitcoin is
really yours and not anybody else’s.
Small-b bitcoin is digital or virtual or e-cash. It’s the original

“cryptocurrency.” It has no physical shape, and it never will. That’s
kind of the point.
Figure 4: Countries where bitcoin is legal
Source of data: "Bitcoin Legality by Country Summary," Coin Dance, as of 2 Nov. 2019.

Global
As a digital currency, bitcoin knows no borders. It is not backed
by any government or central bank. Anyone can use it anywhere—
except where it’s prohibited by law (Figure 4, previous page).15
Bitcoin can be sent anywhere the Internet reaches, from computer

to computer. You can hold bitcoin in any country and send it to any
Bitcoin can be sent
other country—except where it’s prohibited by law. You can spend
anywhere the Internet bitcoin with any merchant that accepts it. All of this makes it a truly
reaches, and spent with global phenomenon.
any merchant that accepts
it. All of this makes it a Of course, fiat money can be sent around the world in a flash the
truly global phenomenon. same way. Today even traditional money can be nothing but a string
of digits in an account that’s nothing but another string of numbers.
In this small way, fiat is catching up to bitcoin. But bitcoin still has
many other unique features, as we’ll see.
Secure
Since bitcoin is a digital currency that exists inside a computer
network, we can’t see it or touch it. It can’t be stolen or counterfeited
the same way as printed money. Yet we often hear about some of the
biggest companies in the world being hacked. These companies have
data pilfered from their databases; but if bitcoin is nothing but data,
is the system really secure?
Yes, I think it is. For more than 10 years, the Bitcoin blockchain has
held up as a highly secure way to store and exchange value. This
isn’t an accident; it’s a deliberate part of the network design. The
Bitcoin network includes thousands of computers all over the world.
Each computer involved in helping to run the network is called a
“node.”
To hack into the Bitcoin blockchain, a bad guy would have to attack
51 percent of all these nodes at exactly the same time. That’s next
to impossible. That would take an unprecedented amount of money,
computing power, and coordination.
Logistical and financial For example, in 2015 one investor estimated that Google’s one million
barriers have blocked the servers equal only one percent of Bitcoin’s total computing power–
bad guys and given Bitcoin so to attack the Bitcoin network would take 51 times all of Google’s
a track record of more computers!16
than 10 years of secure
By another estimate, the electricity for this kind of hack would cost
operations.
more than $25,000 an hour, but there’s no guarantee that it would
work.17 These logistical and financial barriers have blocked the bad
guys and given Bitcoin a track record of more than 10 years of
secure operations.

Third-party exchanges are the problem

What about all the stories about Bitcoin exchanges being
breached and losing millions or even billions in their
customers’ assets? That’s a different side of the story.
Remember that Bitcoin is software code. To buy or sell bitcoin
takes more software in the form of a digital wallet.
What about all the stories Many of these wallets are issued by companies set up to
exchange bitcoin for fiat currencies like USD or Euros; they
about Bitcoin exchanges
make money by charging a small fee on every transaction.
being breached and losing The code for those wallets is written by people, some of them
millions or even billions in better programmers than others.
their customers’ assets?
Some exchanges are sloppy. Some are run by shady
characters in countries without a lot of rules for financial
institutions. And some are run by crooks who simply ignore
the rules. Think of QuadrigaCX, whose CEO stole roughly $200
million of his customers’ money on luxury travels and real
estate.18
Some wallets can’t store your private keys for your bitcoin;
instead, the exchange keeps those for you. This is convenient,
and it reduces the chances that you will somehow lose or
mismanage your keys.
Figure 5: While bitcoin is secure, third-party exchanges are less so

But it also means that your bitcoin is only as secure as the

code defending that exchange. While the bitcoin network is
decentralized, the exchanges are not. Every exchange is what
security experts call “an attack surface.” In other words, it’s a
central point that hackers can readily attack. Since the biggest
exchanges are holding billions in currencies—both digital and
fiat—this makes them juicy targets for hackers.
So while the Bitcoin So while the Bitcoin network is secure, some of the
network is secure, some surrounding infrastructure added by others may not be (Figure
of the surrounding 5, previous page). And some of the people running those
infrastructure added by exchanges may be willing to fake a hacker attack so they can
pocket their clients’ money.
others may not be.
In any case, there’s a trade-off between convenience and
security. We lock up our houses with flimsy little keys that are
convenient to carry and use. Our locks won’t actually stop any
determined thieves: they can just break a window in the back
door or cut through a screen over an open window. But we
rely on locks for the same reason people let exchanges hold
their private keys: it’s convenient.
Usually that works out fine. But if it doesn’t, don’t blame

Bitcoin. The failure came from someone else on the periphery
of the Bitcoin ecosystem.
Fungible
Bitcoin is a “fungible” unit of value exchange. That doesn’t mean
it’s a fungus! Fungible means something can be divided into smaller
units, and every unit has the same value as any other unit. The most
common fungible asset is cash. Think about it: you can break a $20
bill for two $10s, a $10 and two $5s, four $5s, 20 $1s, or any other
combination of bills and coins. The pizza guy doesn’t care what bills
you pay him with, as long as you cover the price of the pizza (with a
little something extra for his tip).
But not everything that’s valuable is fungible. For example, every

diamond is unique. If you cut a diamond in two, you have no
guarantee that both small stones will be worth the same as the larger
Fungible means something original stone. They may be worth more or less, depending on each
stone’s cut or clarity.
can be divided into smaller
units, and every unit has In terms of other large assets, a house is not fungible. Neither is a
the same value as any car. Neither is a painting. There’s no way to easily split up a house
other unit. and recombine it—and who wants half a car? Or one slice of a
painting?
What about gold: fungible or not? The purity of gold is measured in

karats up to 24, which is pure gold. If you melt down two ounces of
24K gold and divide it into two one-ounce measures, they’re worth
the same as the original two ounces (assuming you didn’t spill any on
the floor). So gold is fungible; and bitcoin is like that.

