Building a New Data Infrastructure with Blockchains and the Internet of Things

The Convergence Ecosystem is open-source, distributed, decentralised, automated and tokenised and we believe it is nothing less than an economic paradigm shift.

We are excited to introduce the Outlier Ventures vision of the future and our investment thesis: The Convergence Ecosystem. The new data value ecosystem see data captured by the Internet of Things, managed by blockchains, automated by artificial intelligence, and all incentivised using crypto-tokens. For a summary of the thesis take a look at the introductory blog, and for a deeper look into Blockchains, Community, & Crypto Governance have a read of my last post here. Today though I want to talk talk specifically about the convergence of blockchains and the Internet of Things.

Complexity versus simplicity

As the graphic above shows, data enters the ecosystem at the ‘data collection’ layer through either hardware (Internet of Things) or Software (Web, VR, AR, etc). In fact, early feedback on the paper has suggested what we are really talking about here is a new data value chain, and I agree with that to some extent. But of course, this is just a snapshot, a simplification of the emerging data value chain.

If your first thought upon reading the paper or looking at the graphic was “buzzword salad” or “this is too abstract, what are the actual products and protocols that need to be built?” well you are not alone. Indeed, thinking through the Convergence Ecosystem was a constant tension between complexity and simplification.

I felt that actually it was more important that non-technical people understood that all these seemingly disparate technologies were connected rather than I went into detail about the technical differences between Cosmos and Polkodot in addressing blockchain interoperability. This simplification can be seen at the data collection layer. I note the Internet of Things and software as the two entry points for data. This is purposefully broad, I had another attempt which separated hardware into types of devices — mobile, wearables, IoT devices, learning robots — but ultimately the ecosystem become to complex and overwhelming to understand for the layperson. With that in mind, I decided that any sensor measuring the external environment should be often bundled together under the umbrella term the ‘Internet of Things’; and this includes all sensors in smartphones and wearables such as gyroscopes, accelerometers, and proximity sensors as well as hundreds of others sensors measuring our world. As for software, well this is so broad as to include any data created from the digital environment regardless of application — augmented reality and virtual reality worlds, our digital exhaust from online activity, and gaming are just a few examples.

The key exercise isn’t to define exactly where data will come from. The key message is that the amount of data created annually will reach 180 zettabytes (one zettabyte is equal to one trillion gigabytes) by 2025 up from 4.4 zettabytes in 2013 and an average person anywhere will interact with connected devices every 18 seconds (nearly 4,800 times a day).

The so called Internet of ‘Things’

If you thought that the blockchain industry lacked a clear definition, well the internet of so called ‘things’ is even worse. The industry lacks a standard definition of the IoT, and in its broadest sense, it will come to include every physical object that has a sensor, microcontroller and Internet connection. Today that mainly means connected home devices like Amazon Echos, wearables like the Apple Watch, industrial and agricultural connected sensors, and smart meters measuring home energy usage. But the range of applications is growing, and it has been estimated that by 2024, the automotive industry will account for the almost a third of all IoT connections, followed by consumer electronics and FMCG (fast moving consumer goods) and the utility sector. Other sectors including Smart Cities, supply chain, manufacturing, healthcare and others will make up a relatively small proportion of the connections. The IoT market intersects with the robotics market in the sense that a robot has the same features as an IoT device, but with the addition of actuators and the means to move and respond to the environment. We would consider connected vehicles, service robots and other types of robotics as data collecting machines.

The IoT market is often measured in the number of connections — roughly 30 billion by the end of the decade — or the economic impact — 11 trillion dollars over the next decade says McKinsey. A less-asked question is: what happens to all the data? The same McKinsey study found we may be using as little as 1% of data being generated. As well as under-utilising data, how data is being used is unclear. In a survey by Ponemon Institute, 82% say IoT manufacturers had not provided any details about how their personal information is handled.

The emergence of distributed systems like IPFS, Filecoin, and other blockchains offers a potential new model for data storage and utilisation. It has been expected that data would be fought over by devices makers, software providers, cloud providers and data analytics companies. In fact, the reluctance of car makers to put Android Auto or Apple CarPlay into their cars is an awareness that they would lose control of valuable data.

