Blockchain has been in the news lately, but beyond knowing that it has something to do with payments and digital currencies, most people don’t know what blockchain is or why they should care. A major part of the reason is that we still don’t have the kind of easy-to-explain blockchain killer-apps that propelled the internet forward.
Blockchain has yet to cross the chasm from technology enthusiasts and visionaries to the wider marketplace that’s more interested in business value and applications. There’s considerable research on blockchain technologies, platforms and applications as well as market experimentation in a number of industries, but blockchain today is roughly where the internet was in the mid-late 1980s: full of promise but still confined to a niche audience.
In addition, outside of digital currencies, blockchain applications are primarily aimed at institutions. And, given that blockchain is all about the creation, exchange and management of valuable assets, its applications are significantly more complex to understand and explain than internet applications.
The management of information is quite different from the management of transactions. The latter, especially for transactions dealing with valuable or sensitive assets, requires deep contractual negotiations among companies and jurisdictional negotiations among governments. Moreover, since blockchain is inherently multi-institutional in nature, its applications involve close collaboration among companies, governments and other entities.
In my opinion, there will likely be two major kinds of blockchain killer-apps: those primarily aimed at reducing the friction and overheads in complex transaction involving multiple institutions; and those primarily aimed at strengthening the security and privacy of the internet through identity management and data sharing. Let me discuss each in turn.
Complex transactions among institutions. “Contracts, transactions, and the records of them are among the defining structures in our economic, legal, and political systems,” wrote Harvard professors Marco Iansiti and Karim Lakhani in a 2017 HBR article.
With blockchain, “every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared… Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction.”
Blockchain holds the promise to transform the finance industry and other aspects of the digital economy by bringing one of the most important and oldest concepts, the ledger, to the internet age. Ledgers constitute a permanent record of all the economic transactions an institution handles, whether it’s a bank managing deposits, loans and payments; a brokerage house keeping track of stocks and bonds; or a government office recording the ownership and sale of land and houses.
Over the years, institutions have automated their original paper-based ledgers with sophisticated IT applications and data bases. But while most ledgers are now digital, their underlying structure has not changed. Each institution continues to own and manage its own ledger, synchronizing its records with those of other institutions as appropriate, – a cumbersome process that often takes days. While these legacy systems operate with a high degree of robustness, they’re rather inflexible and inefficient.
In August of 2016, the WEF published a very good report on how blockchain can help reshape the financial services industry. The report concluded that blockchain technologies have great potential to drive simplicity and efficiency through the establishment of new financial services infrastructure, processes and business models.
However, transforming the highly complex global financial ecosystem will take considerable investment and time. It requires the close collaboration of its various stakeholders, including existing financial institutions, fintech startups, merchants of all sizes, government regulators in just about every country, and huge numbers of individuals around the world. Getting them to work together and pull in the same direction is a major undertaking, given their diverging, competing interests. Overcoming these challenges will likely delay large-scale, multi-party blockchain implementations.
Supply chain applications will likely be among the earliest blockchain killer-apps, increasing the speed, security and accuracy of financial and commercial settlements; tracking the supply chain lifecycle of any component or product; and securely protecting all the transactions and data moving through the supply chain. The infrastructures and processes of supply chains are significantly less complex than those in financial services, healthcare, and other industries and there are already a number of experimental applications under way.
A recent WSJ CIO Journal article noted that blockchain seems poised to change how supply chains work. The article cites examples of projects with Walmart and British Airwayswhere blockchain is used to maintain the integrity of the data being shared across the various institutions participating in their respective ecosystems. Earlier this year IBM and Maersk announced a joint venture to streamline operations for the entire global shipping ecosystem. Their joint venture aims to apply blockchain technologies to the current stack of paperwork needed to process and track the shipping of goods. Maersk estimates that the costs to process and administer the required documentation can be as high as 20 percent the actual physical transportation costs.