You know how you can divide a dollar into 100 pennies, which equals
two decimal places like this: $0.01? You can divide a bitcoin down
to eight decimal places like this: 0.00000001 BTC. And guess what
every hundred-millionth part of a bitcoin is called? One Satoshi. You
can pool together or portion out all your Satoshis and every Satoshi
is worth the same as every other Satoshi. Because they’re fungible,
right?
One of the unique features Fixed supply

of bitcoin is that there’s a
limited supply of it. There One of the unique features of bitcoin is that there’s a limited supply
will only be 21 million of it. There will only be 21 million bitcoin in circulation, ever. At
bitcoin in circulation, ever. publication time, more than 18 million bitcoin have already been
minted. That’s close to 85 percent of the total.
On average, every 10 minutes another 12.5 bitcoins are awarded

to the “miner” who successfully validates another pool of bitcoin
transactions. Every four years this reward is cut in half, so mining
will yield increasingly smaller rewards until 2140, when all 21 million
bitcoin have been issued.
This is completely different from fiat currencies, which have a floating

supply set by each country’s central bankers, more or less under the
direction of a country’s politicians. For example, the total amount of
US dollars in the world—also known as the money supply—can be
increased any time the US Federal Reserve System decides to print
more.
After the financial crisis of 2008, the US money supply jumped by

an astonishing $3.4 trillion.19 That’s an awful lot of extra greenbacks
to print! Reached the national debt ceiling? No problem—just raise
it! Need more dollars in circulation? Just print some more. Easy fix,
right?
But bitcoin doesn’t work that way. No one can say, “Hey, let’s go
print some more bitcoin!” The total amount of bitcoin in the world is
determined by the original software code, and nothing can change
that ... not even 51 percent of the miners. Making that kind of decision
would undermine the whole reason for the network.
No one can say, “Hey,
let’s go print some more An intriguing aside: what if this fixed supply means that a single
bitcoin!” The total amount bitcoin got to be worth so much that even a single Satoshi was too
of bitcoin in the world is big to spend—in other words, it was worth so much that no one
would accept it, sort of like a $10,000 bill?
determined by the original
software code. Here’s a solution most members of the network would likely support:
divide bitcoins into even smaller parts. In other words, increase
the number of decimal places to make spending bitcoin practical
again. This wouldn’t change the fixed supply; it would rely on the
fact that bitcoin is fungible. Changes like this can be through Bitcoin
Improvement Proposals on GitHub, an open-source forum for
collaboration on any suggested changes to the protocol.20

The high cost of mining bitcoin

Miners compete to earn bitcoin by solving complex problems
in cryptography. To win the challenge, miners need special
high-powered computers that suck up a lot of electricity.
These complex challenges were part of Satoshi’s design, and
they keep the Bitcoin network secure.
At one point, estimates were that Bitcoin mining uses as

The energy consumed by a much power as Ireland. But now it’s grown to equal more
single Bitcoin transaction is power than Switzerland.21 The energy consumed by a single
many thousands of times Bitcoin transaction—even though the exact calculations are
the energy needed to do a debatable—is many thousands of times the energy needed to
do a transaction with your Visa card.22
transaction with your Visa
card. That’s a problem. Luckily, some of the smartest minds in the
world are working to solve it. Let’s hope they come up with
some energy-saving design soon.
A store of value
One of the wonderful things about money—in most times and
places—is that when you put some away today, it’s still worth
something tomorrow. This is what “a store of value” means.
Not many other things are a good store of value.
Consider your car. Unless it’s a classic antique in pristine condition,

it’s worth less every year until it eventually ends up in a junkyard.
Same goes for your computer, your smartphone, your kitchen
gadgets, and most other consumer items. These things don’t hold
their value; in a few years you can find them on eBay for a fraction of
their original price.
On the other hand, gold and silver are traditional stores of value.
They’re scarce, they have many practical uses, and they can be
melted down and reused. Some investors rush into precious metals
whenever they think a crash is coming.
Another store of value is land, especially fertile farmland or

waterfront property. After all, they’re not making any more of it.
Bitcoin and other
cryptocurrencies are a new We can consider bitcoin a store of value mainly because of its fixed
class of assets resembling supply. While the price of bitcoin has certainly been volatile, it has
gold, land, or collectibles grown a lot since 2009. It was $8,760 as of this writing.
like antique cars.
Bitcoin and other cryptocurrencies are a new class of assets
resembling gold, land, or collectibles like antique cars. The value of
all these assets is determined by the market forces of supply and
demand. The more people want something and the less of it there is,
the more it’s worth.
The jury is still out on whether bitcoin makes a reliable store of

value. I’d say over the long term, it probably is. After all, no other

asset has appreciated from nothing to $10,000+ over the 11 years

since Bitcoin was created. But in the short term, it’s not always a
safe investment. That all depends on whether you buy high or low in
any cycle of price fluctuations.
A medium of exchange
Money has now evolved Money was originally created as a medium of exchange; something
far easier to manage than driving all your sheep down to the market
into a global payments and then lugging home many jugs of olive oil. With an accepted
system that supports medium of exchange, a buyer and seller could make a deal and then
instant transactions deliver the physical goods at a more convenient time and place.
between buyers and sellers
all over the world. Money has now evolved into a global payments system that supports
instant transactions between buyers and sellers all over the world,
and bitcoin is becoming another established medium of exchange,
accepted by more and more mainstream retailers.
Here’s a short list of the many companies that now accept bitcoin:
» AT&T: you can pay your phone bill.23

» Expedia: you can book cars, cruises, flights, and hotels all
over the world.24
» Gyft: you can buy gift cards from 200+ retailers including
Amazon, Best Buy, Home Depot, Whole Foods, and Target—
which gives you a way to cash in bitcoin for many consumer
products.25
» Microsoft: you can top up your Microsoft account and then

buy apps, games, and movies in the Windows and Xbox
stores. At press time, you can’t buy gift cards or hardware
from the Microsoft store.26
» Newegg: you can pick from a huge selection of techy

products, from appliances to wine coolers.27
» Overstock: you can shop online for anything from air

mattresses to wedding rings.28
The growing number
of retailers integrating » Virgin Galactic: you can even reserve your seat to blast off
bitcoin into their payments into earth’s orbit; who wouldn’t want to do that?29
systems is a good sign: There are more companies besides these. This growing number of
it means bitcoin is here retailers integrating bitcoin into their payments systems is a good
to stay as a medium of sign: it means bitcoin is here to stay as a medium of exchange.
exchange.
A public utility
You can also think of Bitcoin as a worldwide utility, since it provides
a number of valuable public services. For example, bitcoin can’t be
“censored” like traditional money. But what does that mean?