So the key value proposition for distributed and decentralised systems in many cases isn’t actually ‘censorship resistance’ or ‘unstoppable payments’, it is actually a shared (but private) dataset of industry data, both transactional and otherwise. As we know we are still early in the development of the blockchain industry, we still need to prove and scale privacy technologies like zero-knowledge proofs, secure multi-party computation, and differential privacy. As well as increasing throughput of blockchains and linking blockchains robustly with off-chain databases for the volumes of data we expect to be generated from the IoT.

Very broadly speaking, decentralised technologies can provide shared data infrastructure whereby data use isn’t a zero-sum game. It is not longer a case of generating data and a use-it-or-lose-it model. The stack of technologies including blockchain-based marketplaces enable IoT data creators — machine-owned or human-owned — to buy and sell data.

Software is eating the world; and throwing off valuable data

Adding to the 50 billion IoT connections, we also need to add digital media and human-generated digital data. We are on our way to quantifying and digitising our external world, and we are even further along in gathering data on our digital lives. We use the term ‘software’ as a producer of data broadly to capture all personal and business data produced through the interaction with databases, operating systems, applications and APIs. These interactions build up digital dossiers including cookie and web browsing data as well as active traces like social media and messaging.

On the business side, as we continue to digitise and bring online our offline interactions and documents like electronic health records and learning records, key sectors will have an overwhelming amount of data to handle, which they do not have the capabilities to utilise. On the consumer side, digitally-created and digitally-augmented environments with augmented reality (AR) or virtual reality (VR) will lead the growth in available personal information.

Half the world’s population — 3.82 billion — will have an Internet connection by the end of 2018 and by 2020 it will be 4.17 billion. Mobile data traffic will grow to 49 exabytes per month by 2021, a sevenfold increase over 2016 according to Cisco. We are creating unfathomable amounts of data, and the growth shows no sign of abating. Adoption of AR and VR will further drive the amount and granular detail of data that we can collect, enabling deeper insights into individual and collective behaviours. Whether it’s from the IoT or software, we have a massive data problem.

IoT needs blockchains

We are creating and collecting more data than ever, but we are storing it in insecure private databases with no incentives to share the data. Data breaches and hacks are commonplace, and the data can be censored or tampered with. Software-generated data is lost, hoarded or latent. There is no reason for consumers to do anything other than to give data away for free and for corporations to hoard it.

Open-source, distributed, decentralised, automated and tokenised infrastructure offers a solution.


For more in how communities and tokens will integrate with the Internet of Things and Artificial Intelligence, read the full paper here.

VC for The Decentralised Future: Introducing the Convergence Ecosystem

Today we are introducing the Outlier Ventures vision of the future and refined thesis: The Convergence Ecosystem.

The Ecosystem sees data captured by the Internet of Things, managed by blockchains, automated by artificial intelligence, and all incentivised using crypto-tokens. The Convergence Ecosystem is open-source, distributed, decentralised, automated and tokenised and we believe it is nothing less than an economic paradigm shift.

How We Got Here: The Outlier Journey

From Blockchain-enabled Convergence

In late 2016, we published a paper titled: ‘Blockchain-enabled Convergence’ outlining our investment strategy. The paper was the result of over three years’ experience researching, investing and building blockchain-based businesses. Our insight was that blockchains are not just a secure ledger for cryptocurrencies and other digital assets, but that they represented something more transformative: a decentralised data infrastructure. Infrastructure that could solve technical and market problems across a variety of emerging technologies like artificial intelligence, autonomous robotics, the Internet of Things, 3D printing and augmented and virtual reality.