Identity management and data sharing. The other major kind of blockchain killer-apps will likely deal with identity management and data security.
As we move from a world of physical interactions and paper documents, to a world primarily governed by digital data and transactions, our existing methods for protecting identities and data are proving inadequate. Internet threats have been growing. Large-scale fraud, data breaches, and identity thefts are becoming more common. Companies are finding that cyberattacks are costly to prevent and recover from. The transition to a digital economy requires radically different identity systems.
A major reason for the internet’s ability to keep growing and adapting to widely different applications is that it’s stuck to its basic data-transport mission. Consequently, there’s no one overall owner responsible for security, let alone identity management, over the internet. These important responsibilities are divided among several actors, making them significantly harder to achieve.
Blockchain technologies should help us enhance the security of digital transactions and data, by developing the required common services for secure communication, storage and data access, along with open source software implementations of these standard services, supported by all major blockchain platforms, such as Hyperledger and Ethereum.
Identity is the key that determines the particular transactions in which individuals, institutions, and the exploding number of IoT devices, can rightfully participate, as well as the data they’re entitled to access. But, our existing methods for managing digital identities are far from adequate.
To reach a higher level of privacy and security we need to establish a trusted data ecosystem, which requires the interoperability and sharing of data across the various institutions involved. The more data sources a trusted ecosystem has access to, the higher the probability of detecting fraud and identity theft. However, it’s not only highly unsafe, but also totally infeasible to gather all the needed attributes in a central data warehouse. Few institutions will let their critical data out of their premises.
MIT Connection Science, a research initiative led by MIT professor Sandy Pentland, has been developing a new identity framework that would enable the safe sharing of data across institutions. Instead of copying or moving the data across, the agreed upon queries are sent to the institution owning the data, executed behind the firewalls of the data owners, and only the encrypted results are shared. MIT Connection Science is implementing such an identity framework in its OPAL initiative, which makes extensive use of cryptographic and blockchain technologies. A number of pilots are underway around the world.
Irving Wladawsky-Berger worked at IBM for 37 years and has been a strategic advisor to Citigroup and to HBO. He is affiliated with MIT, NYU and Imperial College, and is a regular contributor to CIO Journal.
PHOTO: RUSTAM AZMI/GETTY IMAGES
Some interesting recent articles on blockchain and crypto:
Latest blockchain applications could bring overdue change to critical, if unsexy, functions in shipping, real estate and…diamonds
We’re now awash in “crypto” hype—cryptocurrencies like bitcoin and fundraising efforts like initial coin offerings. For every venture capitalist or technical expert, there’s a half-dozen hype men and fly-by-night startups making the entire space look like a 21st-century version of the Amsterdam tulip mania.
All that noise has obscured the bona fide efforts involving the underlying technology, blockchain. Of all the manifestations of crypto, it’s the most seemingly mundane applications of blockchain that could lead to the biggest and most concrete changes in all of our lives.
These applications can’t be found on a coin exchange, and they aren’t going to turn anyone into an overnight billionaire. But they could bring much-needed change to some of the world’s most critical, if unsexy, industries. This means new ways of transferring real estate titles, managing cargo on shipping vessels, mapping the origins of conflict materials, guaranteeing the safety of the food we eat and more. Using blockchain, you could prove that a particular diamond on sale in a Milan boutique came from a particular mine in Russia.
What is blockchain? It’s essentially a secure database, or ledger, spread across multiple computers. Everybody has the same record of all transactions, so tampering with one instance of it is pointless. “Crypto” describes the cryptography that underlies it, which allows agents to securely interact—transfer assets, for example—while also guaranteeing that once a transaction has been made, the blockchain remains an immutable record of it.
The third reason is that hype I mentioned. The current excitement around cryptocurrency gives blockchain the visibility to attract developers and encourage adoption. Companies that have taken an “If it ain’t broke, don’t fix it” attitude toward back-office processes and logistics IT might be ready to spend big on updating those systems when they hear the buzzword “blockchain.”