When you have fiat cash in a bank account, your bank controls
who and where you can send money. For example, you might not
be able to contribute to a certain group that you support because
your government doesn’t approve of them, such as WikiLeaks. You
can’t deposit money into your account if the government doesn’t
approve of how you earned it, such as by operating a legal marijuana
operation in the United States.30
Fiat currencies can be Most governments limit how much cash you can take out of the
“censored” or perturbed country when you travel, and how much foreign currency you can
by the same type of “fiats” buy. And in the worst case, your bank account can be frozen or your
that created them in the money seized by government authorities, with or without cause.
first place.
Or suppose you have a stash of banknotes hidden in your mattress.
A central government can suddenly declare that those bills are no
longer valid. This happened in India in 2016. The old bills had to be
exchanged for new ones, which caused 8-hour lineups at banks and
severely hurt the economy. Some economists said it cost the country
1.5 million jobs.31
These are all examples of how fiat currencies can be “censored” or

perturbed by the same type of “fiats” that created them in the first
place.
Bitcoin resists all that, because it operates according to the

protocol—the middle of the cake, remember?—and the community
that sustains it. Bitcoin is governed by the rules established by
Satoshi Nakamoto and upgraded by the consensus of the network,
independent of any government agencies anywhere.
How is this different from something that belongs to everyone, like

a park? In the past, many village green and other shared resources
were overused and depleted, a phenomenon known as “the tragedy
of the commons.” The problem is that when there is no clear
ownership of a shared resource, no one feels responsible to look
after it.32
Yet being used by more and more people has not depleted Bitcoin.
Unlike a traditional shared resource, Bitcoin is a network where the
Bitcoin is governed by the more people who join it, the more valuable it becomes—just like the
rules established by Satoshi Internet or social media.33
Nakamoto and upgraded
Borderless, censorship-resistant money is especially valuable
by the consensus of the in regions where fiat currencies have become unstable, such as
network, independent of Venezuela or Zimbabwe. For nearly two billion people around the
any government agencies world who are unbanked, having access to bitcoin can open the door
anywhere. to a new world of financial services that have always been out of
reach. The unbanked could suddenly apply for microbusiness loans,
life insurance, mortgages, and other services that can spell the
difference between poverty and prosperity.
In these ways, Bitcoin serves as a much-needed public utility. Now

that we’ve looked at Bitcoin in particular, let’s move on to consider
blockchain in general.

Part 3: What is blockchain?

This section spells out the difference between Bitcoin as a working
cryptocurrency and the underlying technology of blockchain. It also
defines some related terms that were not already defined in Part 3.
Blockchain got its name from the way that bitcoin transactions are
Blockchain got its name grouped, validated, and recorded in a linear, chain-like fashion. On
from the way that bitcoin average, every 10 minutes, the most recent bitcoin transactions are
transactions are grouped, validated and organized into a block. The new block is cleverly linked
validated, and recorded in a to all the earlier blocks before it, creating an ever-growing chain of
linear, chain-like fashion. blocks that leads right back to the first block of bitcoin ever mined in
2009.
Thus, the whole chain of blocks can be verified to confirm that it’s
valid. The blockchain that supports Bitcoin is an amazing technology
that can be used for many other purposes beyond electronic money
transfer. In just a few short years, developers and entrepreneurs
have proposed many ways to repurpose blockchain as a transactional
platform. For example
» Land titles can be transferred.

» Everything from diamonds to mangoes can be traced through
a global supply chain.
» Insurance companies can report to governments faster.

» Entire cities such as Dubai and Singapore can speed up bank
settlements and see their cash flows faster.
» School children can be rewarded for walking or riding their

bikes to school instead of being driven.
» Company registrations can be checked for due diligence.

We may eventually be able to send our health data to doctors during
an emergency using blockchain, and vote in elections en masse in a
Innovations underpinned by more convenient and reliable way!
blockchain technology are
creating new opportunities Innovations underpinned by blockchain technology such as those
across dozens of different mentioned above are creating new opportunities across dozens of
industries, as well as different industries, as well as transformations across government,
enterprise, and society. It’s the core of what we’re researching at the
transformations across Blockchain Research Institute.
government, enterprise,
and society. Of course, learning about blockchain involves (surprise!) dealing with
a few more terms that can be confusing at first. Here’s the kind of
phrase you may encounter with blockchain, filled with the same kind
of jargon that surrounds Bitcoin:
A blockchain is a decentralized ledger that is immutable,

public or private, permissioned or permissionless, and
transparent.