In 2017, crypto-tokens proved they are the first digitally-native mass coordination mechanism

2017 saw a vast change in the cryptocurrency and blockchain markets to arguably the peak of inflated expectations as per the Gartner Hype Cycle. The ERC20 smart contract industrialised the token sale crowdfunding model, raising over 4 billion dollars in funding. Despite misplaced energy and too much focus on token prices, it is now clear, in a way that wasn’t in late 2016, that crypto-tokens are a critical missing component in decentralised networks — the first digitally-native mass coordination mechanism for humans, bots and machines. Recognising the underlying importance of crypto-tokens to create an ecosystem of converging technologies, we started investing.

From IOTA, Botanic & SEED, Evernym & Sovrin, to Fetch and Ocean

Over the last year we have partnered with and invested in IOTA, a foundation building Internet of Things infrastructure with a new type of decentralised data structure. Botanic and the SEED Vault foundation it founded, creating a platform for developers to publish trusted software bots. Evernym, a company using the Sovrin Network and Protocol to establish self-sovereign identity. Fetch, a startup building an emergent intelligence protocol combining distributed ledgers with machine learning. And most recently, Ocean Protocol, who are developing a decentralised data exchange protocol to unlock data for AI. Each of these investments have been strategically chosen because they are a complimentary piece of decentralised infrastructure required to create the Convergence Ecosystem.

Why We Need The Convergence Ecosystem

Centralised Web 2.0 has failed…

Centralised Web 2.0 digital infrastructure has failed. Too many hacks and data leaks. No individual privacy. Monopoly control over global information and communities networks. The Internet of Things is creating an unmanageable data environment, and artificial intelligence is giving those who control the most data more power than any company in history. As Tim-Berners Lee, the creator of the Web, recently wrote;

“What’s more, the fact that power is concentrated among so few companies has made it possible to weaponise the web at scale. In recent years, we’ve seen conspiracy theories trend on social media platforms, fake Twitter and Facebook accounts stoke social tensions, external actors interfere in elections, and criminals steal troves of personal data.”

Something must change.

We are 10 years into the decentralisation revolution

It has been ten years since the publication of Satoshi’s seminal paper and the introduction of the first viable decentralised solution to the problem of double-spend in digital networks. Bitcoin sparked interest and innovation in other cryptographic and decentralised technologies including blockchains and crypto-tokens. We are in a rapid period of experimentation around decentralised technologies including consensus mechanisms, identity, data structures, crypto-economic designs and smart contracts. Taken together, we see the foundations of a new data infrastructure.

Our Vision: The Convergence Ecosystem

Introducing the Convergence Ecosystem

We believe that future decentralised data infrastructure will come from the convergence of the Internet of Things (data production), blockchains (data distribution), and artificial intelligence (data consumption). The integration of these technologies will see markets become increasingly open-source, distributed, decentralised, automated, and tokenised.

The Convergence Ecosystem consists of four parts: governance, production, distribution and consumption. Each of these are explored in the paper, and we will be publishing further analysis into part throughout the year.

Governance — How are protocols and communities governed and incentivised?

  • Data flow through the ecosystem is coordinated and incentivised using crypto-assets, crypto-currencies and crypto-consumables designed to incentivise behaviours for people, machines, devices and agents to the benefit of the overall ecosystem. These new types of assets will continue rapidly experimenting with supply and demand policy including fungibility mechanisms like the Ethereum ERC 721 NFTs.
  • Emergent governance models will have differing levels of decentralisation and automation depending on the values of the community. Some will value censorship-resistance and others self-sovereign identity. New decentralised projects will be guided by social democratic values that prioritise wealth redistribution through ‘network’ (read: State) intervention or pre-agreed taxation rules. Others will prioritise ethical and environmental values with green-friendly policies that use non-consumption based consensus mechanisms (eg Chia) and focus on common-ownership and resource sharing. Communities will continue to experiment with traditional governance models like corporations and newer structures like decentralised organisations or decentralised autonomous organisations (DAOs).

Production — How is data produced?

  • Data is brought into the ecosystem by either hardware connected to the Internet of Things or software such as digital, virtual or augmented spaces.
  • We are creating and collecting more data than ever, but we are storing it in insecure private databases with no incentives to share the data. Data breaches and hacks are commonplace, and the data can be censored or tampered with. Software-generated data is lost, hoarded or latent. There is no reason for consumers to do anything other than to give data away for free and for corporations to hoard it. Decentralised infrastructure offers a solution.