In this way, blockchain resembles another buzzword, “the cloud.” While detractors argued that the cloud was just “someone else’s computer,” it gave many industries new business processes, new ways to charge for services, disruptive startups and new divisions within existing companies and an ecosystem of supporting technologies. Blockchain has the same potential.
Blockchain All the Things
Take logistics. Already, 1.1 million items sold or on sale at Walmart are on a blockchain—including chicken and almond milk—helping the company trace their journey from manufacturer to store shelf. Global shipping giant Maersk uses the same technology from IBM to track shipping containers, making it faster and easier to transfer them and get them through customs.
While these projects are still a fraction of the overall tracking that goes on at these giants, they are expanding rapidly both within the organizations and across their industries. Other companies using blockchain technology to track goods include Kroger, Nestlé, Tyson Foods and Unilever, with many more yet to be announced, says Bridget van Kralingen, senior vice president of platforms and blockchain at IBM.
Everledger, a company started in April 2014 with the intention of creating a blockchain-based registry of every certified diamond in the world, already has 2.2 million diamonds in its registry. It’s adding about 100,000 diamonds a month, says Leanne Kemp, chief executive and founder.
By recording 40 different measures of each stone, including “physically unclone-able features,” Everledger is able to trace the journey of a stone from when it’s pulled from the earth to the day it’s purchased by a consumer. Every participant in that chain, from the miner to the cutter to the retailer, maintains a node—with a complete copy of the database—in the Everledger blockchain network.
CartaSense is an eight-year-old Tel Aviv company that puts internet-connected sensors on freight pallets and uses analytics to determine when goods may be delayed or damaged. CartaSense customers, rather than physically handing off scanned and signed paper documents, use a blockchain database on which freight companies can record every stage of the journey of a package, pallet or shipping container. Kuehne + Nagel, one of the world’s largest freight companies, is one of CartaSense’s clients.
Replacing Regulations With Code
Blockchain is being implemented first within companies and centralized governments that can move quickly on new technologies.
Dubai, for example, has declared its intent to make itself the “first blockchain-powered government in the world by 2020.” That could streamline things in real estate, says Stephen McKeon, an associate professor of finance at the University of Oregon who studies blockchain. By moving the central record of all real-estate transactions onto a blockchain, Dubai could make it faster and easier to transfer property titles.
Because such “smart contracts” on a blockchain are code, they can contain rules about how they can be modified or transferred. In this way, blockchain could become a way to transfer the obligation of enforcement from bureaucrats to computers. For example, to prevent fraud, titles could be transferable only to certain accounts, or might transfer only after another condition, such as the transfer of funds in escrow, is met.
It’s too early to say whether blockchain, as both a technology and a movement, has the power to overcome issues that thwarted generations of software engineers. The most justifiable skepticism is that blockchain is incremental rather than revolutionary. In some cases, it isn’t much more than a marketing term imposed on systems that hardly differ from existing databases. (There’s a healthy debate about what blockchain even means, and even companies like CartaSense call their system a “blockchain-like technology.”)
But if it works, it has the potential to be a fundamental enabling technology, the way new standards for transmitting data across networks led to the internet. More concretely, it could someday underlie everything from how we vote to who we connect with online to what we buy.
Write to Christopher Mims at email@example.com
Appeared in the March 12, 2018, print edition as ‘Blockchain Has Power to Transform.’
The alarm bells keep ringing on the tech quasi-monopolies that rule the Internet. There are two main issues to address: one is the ownership and control over personal data – this data rightly belongs to consumers, not network servers – and two is the positive network effects that drive these cos. to dominance.
How we analyze these tech titans differs along these two issues. Amazon, Apple and Microsoft sell products and product markets are not easily protected from competition. They are middlemen between producers/suppliers and consumers. I expect we will discover new competitive models to deliver goods and services, which will eat into these cos.’ dominance. The promise of blockchain technology is exactly to eliminate the middleman.