Let’s break down each of the terms in turn.
Decentralized
It’s easy to see what centralized means. It means every point
connects only to one central point (Figure 6). This is also how
traditional databases are designed, with one server storing the
master copy. The design is simple and efficient, but it’s got a big
Decentralized means problem: the single point is vulnerable and very attractive to
without a single center, hackers.
so that every point can
connect more directly to Having one master copy means that any traditional database has a
every other point. single point of failure. And fail they do! Security breaches exposing
the private data of customers are all too common—largely because
consumer data is so valuable. Capital One, Home Depot, Marriott,
and Equifax are four examples where private customer data on a big
brand’s centralized servers were compromised.
It’s no wonder that consumer trust in organizations is close to

an all-time low. According to Blockchain Research Institute (BRI)
research contributor Jeremy Epstein, CEO of Never Stop Marketing,
“Marketers spend a lot of money to collect personal information
about customers, but not a lot to protect it.”34
A blockchain, on the other hand, is decentralized. Decentralized

means without a single center, so that every point can connect more
directly to every other point. As shown in Figure 7 (next page), there
can be more than one point where others connect.
This is essentially how the telephone system or the Internet works.

While it feels like we can call or e-mail anyone anywhere, all our
Figure 6: Centralized, decentralized, and distributed networks

A truly distributed network is more resilient than a centralized one; it cannot easily be interrupted,
shutdown, or controlled by a single entity such as a large corporation or a government.
Centralized Decentralized Distributed

One node does everything Several nodes distribute work to All nodes are equal
sub-nodes
© 2017 Blockchain Research Institute. Reprinted courtesy of copyright holder. All rights reserved.

communications go through networks run by different companies.

To call from New York to Los Angeles, we may start on Bell and then
jump to AT&T, and make several further jumps besides. We just don’t
realize it.
You’ll see one more term to consider in Figure 7: distributed. This is

where it gets messy! There’s an ongoing debate in the blockchain
world about the proper meaning of decentralized vs. distributed. This
While a decentralized may come down to what people mean: how a network of computers
database is slower and works in the real world, how many people control a network, or how
less efficient, it’s also far a network behaves if a big chunk of it goes offline.35
more resilient—and next to
impossible for hackers to The Bitcoin blockchain is decentralized, since its nodes are
distributed all over the world, and there’s no single master copy of
attack. the blockchain. As of this writing, nearly 10,000 nodes were running
the same copy of the Bitcoin network on their computers.36
There’s not just one master copy held at one location; instead, there
are thousands of copies all over the world. While a decentralized
database is slower and less efficient, it’s also far more resilient—and
next to impossible for hackers to attack, as we’ve seen.
Another way to say decentralized/distributed is “peer to peer,” as in

between buddies, colleagues, or equals. If anyone can talk to anyone
else without having to use any go-between, that’s a peer-to-peer
network. This is often abbreviated as P2P. Consider it a bonus term.
Figure 7: Top 20 countries with the most Bitcoin nodes

There were 9,417 nodes total as of 28 October 2019 at 10:22:27 GMT-0400 (Eastern Daylight Time).
The left chart shows the top tier of countries; the right shows the second tier.
Source of data: "Global Bitcoin Nodes Distribution," Bitnodes, supported by Earn.com, as of 28 Oct. 2019.

Immutable
Immutable means you can never erase something—like that scrawl
on the wall your toddler made when they somehow got hold of a
Sharpie. That scrawl is pretty much impossible to erase. Every
Bitcoin transaction from the dawn of time is like that: no one can
delete, edit, revise, rewrite, update, or undo any of them. Not even
Satoshi.
There will always be a
permanent record of every There will always be a permanent record of every Bitcoin transaction
Bitcoin transaction on the on the blockchain. The blockchain just keeps getting longer as each
blockchain. block is added to it, but no blocks are ever deleted. That means a
blockchain is a lot like the Hotel California: “You can check out any
time you like, but you can never leave.”37 Or at least, no transaction
can ever leave.
A computer scientist might say that a blockchain is an append-only

database. That means the same thing. You can add (append) stuff to
it, but you can’t change or delete anything that’s already there. Of all
blockchain’s features, this is really powerful—and it helps make the
blockchain reliable and tamper-resistant.
Public or private
Imagine two parties being held on the same Saturday night. One is
a crazy house party where kids are dancing on the furniture, doing
shots in the kitchen, and jumping off the roof into the pool. The
parents went away on a cruise, and the teenagers decided to take
advantage of their absence. Cars are parked all over the street, and
anyone can show up without even knowing who lives there. This is a
wide-open public party where you don’t need anyone’s permission to
be there.
Now consider another event being held downtown at a fancy hotel.

It’s a fundraiser for some worthy cause, where everyone paid $1,000
for a ticket. Hotel employees are checking IDs at the door and doing
valet parking. All the guests are dressed up in tuxedos or little black
dresses. And everyone is behaving properly, sipping their wine and
nibbling on cheese. Many of the guests know one another and may
Blockchains can be either be colleagues or clients. This is a private party, where you definitely
public or private. Bitcoin is need an invite to be there.
clearly open to the public.
Blockchains can be either public or private. Bitcoin is clearly open to
Private blockchains are the public. Anyone can buy bitcoin, anyone can download the entire
usually set up between blockchain on their computer, and anyone can participate in the
trading partners. network in a number of ways. Bitcoin doesn’t care how much money
you have, how old you are, or whether you’re a philanthropist or a
criminal. Neither do most other cryptocurrencies, which tend to use
public blockchains to encourage more people to jump in.
A private blockchain, on the other hand, is a more exclusive affair.