Distribution — How is data authenticated, validated, secured and stored? How is it transported across databases and blockchains, and how is it exchanged?

  • Once data is in the ecosystem it needs to be authenticated, validated and secured. This is where blockchains or more specifically distributed ledgers, consensus mechanisms, self-sovereign identity and reputation, and decentralised storage and data integrity solutions are valuable tools.
  • Using new data distribution protocols such as; transport & messaging, state communication; value and data interoperability, data can be efficiently moved from storage across networks and protocols to marketplaces.
  • Marketplaces are already developing going beyond just cryptocurrencies to support the buying and selling of all sorts of other data types including internet of things data, artificial intelligence data, personal data, and a range of newly emerging digital assets including but not limited to cryptokitties.

Consumption — How is data turned into insight?

  • Finally, data is processed, analysed and automated using a range of technologies including distributed computation, decentralised machine learning and smart contracts.
  • This is where data is transformed into actions and insight using traditional and distributed computing techniques, as well as newer types of computing such as quantum computing. It is at this layer where blockchains and artificial intelligence blur and it becomes clear they are intertwined and interconnected. Both smart contracts and machine learning offer differing levels of automation and decentralisation depending on the type of input data and level of trust the use case demands.

Winners will differentiate on values and trust

The open-source nature of the technology; ease of forking; almost zero costs of digital distribution; and interoperability protocols will mean projects will struggle to differentiate using technology in the long-term. Successful projects will differentiate through political values such as libertarianism, self-sovereignty and egalitarianism as well as through trust. This makes the Convergence Ecosystem structurally different from other markets in which value capture happens at friction points. With very few friction points and lock-in, we are unlikely to see the same market consolidation dynamic that has dominated previous digital markets. When technology and data are open and free, lock-in will come from brand and values. There will be as many protocols as there are value-systems and personal priorities.

There will not be one chain to rule them all. In a world of scarcity, competition is the optimal strategy. In a world of abundance, we must change our mental models. The Convergence Ecosystem drives collaboration rather than competition.

Outlier Ventures: VC for The Decentralised Future

The Convergence Ecosystem is our vision of the future. We expect the Ecosystem to support hundreds of communities that will over time outcompete their Web 2.0 competitors for developers and users using tokenised business models. This shift will not occur overnight. People will continue to focus on the price of crypto-assets and worry about the regulatory implications of public token sales.

But behind the scenes, a decentralised infrastructure is being built.

Network by network.

Protocol by protocol.

We want to invest and partner with tokenised communities to build decentralised economies. Join us to help build the decentralised future!

Download the full paper here

Also a big thanks to all the Outlier Ventures team including Joel John, Harry McLaverty and Shaquile Noir for their work on putting this together. Also to Jamie Burke, Aron van Ammers, Eden Dhaliwal, Anesu Machoko, and Geoff Le Fevre for their contributions and feedback.

Also a massive thank you to all of the people outside of Outlier that contributed to the paper:

Dele Atanda — CEO, metâme x (Dele Atanda)

Chris Burniske — Partner, Placeholder & Author of Cryptoassets (Chris Burniske)

Dr Rose Chan — Founder, Ladyboss.world & Former Head of Blockchain Working Group, World Bank (@I_am_rose)

Professor David Lee Kuo Chuen Professor, FinTech & Blockchain, Singapore University of Social Sciences (@DavidKChuenLEE)

Matt Chwierut — Director of Research, Smith + Crown (@Skryptical)

Dr Anne Hsu — Assistant Professor, Department of Computer Science, Queen Mary University

Dr Stylianos Kampakis — Research Fellow, UCL Centre for Blockchain Technology (@s_kampakis)

Samuel Klein — Fellow, Berkman Centre for Internet & Society at Harvard University (Samuel Jay Klein ❦)

