GLOBAL SOLUTION NETWORKS

A Bitcoin

Governance Network:

The Multi-stakeholder Approach to the Challenges

of Cryptocurrency

by Alex Tapscott Director, International Equity Sales

Canaccord Genuity

GLOBAL SOLUTION NETWORKS

Key questions when considering how to develop a bitcoin governance network:

Executive Summary

•  A new network or expansion of an existing institution

•  Define the mandate and authority

•  Whose interests are to be considered, and to what is the network accountable?

•  Will nation states cede authority?

Bitcoin in Brief: •  Invented 2008 by a programmer

calling himself Satoshi Nakamoto •  Overcame the issue of double or

multiple use by maintaining a blockchain ledger of transactions.

•  Eliminates need for traditional intermediaries (banks, clearing houses, etc.)

•  “Mining” is the means for expanding supply, which has contributed to volatility.

•  Mt. Gox scandal (mismanaged or “lost” supply), which undermined confidence, has been overcome.

GLOBAL SOLUTION NETWORKS

A workable framework must consider both opportunities and challenges for bitcoin governance

Opportunities: •  Eliminates need for intermediaries •  Improved efficiency and cost •  Promotes financial inclusion •  Mitigates political risks

Challenges: •  Lack of widespread adoption •  Safety concerns •  Crime and fraud •  Volatility and price

Opportunities and Challenges

How does bitcoin work? •  “Blockchain” public ledger

verifies and approves each transaction.

•  Network members verify each transaction, eliminating need for financial intermediaries.

•  Verifiers earn new bitcoin, expanding supply

•  Allows for growth of supply •  Avoids pitfalls of duplication

(double spending)

GLOBAL SOLUTION NETWORKS

Windhover Transition Plan

Developed at a convention of ID3 (research group affiliated with the MIT Media Lab), the plan sought to fill the power vacuum in the ecosystem by addressing a range of governance issues including setting standards and drafting policy. KYC (know your customer) and AML (anti-money-laundering) add complexity in the global process that are beyond current practices. Privacy is a critical concern in the process and opportunity for continued innovation is key as well.

A Global Solution Networks governance network for cryptocurrency

•  Diverse stakeholders from the four pillars of society:

!  government !  business !  society !  individuals

•  Global in scope, beyond one nation-state

•  Leveraging technology

•  Pursing progressive goals

How to Solve the Problem

GLOBAL SOLUTION NETWORKS

Networks to Govern Bitcoin Network Type Network Role Network Function

Global Standards Networks

Promote open-source innovation

Ensure that future modifications reference correct source code of open-source Bitcoin Core.

Watchdog Networks Hold stakeholders accountable Measure impacts and maintain integrity.

Knowledge Networks Foster Openness and Inclusion Support market education and adoption

Policy Networks Policy Advisors and government representatives

Fight crime, prevent fraud, protect consumers and integrate KYC and AML.

Bitcoin Governance Network

Maintain a coherent and cohesive system.

•  Open organizational boundaries •  Non-hierarchical •  Based on merit , not status •  Consensus driven

GLOBAL SOLUTION NETWORKS

“Financial inclusion is a very big deal for bitcoin…if you can install an Internet connection and someone has it on a phone suddenly you’ve installed…a bank account and there are no forms, no bureaucratic process, no corrupt official to bribe…You’ve reduced the barrier to entry.. It’s free. It’s available to anybody with an Internet connection.”

Interviews with Key Experts

Jeremy Allaire Founder and CEO Circle Internet Financial

Patrick Murck General Counsel Bitcoin Foundation

Jim Bailey Global Managing Director Accenture Mobility

Balaji Srinivasan Board Partner Andreessen Horowitz

Jerry Brito Director, Technology Policy George Washington University

“…the first wave is the pioneering wave and it’s all about peer-to-peer interaction with the protocol… The next wave, that’s building liquid performance exchanges, building wallet services that make sense, mining equipment…On top of that is where you’re going to see the real innovation and that’s the stuff that’s on the horizon.”

“At one point it was illegal to do commerce on the Internet…the Clinton administration basically said we’re going to allow anybody to come on the Internet and connect and innovate and integrate and do commerce and we will intervene when necessary. That gave us the explosion of innovation. t’s like a perfect template for what we should have.”

“The market is driving whether bitcoin is going to be successful, whether people are going to tolerate the volatility to get the benefits of bitcoin as a currency… there’s a point at which governments put the harnesses on digital currencies to limit their use and impact so they can preserve the levers that they have for managing the US dollar.”

“The message for regulators is that this is a nascent industry, there ought to be some baseline rules that are not totally inconsistent with these that are applied to existing money services businesses, but the industry needs time to grow… it’s important to leave enough room in the market for that kind of innovation to happen.”

GLOBAL SOLUTION NETWORKS

An important innovation with the potential to disrupt many industries Bitcoin will not fulfill its potential without strong governance based on openness, transparency and accountability. Governments will be instrumental. Payment and financial services are the most obvious and most pervasive use-case for the technology. Developers are working on myriad other applications.

Start-ups are using the private key technology to create user IDs that make security breaches more difficult to execute. It could become the basis for content monetization, digital contracts or charitable giving.  

Conclusions and Implications

A Bitcoin Governance

Network The Multi-stakeholder

Solution to the Challenges of Cryptocurrency

by Alex Tapscott,

Director, Institutional Equity Sales Canaccord Genuity

Read the complete paper at gsnetwroks.org Global Solution Networks:

Don Tapscott, Executive Director Dr. Joan Bigham, Managing Director Anthony Williams, Executive Director Review all research results on our web site: gsnetworks.org.