Day 6

A made-in-Canada cryptocurrency called ethereum is building on the bitcoin revolution

In the increasingly valuable world of cryptocurrencies, bitcoin is still king. But Alex Tapscott, CEO of NextBlock Global, says a Canadian upstart called ethereum is worth watching too.
Ether, like bitcoin, has seen a dramatic increase in value over the last year.

Imagine what the internet did for communication and the exchange of information. Now picture that kind of sweeping change to the world of money; that sort of ease and transparency applied to banking, stock markets and the ability of companies to raise money.

As Alex Tapscott tells Day 6 guest host Peter Armstrong, we are moving on from the internet of information and beginning the age of the "internet of value."

The value of the stock market is $80 trillion so we're tackling pretty big markets here.- Alex Tapscott, NextBlock Global

Tapscott is the chief executive officer of NextBlock Global, a Toronto-based digital currency investment firm.

Don and Alex Tapscott's book, Blockchain Revolution, argues the technology underlying Bitcoin will revolutionize almost every facet of online activity. (Alex and Don Tapscott)

"Blockchain represents the second generation of the internet," he says, referring to the technology that allows people to send and receive money through the internet without using a bank.

Tapscott also co-wrote Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and The World with his father Don Tapscott.

"Blockchain allows us to change the way we move, store and manage assets in the economy ... we're talking about industries that are a lot bigger than Blockbuster ... we're talking about stock markets."

Bitcoin, first released in January 2009, is the cryptocurrency most people know. It is notoriously volatile, but at of the time this story was published, it is enjoying a record-breaking high. One bitcoin is worth nearly $6,000 Canadian dollars.

Despite Bitcoin's success, Tapscott says a rival, ethereum, is the one to watch because it's far more versatile. It's not just a cryptocurrency, it's a platform that entire businesses and entire markets can be built upon.

An image of Bitcoin and US currencies is displayed on a screen as delegates listen to a panel of speakers during the Interpol World Congress in Singapore in July, 2017. (Roslan Rahman/AFP/Getty Image)

"You can build applications that replace sharing economy companies like Uber, or applications that could change the music industry," he says.

"That's a radical transformation because assets are foundational to the whole economy. I mean the value of the stock market is $80 trillion so we're tackling pretty big markets here."


The rise of ethereum

While ethereum is a global phenomenon, most of the founding team is Canadian. The brain behind the platform is Vitalik Buterin, a 19-year-old Russian-Canadian and University of Waterloo dropout.

Alex Tapscott's work focuses on the impact of emerging technologies on business, society and government. (Northwest Passage Ventures)

Tapscott says ethereum is likely the most important startup in Canadian history because it's become the investment bank of the blockchain world.

"Two-thirds of all new companies that are built in this sector are now being built using the ethereum standard," Tapscott says. "And the value of companies built on top of ethereum is now many billions of dollars."

He also says that when it comes to global leaders in blockchain, Canada has a place at the table.

"We certainly are punching above our weight," says Tapscott. 

"Toronto is one of the top five places in the world where there is entrepreneurship, new company formation and innovation that's comparable to a lot of the places you think of, like San Francisco or Singapore, Shanghai and Tokyo."   


Regulating a new industry

Companies are using digital coins to raise funds in what is called an ICO, or initial coin offering, but there is uncertainty over which investment rules apply.

Unlike an IPO, which is the first time that the stock of a private company is offered to the public, an ICO allows people to invest using cryptocurrency without following the same guidelines.

This technology has the potential to change everything.- Alex Tapscott, NextBlock Global

Canadian securities regulators are now taking a closer look at technology companies that offer ICOs to raise capital.

Tapscott says he that's a good thing, because he doesn't want to see the technology impaired by bunch of bad actors.

"This technology has the potential to change everything," he says. "So in order for us to achieve this transition of traditional assets to digital assets, there needs to be clear rules of the road."

To hear the full conversation with Alex Tapscott, download our podcast or click the 'Listen' button at the top of this page.

NOTE:  A previous version of this story carried the headline: 'A made-in-Canada cryptocurrency called ethereum will soon be worth more than bitcoin.' It has been updated to reflect news.