Blockchain-Enabled Convergence

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 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 commoditized 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.

Advertisements
Blockchain-Enabled Convergence

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 Internet of Things: Brave New World or Utopia

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.

The Blended Reality Era