Private blockchains are usually set up between trading partners in a
certain industry, such as Walmart and its food suppliers; that system
is like a private party where IBM provides the bouncers and the valet

parking attendants on Walmart’s behalf. Participation is by invitation

only. See the difference?
Permissioned or permissionless
I know, both these terms are a little unwieldy. And your spell-check
won’t likely recognize “permissionless” as a real word. But the idea
is simple, and closely related to the public/private discussion above.
A private, permissioned In fact, you can almost use these two terms interchangeably with
blockchain can clearly “public” or “private.”
police its members and
keep out bad guys more The open house party is permissionless, because anyone can
effectively than a public, show up and get in, no questions asked. But the fundraiser is
permissionless blockchain permissioned, because you need a ticket and some ID to get in the
door. Again, most cryptocurrencies use permissionless blockchains,
that lets anyone in. because the more the merrier for them. But most enterprise
blockchains are permissioned, because business people want to
control who’s on the network.
A private, permissioned blockchain can clearly police its members

and keep out bad guys more effectively than a public, permissionless
blockchain that lets anyone in. There’s a little more to these
distinctions than just this, but that’s the bottom line.
Transparent
If you’re a node on any blockchain network, that means you’ve
downloaded the entire history of a blockchain onto your computer,
and you can readily see into that blockchain’s entire history of
transactions. The Bitcoin blockchain is completely transparent, so
anyone can see the transactions taking place right now or look back
to find any past transaction. Any time of day or night, you can look
into Bitcoin using any one of the many free blockchain explorers.
For example, check out the blockchain explorer found at

www.blockchain.com/explorer. You can use the search tool at the
top to look up any transaction or block in history. In the middle
part of the interface, you can see some running stats about Bitcoin.
At the bottom, you can see a list of the latest blocks, how many
The Bitcoin blockchain is transactions they contain, who mined them, and their sizes. You can
click on the transactions tab to see all the Bitcoin transactions taking
completely transparent, place anywhere in the world in real time.
so anyone can see the
transactions taking place You can find many other explorers on the web, such as TradeBlock
right now or look back to and BTC.com.38 The BTC explorer is available in 25 languages and
find any past transaction. through Facebook and Twitter. That shows how open and transparent
the Bitcoin blockchain really is. Neat, isn’t it?

Part 4: Enterprise-grade blockchains

As a career-minded person, you’re probably wondering how you can
use something as freewheeling as blockchain in your industry, and in
your own organization. Don’t worry; lots of other people have asked
themselves the same thing.
Many industries from This section looks at four interesting blockchain offerings that provide
banking to supply chain extra capabilities ideal for enterprises. These platforms offer varying
are looking intensely at degrees of the features described above, specifically transparency
blockchain. and privacy. Depending on the use case, one blockchain platform
may be more suitable than the others for an enterprise application.
Regardless of which blockchain an organization might choose, you

don’t have to go it alone. Many industries from banking to supply
chain are looking intensely at blockchain, trying out proofs of
concept, and forming consortia with their trading partners to lower
the risk and increase their chances of success.
The strengths of open source

Open-source software is freely available; anyone can download the
code, view it and suggest improvements, or build on the same base
but take it in a different direction. This is the opposite of commercial
software, where the code is hidden because that’s what the vendor is
selling.
Open-source software is generally recognized as lower risk, higher

Something as important quality, and faster to market than commercial software. That makes
as an enterprise-grade sense. By working together, programmers can usually come up
blockchain should be with better solutions faster than by competing with each other. A
transparent and freely worldwide open-source community with thousands of members can
move faster, test code better, and imagine more possibilities than the
available to anyone, not a employees of any single company.
black box owned by a single
company. All the enterprise-grade blockchains listed here are open source.
Many business people think this is a fundamental requirement.
Something as important as an enterprise-grade blockchain should be
transparent and freely available to anyone, not a black box owned by
a single company.
Ethereum
While Bitcoin was the original cryptocurrency and blockchain
invention, Ethereum is undoubtedly its closest younger cousin. It
sometimes tries to outdo its cousin! Ethereum was the brainchild of
Canadian Vitalik Buterin who was at the time a 19-year-old developer
seeking to add missing capabilities to Bitcoin.
One of the most useful additions in Ethereum is “smart contracts.”

You’ve probably heard that term. These are automated transactions
that can run on the blockchain unattended. A smart contract can

be programmed to buy, sell, send money, accept payments, or do

other creative functions when certain external conditions are met.
This is why Ethereum is sometimes described as a “programmable
blockchain.”39
Ethereum has a well-established ecosystem, with many other

developers and companies using its platform. After raising $18
million in bitcoin in 2014 to fund its development, the Ethereum
network went live in July 2015. Ether (ETH) is the network’s native
cryptocurrency, which at press time had an overall market worth of
$20.2 billion. To find out more, visit www.ethereum.org.
Hyperledger
Hyperledger, hosted by the Linux Foundation, was created in
2015 when corporations including IBM and Intel wanted to donate
blockchain code as open source. Hyperledger now has close to 300
corporate members, from Accenture to VMware. The organization
promotes collaboration across industries and companies to encourage
wider acceptance of blockchain in enterprises.
Hyperledger Fabric was originally donated by IBM and is now being

used by hundreds of organizations around the world, including
Walmart. Hyperledger Sawtooth was originally donated by Intel. So,
what’s in it for those donors? IBM has a legion of consultants who can
help companies implement Hyperledger Fabric. As a chipmaker, Intel
is interested in building advanced features that support blockchains
into their chips to stay ahead of competitors.
Today, Hyperledger supports more than a dozen blockchain

frameworks and tools that are available for anyone in the world to
use. Every project is slightly different. For example, Hyperledger
Indy is all about decentralized identity; it’s being used by several
provinces of Canada for business registrations. None of these
blockchains depend on any cryptocurrency. Most often, the unit of
value exchanged through these projects is data! To find out more,
visit www.hyperledger.org.
EOSIO
The EOSIO platform provides several advanced features that will
interest business people, including the ability to develop and host
decentralized apps and to run smart contracts with no fees.
The EOS public blockchain, among others, uses the EOSIO protocol—
the middle layer of the cake—designed to eliminate some drawbacks
of earlier blockchains. Today the EOSIO protocol claims to be faster,
cheaper, scalable to handle more transactions, and far more energy-
efficient than Bitcoin or Ethereum.
The native cryptocurrency EOS is used to reserve bandwidth and

storage on the decentralized platform. Block.one, the creator of
EOSIO, held a spectacular initial coin offering (ICO) that ran for