Professor William Knottenbelt — Director, Imperial College Centre for Cryptocurrency Research and Engineering (@will_wjk)

Dr Robert M. Learney — Lead Technologist Blockchain & DLT, Digital Catapult (Robert Learney)

Trent McConaghy — Co-founder, BigchainDB & @Oceanprotocol (Trent McConaghy)

Mark Stephen Meadows — CEO & Founder, Botanic.io & SEED Token (Mark Stephen Meadows)

Teemu Paivinen — Founder, Equilibrium Labs & Author of Thin Protocols (Teemu Paivinen)

Samuli Poyhtari — Founder, OrbitDB (@haadcode)

Drummond Reed — Chief Trust Officer, Evernym (Drummond Reed)

Toby Simpson — Co-founder, Fetch.AI

Dr Phillip J. Windley — Chairman, Sovrin Foundation (Phil Windley)

Blockchain-Enabled Convergence

First published at www.outlierventures.io

Humans often use the past as a guide for the future; this mistake often makes it impossible to adapt to our rapidly changing world. Technological progress is not linear, it’s exponential in nature, making it much harder to grasp. This means we constantly underestimate the pace of change and as software eats more industries, improvements compound as traditionally human-centric industries like healthcare, logistics and agriculture digitise. As these industries come online and capture, process and automate data; ownership of this data will define the state, market and nation over the next half a century. Blockchains are therefore one of the most significant technological innovations since The Internet and fundamental to Web 3.0. Blockchains, distributed ledgers, smart contracts and other decentralisation innovations provide the foundation for a scalable and secure data and asset management layer for the new Web 3.0. It acts as a platform to support individual rights while benefiting from the aggregation of vast amounts of data from the Internet of Things. They also ensure the benefits of artificial intelligence are shared broadly across society and do not aggregate to a few AI owners, or the 0.00001% of the population. The Internet of Things, artificial intelligence, autonomous robotics, 3D printing, as well as virtual & augmented reality

Blockchains are therefore one of the most significant technological innovations since The Internet and fundamental to Web 3.0. Blockchains, distributed ledgers, smart contracts and other decentralisation innovations provide the foundation for a scalable and secure data and asset management layer for the new Web 3.0. It acts as a platform to support individual rights while benefiting from the aggregation of vast amounts of data from the Internet of Things. They also ensure the benefits of artificial intelligence are shared broadly across society and do not aggregate to a few AI owners, or the 0.00001% of the population. The Internet of Things, artificial intelligence, autonomous robotics, 3D printing, as well as virtual & augmented reality are all converging in new and exciting ways. Blockchains will become the decentralised data and asset management layer that links the data and value from these technologies, ushering in the era of blockchain-enabled convergence.

Convergence is not a process that will happen immediately, nor be a simple and linear progression. Trends will combine at different speeds based on technical limitations, political and social barriers, as well as commercial considerations. The market dynamics will vary with industrial manufacturers and telecommunications providers leading the charge in the Internet of Things, while consumer Internet companies like Google and Facebook innovate in artificial intelligence. It is important to grasp the nuances of each market, but in doing so, it’s easy to miss broader macro-trends. The development of blockchains is a good example, as exceptionally talented developers push the boundaries of cryptography with zero-knowledge proofs and smart contracts but fail to see the implications on broader governance structures and political philosophies. These are the kind of things we have been trying to figure out since the dawn of civilisation. It is just as important in technological progress to study Plato and Hume as it is to study Von Neumann and Shannon.

As the rate of change increases, it is critical to understand these technology trends as part of a wider collective rather than as separate developments. Blockchain-enabled convergence is our attempt to capture this wide collective. The first part of the white paper explores blockchains, artificial intelligence, the Internet of Things, autonomous robotics, 3D printing, and virtual & augmented reality to understand the drivers and barriers to adoption. Part two investigates how blockchain-enabled convergence changes the trade value chain from manufacturing and design through logistics and distribution to retail and commerce, and even more profoundly changing the very governance structure of the organisation.