Google and Facebook are different animals. Search is starting to appear to resemble a public good, like public libraries. With the positive externalities of network effects, it also resembles a natural monopoly – the more people use a search engine, the better is the information obtained, meaning the search engine becomes ever more valuable. We probably don’t want to destroy this value. To me, this suggests that Google’s search engine eventually will become a publicly regulated utility – because the politics will demand it. We already see this outside the U.S.
Facebook, the ultimate social network, is going through some ups and downs because of issues of how it collects and uses personal information. My impression is that a single social network for all socializing needs is probably not the ideal solution. If correct, competition will eat into FB, which will start to break up into different targeted functions, reducing its value as a one-stop-fits-all OSN.
We shall see.
How Silicon Valley went from ‘don’t be evil’ to doing evil
March 4, 2018
Meet the new boss. Same as the old boss.
– The Who, “We won’t be fooled again”, 1971
Once seen as the saviors of America’s economy, Silicon Valley is turning into something more of an emerging axis of evil. “Brain-hacking” tech companies such as Apple, Google, Facebook, Microsoft and Amazon, as one prominent tech investor puts it, have become so intrusive as to alarm critics on both right and left.
Firms like Google, which once advertised themselves as committed to being not “evil,” are now increasingly seen as epitomizing Hades’ legions. The tech giants now constitute the world’s five largest companies in market capitalization. Rather than idealistic newcomers, they increasingly reflect the worst of American capitalism — squashing competitors, using indentured servants, attempting to fix wages, depressing incomes, creating ever more social anomie and alienation.
At the same time these firms are fostering what British academic David Lyon has called a “surveillance society” both here and abroad. Companies like Facebook and Google thrive by mining personal data, and their only way to grow, as Wired recently suggested, was, creepily, to “know you better.”
The techie vision of the future is one in which the middle class all but disappears, with those not sufficiently merged with machine intelligence relegated to rent-paying serfs living on “income maintenance.” Theirs is a world in where long-standing local affinities are supplanted by Facebook’s concept of digitally-created “meaningful communities.”
The progressive rebellion
Back during the Obama years, the tech oligarchy was widely admired throughout the progressive circles. Companies like Google gained massive access to the administration’s inner circles, with many top aides eventually entering a “revolving door” for jobs with firms like Google, Facebook, Uber, Lyft and Airbnb.
Although the vast majority of all political contributions from these firms, not surprisingly, go to the Democrats, many progressives — at least not those on their payroll — are expressing alarm about the oligarchs’ move to gain control of whole industries, such as education, finance, groceries, space, print media and entertainment. Left-leaning luminaries like Franklin Foer, former editor of the New Republic, rant against technology firms as a threat to basic liberties and coarsening culture.
Progressives are increasingly calling for ever growing tech monolith to be “broken up,” calling for new regulation to limit their size and scope. Many have embraced European proposals to restrain tech monopolies which now resemble “predatory capitalism” at its worse.
The right also rises
Traditionally, conservatives celebrated entrepreneurial success and opposed governmental intervention in the economy. Yet increasingly even libertarians, like Instapundit’s Glen Reynolds, have suggested that some form of anti-trust action may be necessary to curb oligarchic power. The National Review even recently suggested that these firms be treated as utilities, that is, regulated by government.
Conservatives are also concerned about pervasive political bias in the industry. The Bay Area, the heartland of the industry, has evolved as Facebook co-founder Peter Thiel notes, into a “one party state.” Ideological homogeneity discourages debate and dissent, both inside their companies.
More importantly, conservatives seek to curb their ability — increasingly evident as traditional media declines — to control content on the internet. As the techies expand their domain, America’s media, entertainment and cultural industries would seem destined to become ever less heterogenous in politics and cultural world-view.
A clear and present danger
Whether one sits on the progressive left or the political right, this growing hegemony presents a clear and present danger. It is increasingly clear that the oligarchs have forgotten that Americans are more than a collection of data-bases to be exploited. People, whatever their ideology, generally want to maintain a modicum of privacy, and choose their way of life.