a year and raised $4 billion—the top ICO of all time. That means
the organization is well-funded for the foreseeable future. Many
developers seem to like it, so it’s an interesting platform to watch. To
find out more, visit www.eos.io.
Corda from R3
Since Corda is a blockchain specifically designed for the requirements
of banks and other financial institutions, it is applicable to other
industries such as insurance, shipping, and energy. These
requirements include privacy, security, speed, scalability, and smart
contracts. As you might expect, Corda is a private, permissioned
blockchain with all transactions encrypted and visible only to
authorized users. Like all blockchains, the idea behind Corda is
to streamline transaction times, reduce costs, and open up new
opportunities.
Since finance is a regulated industry, Corda developers prefer to use

time-tested tools whenever possible. For example, smart contracts
can be written using the Java programming language, which
has been around since 1995. Using proven tools means that few
unexpected bugs will be discovered. That gives financial companies
and regulators peace of mind.
R3 was founded in the fall of 2015 in New York and has attracted
more than 300 firms in its ecosystem. The first version of Corda was
released in November 2016, and updates have continued since. A
commercial version called Corda Enterprise is not open source, yet
both versions work smoothly together. To find out more, visit
www.corda.net.
Where to from here?

If you have made it this far through this report, you might be well
on your way down the rabbit hole. Consider yourself a blockchain
enthusiast (or else deeply curious to see where I was going with
this). You’ve covered the basics of bitcoin and blockchain and
enterprise-grade blockchain platforms, and cut through the jargon on
the way. Give yourself a kudo!
Regardless of your personal
or professional interests, Your blockchain learning journey has only just begun. Yes, there’s
it’s safe to say that a whole lot more to follow. Are you ready to keep going? As a life-
blockchain technology will long learner, I know that the blockchain and cryptocurrency space is
be woven into your life to the right place for me, because I am constantly being stretched. I’m
also incredibly inspired by the numerous blockchain applications that
the same extent that the
are driving the United Nations Sustainable Development Goals, from
Internet is today. alleviating poverty to sustaining life below water. My motivation to
continue to hone my skills and get uncomfortable is very high so that
I can continue to be at the forefront of digital transformation.
Regardless of your personal or professional interests, it’s safe to say

that blockchain technology will be woven into your life to the same
extent that the Internet is today. So find your sweet spot—wherever
it may be that blockchain technology most profoundly collides with

your industry, or your aspirations. While your world view may never
be the same, you’ll likely never have a dull moment. Good luck!
Conclusion and recommendations

Be determined to learn: Understanding blockchain comes down
to having a curious mind, the determination to learn and keep
on learning, and the will to transform outdated business models.
Blockchain comes fastest to those who really want to succeed in the
second generation of the Internet.
Seek out quality resources: You can now access many reports that
the BRI has released into the Creative Commons. Simply fill out a
form and you’ll be redirected to the BRI’s new public portal launched
on 22 July 2019. How timely! Here’s the link to access it: resources.
blockchainresearchinstitute.org/researchrequest.
Get uncomfortable: If you’re serious about your journey, I can

promise you moments of discomfort and frustration. But having come
through many of these, I can assure you that it’s all worthwhile! And
Blockchain touches I hope this primer has helped you over some of the road’s bumpier
everyone, so the time to sections. Good luck!
get involved is now.
Start now: Blockchain touches everyone, so the time to get
involved is now. At the BRI, I’ve worked with people of all different
backgrounds. Whether you’re in HR, marketing, finance, or academia,
there’s a good chance you’ll be using blockchain technology in the
future. And there’s still plenty of opportunity for you to be a leader in
your field—if you start now.
“Please join us”: This was the concluding sentence of Blockchain

Revolution, a call to action that spoke to me profoundly, and it was all
the motivation I needed to begin my journey. I will leave you with the
same invitation. I assure you that the P2P technology of blockchain is
designed to include everyone. Consider this an open invitation.
Appendix
Congratulations! At this point, you should have a much better handle
on the jargon around Bitcoin and blockchain. Now I’d like to suggest
some further steps to gain more understanding of this brave new
world. Please note that these are my personal recommendations
only; these are not official endorsements by the BRI.

Internal activities
Internal activities are things you can pursue on your own, such as
reading blogs or books, listening to audiobooks or podcasts, watching
online presentations or videos, or taking online courses. These will
appeal to you if you like learning on your own. You can do nearly all
of these on your own terms from anywhere, any time.
Recommended blogs and newsletters

» Blockchain Research Institute Weekly News
A free weekly roundup of the most important blockchain news
of the week, curated by my own organization:
www.blockchainresearchinstitute.org/newsletter.
» MIT Technology Review on Blockchain

An interesting collection of blockchain insights and opinions,
written in an accessible way that anyone can understand.
www.technologyreview.com/blockchain.
Recommended books and papers

Since the Bitcoin white paper started it all, you should take a peek
The Tapscott book started at it. It’s only nine pages long. Even if you can’t quite grasp the
me on my personal journey math or code samples, it’s still a model of clarity and conciseness.
into blockchain, and it’s Of course, the Tapscott book started me on my personal journey
often recommended as the into blockchain, and it’s often recommended as the first book people
first book people should should read to learn more.
read to learn more.
» “Bitcoin: A Peer-to-Peer Electronic Cash System” by Satoshi
Nakamoto
» Blockchain Revolution: How the Technology Behind Bitcoin

and Other Cryptocurrencies Is Changing the World by Don
Tapscott and Alex Tapscott
» Cryptoassets: The Innovative Investor’s Guide to Bitcoin and

Beyond by Chris Burniske and Jack Tatar
» The Age of Cryptocurrency: How Bitcoin and the Blockchain

Are Challenging the Global Economic Order by Paul Vigna and
Michael J. Casey
» The Truth Machine: The Blockchain and the Future of

Everything by Michael J. Casey and Paul Vigna
» Mastering Bitcoin: Programming the Open Blockchain, 2nd ed.,

by Andreas M. Antonopoulos
» Blockchain: Blueprint for a New Economy by Melanie Swan