5 Key Themes

The Outlier Ventures white paper explores an extremely broad range of technologies and markets, yet despite this breadth, we found 5 key themes that kept coming up time and time again. These themes are not technological in nature but rather trends that will reshape markets, society and excitingly, the relationship between humans and machines.

1. Web 3.0 — The Global Trust Network

Web 3.0 underpinned by blockchains and decentralized technologies provide global trust. The core design of The Internet was enable the sharing of information. The core design of Bitcoin, and other open permissionless blockchains, is a network of trust for exchanging value and asset ownership. Web 3.0 provides trust and chain-of-ownership; the missing link with the existing Internet infrastructure.

2. The ‘Real’ Sharing Economy

New digital intermediaries have sprung up so individuals can ‘share’ unproductive assets; spare rooms on Airbnb, spare seats on Uber and spare time on TaskRabbit. These ‘sharing economy’ companies are nothing more than a new middleman sitting between a buyer and seller capturing outsized value. Blockchain-enabled convergence allows seamless peer-to-peer exchange of assets and value reducing the need for trust brokers in the middle of a market extracting economic rent.

3. The Killer Business Model: The Decentralized Data Marketplace

A blockchain-based data marketplace helps solve two major problems in artificial intelligence today, the access to data for those that need it, and monetizing unused data for those that have it. A decentralized data marketplace creates an economic mechanism for individuals and organisations to buy and sell data, reducing the incentive to hoard valuable unused data and remunerating the creators of data not just the processors.

4. The Commoditization of Logistics & Production

Blockchain-enabled convergence transforms the trade value chain. Autonomous robotics, AI, IoT and blockchains will digitise logistics and distribution reducing its importance and therefore ability for companies at this point in the value chain to capture profit. Producers can capture more of the value they create and consumers can pay less. In the long-term, technical deflation will hit the knee of the exponential curve as much of production gets commoditised by 3D printing, and virtual and augmented reality make it cheap to design and print products at home.

5. The Rise of the Decentralised Organisation

The global multinational corporation that developed to coordinate global trade is under threat as the dominant form of governing structure. New decentralised processes for business financing with Initial Coin Offerings (ICOs), incorporation, voting, payments and talent and project coordination are enabling start-ups to choose processes that are suitable for smaller, more agile start-ups rather than using an expensive corporate structure designed for large companies.

Special Thanks to Anish Mohammed, Trent McConaghy, @edcafenet, Vijay Michalik, Creative Barcode, @API_economics, David J Klein, and Ethan Gilmore of VarCrypt for conversations and contributions.

Why I am dedicating my career to Blockchains

Blockchains are not just the next growth market or investment opportunity; they represent the most important democratising force since the Internet. With this is mind, I am joining Outlier Ventures to head up research and partnerships. I will split my time between providing research to our portfolio companies and exploring new investment opportunities and venture partnerships on behalf of our fund, Outlier Capital LLP.

I will work with our existing portfolio companies to help them build sustainable and profitable businesses. MoneyCircles.com is building social banking platform on the Blockchain. Buyco.io is exploring decentralised collective procurement. BlockStars.io offers blockchain consultancy and AssetCha.in is securing valuables on the blockchain.

I leave Frost & Sullivan, a global research and consulting company, after three years as a strategy consultant in the digital transformation team. I helped companies like Amadeus, Shell, Huawei, and Intel to assess the impact of emerging technologies, validate opportunities in current and adjacent markets and create marketing strategies.

After working across many industries, it became increasingly clear that the macro decentralisation trend is reshaping every company and industry.Decentralisation is the framework I use to explore seemingly disparate trends such as the Internet of Things (IoT), 3D Printing, Drones, Deep learning, reinforcement learning and, most fundamentally, blockchains. I published numerous reports at Frost & Sullivan investigating all of these technologies and their impact on industries including agriculture, healthcare, and financial services.

