From bitcoin to Zcash, the world’s cryptocurrencies are all built on blockchain – digital ledgers that are duplicated multiple times and distributed across a network of computers to create a decentralized and reliable database.
As cryptocurrencies continue to gain acceptance among investors and consumers, Canada has emerged as a hub for their foundational technology.
“Canada probably has one of the three biggest hubs for blockchain technology in the world,” says Jason Cassidy, chief executive officer of Crypto Consultant, a Toronto-based firm that provides consulting and market analysis services for digital currency and the blockchain.
“We’ve achieved this position by virtue of having a lot of young innovators that got into the industry three to four years ago, and also due in large part to the federal and provincial governments that have been very pragmatic in working with the industry.”
Who and what make up the country’s blockchain ecosystem?
Mr. Cassidy points to a network of Canadian cryptocurrency startups that includes the payment remittance company Paycase Financial Corp., and the digital currency exchange Coinsquare Ltd., both based in Toronto.
Hilary Carter, managing director of the Blockchain Research Institute, which was founded last year by Don and Alex Tapscott, the father-and-son authors behind the book Blockchain Revolution, says Canada is home to a number of blockchain pioneers.
Among them is the digital currency ethereum, which has two Canadians among its founding team, Toronto-based Aion, and Tendermint, whose co-founder and chief technology officer, Ethan Buchman, is in Toronto.
Ms. Carter also cites the large Canadian presence of blockchain leaders such as Cosmos, billed as a sort of internet of blockchains, and ConsenSys, a world-leading developer of ethereum-based applications.
“We have a very close-knit and dynamic blockchain community in Canada,” she says. “We’re also very fortunate to have thought leadership in blockchain centred here in Toronto, with the Tapscotts and the Blockchain Research Institute – it’s very exciting.”
Alex Tapscott says the rise of Canada as a blockchain hub can be attributed to a combination of factors, including a healthy startup community, a transparent legal system, a robust financial-services industry as well as industry regulators who are open to innovation.
But it’s the blockchain entrepreneurs who have really driven the growth of the industry by starting companies and then seeding other blockchain ventures, says Mr. Tapscott. As an example, he cites Anthony Di Iorio, a co-founder of ethereum who went on to launch and fund other companies in the space.
“Another great example is the founder of Aion, who realized there was an opportunity to build on what ethereum had done and try to do certain things better, such as scaling blockchain platforms and enabling interoperability between different platforms,” says Mr. Tapscott. “Now Aion is one of the leading platforms in the world, with a footprint that extends well beyond our shores to every corner of the globe.”
Canada could up its game in academic research and training for blockchain, says Mr. Tapscott. While there’s a lot of research going on in companies, universities need to step up their efforts in research as well as in offering programs to train the next generation of blockchain developers and entrepreneurs, he says.
William Mougayar, author of The Business Blockchain and managing partner and chief investment officer at Geneva-based JM3 Capital, says there’s also room for improvement in the country’s regulatory environment. In particular, Canada’s stance on initial coin offerings – the use of cryptocurrencies to raise money for business – has put a damper on the digital currencies and blockchain market, he says.
“As a result of that, many companies are leaving and seeking jurisdictions that are more welcoming to the digital token phenomena,” says Mr. Mougayar.
Mr. Tapscott says growing Canada’s blockchain industry has implications that go beyond buying and selling cryptocurrencies.
“From a national perspective, Canada has been a resource-driven economy for 100 years,” he says. “As we’re entering into the second digital age – the first age was the arrival of the internet and the rise of computers – we’ve got an opportunity to become a leader in blockchain, which will power the new infrastructure for the internet.”
This new, blockchain-powered infrastructure will be a digital medium for value in the same way that the internet is a digital medium for information.
Mr. Cassidy provides examples of other applications for blockchain: supply chain management systems where all the parties can see where all items are in the system, “micro-payment” transactions between devices connected over the internet, and real-estate transactions. “There’s a litany of applications,” he says.
To strengthen its position as a blockchain leader, Canada needs to do more to educate its citizens, says Mr. Cassidy. Government support for the industry is crucial, he says.
“We need universities to start offering courses to young minds because the biggest issue in blockchain is lack of talent,” says Mr. Cassidy. “We also need to be getting more pilot projects set up and we need to be breaking bread with companies looking to push this narrative forward.”