The perfect world of the oligarchs can be seen in the Bay Area, where, despite the massive explosion in employment, even tech workers, due to high costs, do worse than their counterparts elsewhere. Meanwhile San Francisco, among the most unequal places in the country, has evolved into a walking advertisement for a post-modern dystopia, an ultra-expensive city filled with homeless people and streets filled with excrement and needles. It is also increasingly exporting people elsewhere, including many people making high salaries.
Of course, technology is critical to a brighter future, but need not be the province of a handful of companies or concentrated in one or two regions. The great progress in the 1980s and 1990s took place in a highly competitive, and dispersed, environment not one dominated by firms that control 80 or 90 percent of key markets. Not surprisingly, the rise of the oligarchs coincides with a general decline in business startups, including in tech.
We have traveled far from the heroic era of spunky start-ups nurtured in suburban garages. But a future of ever greater robotic dependence — a kind of high-tech feudalism — is not inevitable. Setting aside their many differences, conservatives and progressives need to agree on strategies to limit the oligarch’s stranglehold on our future.
Joel Kotkin is the R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism (www.opportunityurbanism.org).
This is a very long, comprehensive essay on bitcoin, blockchain, and distributed network economics. Published in the NY Times.
An excerpt I find particularly relevant to the tuka model:
The token architecture would give a blockchain-based identity standard an additional edge over closed standards like Facebook’s. As many critics have observed, ordinary users on social-media platforms create almost all the content without compensation, while the companies capture all the economic value from that content through advertising sales. A token-based social network would at least give early adopters a piece of the action, rewarding them for their labors in making the new platform appealing. “If someone can really figure out a version of Facebook that lets users own a piece of the network and get paid,” Dixon says, “that could be pretty compelling.”
That would be tuka.
One can’t get enough of this…
This site provides some great resources and tutorials in the blockchain cryptocurrency space:
This article from Bitcoin.com is a year old, but most people are unaware of these new innovations that define Web 3.0. Web 3.0 is basically the decentralization of Web 2.0 that was/is dominated by central distribution servers like Facebook, Google, Amazon, Netflix, etc. Web 3.0 will put the users in control of their own personal data and information networks. This means the value will be distributed according to the ownership and control of information data. These central distribution servers are the richest companies in the world today – just imagine if they had to start paying you for all the information you upload to their servers. The new services, such as tuka, will share that value.
Is Facebook About to Get ‘Myspaced’ by Next-Gen Social Media?
August 26, 2016 |
By Jamie Redman
Social media is a major component of the Internet and has already transformed how humans communicate and interact. Looking to take things to the next level, a few projects are trying to combine social media with the blockchain.
Blockchain-based social media platform Steemit has gained quite a following in the past few months. The project was built by Daniel Larimer, the founder of Bitshares, using graphene architecture. The company is also led by Ned Scott, who is a technical analyst with a background in financial data.
Steemit launched in March 2016 with moderate enthusiasm from the community and a small following. It has since been a hot topic in cryptocurrency circles and social media.
During the summer, Steemit attracted a lot of artists, writers, and vloggers to the platform because it pays people for sharing content. People have been paid thousands of dollars per post in some instances, with the most popular articles netting close to $15,000 USD.
The platform, which combines the concepts of Facebook, WordPress, and Reddit, operates on the Steemit blockchain and uses three types of crypto-tokens:
Steem Power gives users the ability to throw their weight around on the platform. The more power you have, the more significant your vote will be when you upvote a post or even a comment. Comments have been seen to be upwards of $20-40, so all interaction is rewarded.
Steem is a token that powers two smart contract protocols similar to Ether’s gas, and is tradable on cryptocurrency markets. The token is supported on exchanges like Bittrex or Poloniex. However, holders also have the option to use their coins to boost their Steem Power..