Recommended audiobooks and podcasts

I remember in 2016 when I first started reading Blockchain
Revolution at night. My problem was that after a busy day of reading,
writing, meetings, and phone calls, my brain was full and my eyes
were tired. Not wanting to give up, I bought the audiobook version,
and started listening to it when I was a little fresher, like walking my
dog in the mornings and weekends, or while on the go in my car. For
me, this format did the trick, and I went through the book easily.
Audio might work well for you too! Here are some recommended
audiobooks and podcasts:
» Audiobook versions of any of the books listed above.
» Speaking of Crypto podcast by Shannon Grinnell

The beginning of the series is very much suited to newcomers.
» Blockchain 2025 podcast from Bitcoin.com

Six years’ worth of interesting observations and informed
opinions, many focused on specific industries.
Recommended online presentations and videos

I find a good speaker can pack a lot of insight into a TED Talk of 18
minutes max (i.e., about the length of a coffee break). Many online
presentations are even shorter. You can find videos about blockchain
simply by searching YouTube. My favorites (listed alphabetically) are
those featuring:
» Andreas Antonopoulos
» Brian Behlendorf
» Vitalik Buterin
» Vinay Gupta
» Neha Narula
» Alex Tapscott
To learn in a more
structured way, several » Don Tapscott
online courses about If you ever have an opportunity to hear any of these experts give a
blockchain are now live talk, don’t miss it!
available.
Recommended online courses
To learn in a more structured way, several online courses about
blockchain are now available. You can generally do these at your own
pace and in your own space, which makes them very convenient.

Here are two that I have had direct experience with, but they are by
no means the only resources available:
» Blockchain Revolution for the Enterprise. Introductory

4-course specialization prepared by Don Tapscott with INSEAD
for Coursera. www.coursera.org/specializations/blockchain-
revolution-enterprise.
To get more involved in » CryptoCurrency Certification Consortium (C4). C4 is a

the blockchain community, nonprofit organization providing certifications in both Bitcoin
you can volunteer to do and security standards auditing. The course materials and
anything from setting up examinations are entirely online. cryptoconsortium.org.
chairs to maintaining a
website. External activities
External activities are things you can do with other people, such as
going to events. These will likely appeal to you if you enjoy learning
by interacting with others. You can start by showing up to blockchain
events like conferences, hackathons, or meetups. While you’re there,
you can ask questions, take notes, make new friends, and discover
exciting things that other people are thinking and doing.
To get more involved in the blockchain community, you can volunteer

to do anything from setting up chairs to maintaining a website. The
Bitcoin and Ethereum communities are driven in part by volunteer
effort. The open-source Hyperledger project is always keen to attract
volunteers who want to push ahead the frontiers of blockchain for
business.
Experiential activities
Experiential activities are things you can do to get hands-on
experience with blockchain. This will appeal to you if you like to learn
by doing.
One of the most valuable things I ever did to learn was to take
Andreas Antonopoulos up on his offer of $2 worth of BTC at the
Blockchain Training Conference in Toronto. He literally gave $2
in bitcoin to any conference delegate who was willing to receive
it. It was fast. It was easy. And it was an essential first step in
my professional development. That transaction remains a pivotal
moment in my blockchain journey.
So if you like learning by doing, here are some things I think

everyone who wants to learn more about blockchain might consider
doing:
» Download a paper Bitcoin wallet from a provider such as

Bitaddress.org.
» Download a mobile Bitcoin wallet, such as Mycelium or Jaxx

Liberty.

» Open an account at a regulated cryptocurrency exchange.

» Buy $100 worth of bitcoin for your mobile wallet.
» Find three charities that accept donations in bitcoin.
» Send $20 worth of bitcoin to each of those three charities.
» Exchange $20 worth of bitcoin for ether.
I’m proposing that you
invest $100 in this exercise. » Check how your bitcoin transactions are permanently
recorded on the Bitcoin blockchain, using a bitcoin explorer
This experience will be such as Blockchain.com.
worthwhile professional
development. » Buy a CryptoKitty with your ether—just for fun! But to do that,
you’ll have to open a MetaMask account too.
Notice that I’m not giving you step-by-step instructions. I’m being
less than specific to force you to explore a little, make your own
decisions, make a few mistakes, but above all learn by doing.
I’m proposing that you invest $100 in this exercise. This experience
will be worthwhile professional development. I just wish all the
bankers, business leaders, journalists, and politicians who pontificate
about blockchain would follow these steps and get their feet wet.
Then their opinions would be better informed, and their views might
even evolve somewhat.
Cryptocurrency Coin Blockchain Money Ripple by WorldSpectrum, 2018, used

under Pixabay license, accessed 6 Nov. 2019.

About the author

Hilary Carter is managing director at the Blockchain Research
Institute where she works closely with more than 50 blockchain
thought leaders to conduct the definitive investigation into blockchain
transformations in enterprise, government, and society. She is
the author of a number of Blockchain Research Institute projects
including “Social Media on the Blockchain: AKASHA Ushers in a New
Era of Censorship-Resistant Communications” and “Blockchain for
Saving Our Seas: How the Ocean Currency Network Is Protecting
Life Below Water.” She is co-author of “Networked Hotbeds of
Blockchain: Creating Global Hubs for the Internet’s Second Era” with
Don Tapscott and Jill Rundle. Her recent focus is on blockchain and
sustainability, in particular how the technology can be used to help
advance the United Nations Sustainable Development Goals. Hilary
is a management graduate of the London School of Economics and
holds the Certified Bitcoin Professional designation.
Acknowledgments
Many thanks to my primary collaborator, Gordon Graham, for adding
much-needed levity and structure to otherwise heavy and at times
personal subject matter; and to BRI Editor-in-Chief Kirsten Sandberg
and Production Manager Mary-Jane Pilgrim for bringing this document
to its finished form. I’d also like to thank Karen Ottoni, director of
ecosystem at Hyperledger, for a key distinction she proposed at the
Blockland Solutions Conference in December 2018. Karen described
two different types of activities that can help newcomers to deepen
their knowledge of blockchain: internal and external.