My thesis is that blockchains will be the data management layer in the technology stack that secures and enables IoT to scale, and provides the platform for artificial intelligence to be accessible and to benefit society broadly. Without blockchains, IoT will be insecure and data will be owned, controlled and ultimately locked down by the companies that own the platforms. With tech platforms moving into connected cars, healthcare and education, this just isn’t a case of having all your emails with one provider. A company will know your genomic data, health records, sleeping habits and educational attainment. We must make sure we as a society don’t allow all of that data to be owned and controlled by a single company.

Even more dangerously, the benefits of artificial intelligence will accrue to those Internet-scale companies such as Google, Facebook and Baidu that have the most data to feed their deep learning models. As data network effects kick in, these companies will collect, retain and leverage proprietary data into ever greater economic and social power through their AIs.Blockchains, as an open-source shared data management tool, has the potential to provide a global incredibly large free-to-access data source for everybody in the world to build AI.

Without blockchains, the era of connected devices and artificial intelligence will further erode privacy and exacerbate societal and economic inequality. I believe blockchains are the single most significant technological development since the Internet, and together with artificial intelligence, will shape our society and economy over the next 25 years.

The Internet of Things: Brave New World or Utopia

As William Gibson once said; “The future is already here — it’s just not very evenly distributed”. This is true of the geographic distribution of new technologies, and it is also true of the distribution new technologies across devices. In this case, sensors and connectivity are already in electronic portable devices such as smartphones and tablets, but we are about to see wide distribution across every object, fabric and machine. The next technological revolution will connect the world, quantifying the environment and sharing that data in vast databases. The mattress will know when a body is present, clothing will know when it needs to be washed, and the lights will know when to dim, and the shoe will know what direction to walk. Sensors are now small and cheap enough for this world to be a reality. The natural world is about to be quantified, automated and made more efficient.

Beyond quantifying the external environment, we are beginning to also quantify the human body. We are likely to see huge growth in the smart wristband market as Apple enters and costs of the device decrease. Companies like OMSignal are manufacturing smart clothing and Google and Novartis are working to develop smart contact lenses. Across the board we are seeing the trend of collecting health data such as heart rate and respiratory rate, to glucose levels and galvanic skin response.

The benefits to the individual will be unparalleled; the ability to track and understand their own body and health, as well as share this data with family members, medical professionals and health researchers. For society this offers a unique ability to run clinical trials on a scale never before possible, data is collected and consolidated from millions of individuals, researchers can identify new patterns, new causes, and treatment effectiveness far cheaper and quicker than ever before. All of this has the potential to provide predictive care saving millions of lives every year.

Data is Currency in the IoT Era

The currency of this new era is data. Data from mattresses, data from thermostats, data from fridges, if it is connected then it will be valuable. Service providers will use the data to integrate with other sets such as browsing history, app permissions, location, and camera roll providing personalized services and tailored ads.

Existing data-driven services have business models that require the collection and storage of vast amounts of personal data. They get this data for free. To charge more to advertisers Facebook, Google, and Twitter need as much data as possible to serve up more relevant ads. Up until now they have had to rely on basic information to tailor ads — search history, friends, browsing habits, etc — in an IoT world, fridge inventory, wake-up times, washing habits, are all extremely valuable signals to feed their machine learning algorithms. As things stand, they will get this data for free.

As we begin to quantify the physical world, data ownership will become the biggest issue for individuals, companies, and governments. People feel uncomfortable sharing home or health data as this is regarded as more sensitive than digital data. The creators of the data and the users of the data have differing incentives — share less vs. collect more.

Trust as Competitive Advantage

The solution to the data privacy challenge will touch almost every business to consumer industry. It is unlikely that ad-supported business models will collapse; they will instead have to become more sensitive to individuals rights and prioritise trust over a land-grab. Individuals will share pretty much all data with trusted service providers as long as the value created is perceived as greater than the cost of sharing the data. Trust is competitive advantage.

Another solution is to create a marketplace for data, bringing together creators of the data (sellers) together with data service providers (buyers). Handshake is a UK-based company that is attempting to do just this. By putting a value on the individual’s personal data, the incentive to give it away for free to Google and Facebook is removed. Some individuals will decide that the value of the internet service provider’s product — instant access to the world’s information, instant connection with all your friends, ability to automatically order groceries — is worth access to their data.

Each individual and family must understand the trade off between sharing data and the privacy implications. It is the most important civic challenges of the digital age; a failure to communicate the loss of privacy associated with new health, home and city services in the internet of things era is to sleepwalk into a world where privacy is completely dead.

The Blended Reality Era

As we start 2015, we are entering the 2nd half of the smartphone era. We’re beginning to see a post-smartphone vision emerge with the smartphone as the centre of a network of sensors. These sensors will be embedded in wristbands, clothing, and everyday items such as locks, lights and thermostats. We are seeing technology brands articulate their vision for their mobile platforms moving beyond smartphones and tablets, into a range of other devices including wearable technologies, cars and household objects. By 2020, a clear picture of the post-smartphone era will have emerged; an era Frost & Sullivan calls the ‘Blended Reality Era’.

Truly ‘smart’ devices

Despite the fevered focus on smartwatches and new wearable devices, the game-changing innovation has already arrived. They are already in smartphones and manufacturers are embedding them in all new products. The sensorization of the world is already happening and the smartphone will be the beating heart of it all.

By 2020, the smartphone will connect with the wristband, fridge and car making the Internet of Things even more valuable to consumers. Sensors will collect data and send it back to a smartphone for visualisation, automation and insight. App-based services will offer automation; if your mattress senses reduced pressure then it will tell the coffee machine to brew a coffee, or if the front door closes, it will turn all lights and appliances onto energy-saving mode. The possibilities are as boundless as the imagination.

From reactive to predictive healthcare

Smartphones, wristbands, and smart clothing will collect real-time healthcare data. The sharing of this data will sit at the core of the privacy-versus-value debate. Sensors will measure glucose levels, blood pressure, and respiratory rate giving a real-time record of personal health. With more data we can expect faster and more accurate diagnosis.  Third-party health and wellness analytics companies, insurance providers and government agencies will want access. If these providers can win the trust of their customers, we will be able to improve personal and societal health outcomes. But if data privacy and security processes are not robust and trust is not gained, society at large will suffer. We have the opportunity to move from a reactive healthcare system to a predictive, preventative, personalised and participatory system. The smart shirt that identifies raised stress levels and plays relaxing music whilst brewing a green tea. The fridge that notifies the user when they are lacking potassium in their diet and suggests a meal of kale and chicken.

Healthcare will not just be something we receive when we are ill. It will be something we take part in daily.

Augmented Reality Eyewear

Augmented reality (AR) is the most exciting use case for an eye-mounted wearable device. The ability to layer digital information on the physical world in real time is unique to a wearable device. An extension of ‘glanceable’ notifications, AR has the potential to be the ‘killer app’ for wearable devices. AR wearables will sit near the eye to be effective, either as with Google Glass or a pair of glasses or with smart contact lenses. The advancements of location-based technologies, display and connectivity technologies will continue to drive adoption.

In 2020 eyewear will be standard equipment for soldiers, surgeons, police and customer service reps. The ability to live-stream and layer on relevant information in real-time such as a patient’s health record, a criminal record, or purchasing history is valuable. Eyewear further reduces the friction of using digital information and will save hours of labour-intensive work.

By 2020, the smartphone will be the central hub in the personal internet of things, connecting with wearables, household objects, and vehicles. Sensors will quantify, and mobile and cloud apps will automate everyday tasks. Sensors, displays and augmented reality services will bring a digital layer to the physical world, quantifying it for efficiency and optimisation. We are in the very early stages of making our environment intelligent. The media coverage may focus on new phones and watches, but the real advances are happening quietly behind the scenes in software. Computing is moving from something that we do, to something that just happens around us. Innovation is continuing unabated in the technology industry. It has just moved from tangible shiny consumer electronics to intangible pieces of code. We are at the very early stages of the Blended Reality Era, by the end of it computing power will be as ubiquitous as electric power. Electric power fundamentally reshaped the global economy. Ubiquitous computing will do the same.