About the Blockchain Research Institute

Co-founded in 2017 by Don and Alex Tapscott, the Blockchain Research
Institute is an independent, global think tank established to help realize
the new promise of the digital economy. For several years now, we
have been investigating the transformative and disruptive potential of
blockchain technology on business, government, and society.
Our syndicated research program, which is funded by major corporations

and government agencies, aims to fill a large gap in the global
understanding of blockchain protocols, applications, and ecosystems and
their strategic implications for enterprise leaders, supply chains, and
industries.
Our global team of blockchain experts is dedicated to exploring,

understanding, documenting, and informing leaders of the market
opportunities and implementation challenges of this nascent technology.
Research areas include financial services, manufacturing, retail, energy
and resources, technology, media, telecommunications, healthcare,
and government as well as the management of organizations, the
transformation of the corporation, and the regulation of innovation. We
also explore blockchain’s potential role in the Internet of Things, robotics
and autonomous machines, artificial intelligence, and other emerging
technologies.
Our findings are initially proprietary to our members and are ultimately
released under a Creative Commons license to help achieve our mission.
To find out more, please visit www.blockchainresearchinstitute.org.
Research management
Don Tapscott – Co-Founder and Executive Chairman
Kirsten Sandberg – Editor-at-Large
Hilary Carter – Managing Director
Others in the BRI leadership team

Alisa Acosta – Director of Education
Wayne Chen — Director of Business Development
Andrew Facciolo — Director of Client Experience
Roya Hussaini – Director of Administration
Noah Lehman — Director of Communications
Jody Stevens – Director of Finance
Alex Tapscott – Co-Founder
EOSIO and single line polygon are registered trademarks of block.one limited company (Cayman Islands) in the United States
and other countries. Logo used with permission.
Ethereum is a registered trademark of the Ethereum Foundation (Zug, Switzerland) in the United States and other countries.
Logo used with permission.
Hyperledger is a registered trademark of the Linux Foundation (San Francisco) in the United States and other countries. Logo
used with permission.
R3. is a registered trademark of R3 LLC (New York) in the United States and other countries. Logo used with permission.
Icons used in Figure 5: Bitcoin BTC Cryptocurrency Crypto Currency by Darwin Laganzon (madartzgraphics), 2016, used
under Pixabay license, accessed 2 Nov. 2019. Castle tower, Wallet, and Spy: Made by Freepik from Flaticon. Key: Made by
Payungkead from Flaticon. All icons recolored and modified. Flaticon icons used under Flaticon Basic License.

Notes
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JOURNEY TO BLOCKCHAIN

A Non-Technologist’s Guide to the Internet of Value

A BLOCKCHAIN RESEARCH INSTITUTE BIG IDEA WHITEPAPER

Our findings, conclusions, and recommendations are initially proprietary to

Blockchain Research Institute, 2020

Except where otherwise noted, this work is copyrighted 2020 by the

Hilary Carter, “Journey to Blockchain: A Non-Technologist’s Guide

To request permission for remixing, transforming, building upon

Whatever your interest, profession, or role in your organization; no

I’ve never been disappointed with my decision to go all in on this

My own journey into blockchain

In the spring of 1995, the final year of my undergraduate degree, I

3 © 2019 BLOCKCHAIN RESEARCH INSTITUTE

But as you know, simply using a PC or smartphone isn’t enough to

Here’s how I look at it: only a fraction of Google users understands

Why I’m inspired by blockchain

Figure 1: Meeting Don Tapscott

4 © 2019 BLOCKCHAIN RESEARCH INSTITUTE

Who among us believes that business has evolved as far as it ever

This is what inspires me: the thought that blockchain represents a

Looking back, it’s clear that before I became immersed in blockchain,

As a signing officer of a bank, I had to make sure that every sizable

It was an exciting career, but I took a pause from it once my first

And they were facing a double-whammy. As soon as they managed

5 © 2019 BLOCKCHAIN RESEARCH INSTITUTE

mainstream, publishers had to start giving away content online to

As a result, advertising revenues plummeted. Printed newspapers

When the web first emerged in the mid-1990s, it was difficult to

From the Internet of information to the Internet of

The second generation of the Internet, the Tapscotts explained, will

6 © 2019 BLOCKCHAIN RESEARCH INSTITUTE

intellectual property, paintings, products in a supply chain, real

My background in finance helped me see that blockchain could

Joining the Blockchain Research Institute

To begin, I played to my strengths, as anyone should, leveraging

For centuries, men have been financial intermediaries to women—

When the Blockchain Research Institute was announced, I reached

7 © 2019 BLOCKCHAIN RESEARCH INSTITUTE

Many of these reports are now freely available in the Creative

In a few short years, the Blockchain Research Institute has built

Part 1: Blockchain begins

You’ve probably heard that Bitcoin was invented by Satoshi

But the new cryptocurrency—and the blockchain technology (or

8 © 2019 BLOCKCHAIN RESEARCH INSTITUTE

» Between 2013 and 2018, investors poured $22.5 billion into

» At press time, bitcoin itself has a market cap of $185 billion.10

Figure 2: The impact of the Bitcoin blockchain in its first decade

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Solving the double spend problem

When you send an e-mail to a colleague over the Internet, your

This is called “the double spend problem.” It’s a nagging problem in

Here’s how: Bitcoin enables people to buy, sell, or trade directly

Bitcoin is different. As Satoshi wrote, “A purely peer-to-peer

By downloading a free app called a “wallet,” anyone can access the

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I mentioned previously that Bitcoin includes a network of

The big deal about bitcoin

These transactions are far more difficult for someone in the

Alex Mashinsky, an inventor of voice over Internet protocol (aka

Yet, its main purpose is to streamline the world of monetary

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A new kind of digital economy

Unlike a public company, Bitcoin has no board of directors. It has