Steem Dollars are designed to be pegged to $1 USD and be the equivalent of one dollar’s worth of Steem for conversion over the platform. On cryptocurrency exchanges, SBD’s can be seen trading for a dollar or less depending on the current market value. So, in essence, it makes more sense to use the system’s seven-day conversion over a third-party exchange, though lots of people cash out their content earnings elsewhere.
Steem Adds New Features
Steemit developers has just announced the addition of highly-requested features to the site. The services will enhance the social media experience by adding private messaging, notifications, and follow buttons. The team believes implementing these new features will facilitate interaction between community members and attract new people currently using Facebook, Instagram, and Twitter.
Steemit CEO Ned Scott explains:
Enhancing the diversity of our application-specific blockchain is a natural progression for Steemit. Private messaging is perfectly suited for a decentralized system and will empower users in a similar way to how direct messages empower users on Twitter. The ‘follow’ feature will enable community members to receive notifications as soon as their favorite authors post, and the notifications will work just like Facebook in that users will be alerted immediately upon a new post or upvote from their favorite contributors. These features are the pillars of current social media giants and we look forward to integrating them into Steemit over the coming weeks.
Big Names & Skepticism
Steemit’s popularity has attracted quite a few well-known people to share content over the platform, including personalities like Trace Mayer, Larken Rose, Charlie Shrem, Roger Ver, Tatiana Moroz and Rick Falkvinge. Some of these famous users regularly take in four figures for introducing themselves, writing stories, and posting video and podcast content.
However, there have been some naysayers who believe the project is a scam, or resembles somewhat of a ponzi. Brave New Coincontributor and bitcoin technical analyst Tone Vays says Steemit appears to be a ponzi scheme. Vays highlighted many points on why he believes the platform is set up like a pyramid scam. He even debated the issue on the Dollar Vigilante’s podcast, Anarchast. Many people are waiting to see if the project can continue to hold its own, keep up its significantly large payouts, and ultimately survive as a social media platform with perks.
Competition Is Coming
Soon Steemit won’t be the only blockchain-based social media platform on the market. Tel-Aviv-based Synereo, founded by Dor Konforty and Greg Meredith, also aims to create a decentralized social media protocol.
The team has recently announced a prototype of the Synereo platform, which is in its alpha phase and works on top of the software’s distributed stack.
With Synereo’s blockchain-based social network, the protocol puts content creators in charge of the media they produce — just like Steemit. Users control their personal information and produce content that can be monetized within the Synereo community.
Unlike Twitter or Facebook, the Synereo application doesn’t store data on its users and cannot sell the information to third-parties. Instead, the platform works through transactions on the Synereo blockchain and is only available to network participants.
The Synereo social media network will operate without any central server, and will compensate its user base for their content and shared computational power. The team also says that the project “adheres to principles of the attention economy” that in essence rewards network users for creation and curation.
The platform includes text posting, image posting, content labeling, taggable posts and hashtags, decentralized searching and content amplification. Users will also be able to promote content by charging with the Synereo blockchain’s native currency, AMP. Users viewing content loaded with AMP will be compensated, encouraging people to interact with amplified content.
The developers’ news update states:
The wewowwe.com project has now API functionality and is able to work with outside networks, so that users can now be compensated automatically with AMPs for their contributions to their social network.—Also the components of the Synereo ecosystem are starting to converge and reveal a detailed picture of its capability.
Will Centralized Social Media Fall to the Wayside?
Platforms like Facebook and Twitter are still the prominent social media applications everyone uses. The mechanics of these websites are very much centralized, as third-parties benefit from users’ content, targeted ads, and personal information.
Given the rising popularity of Steemit, the next generation of social media will make it easier to monetize content, resist censorship and provide users with a true peer-to-peer experience. It may be a few years until Facebook loses its supremacy the way MySpace did, but the trend towards decentralization and better security will ensure that users do not only retain their privacy, but also share in the spoils of their online community.
More info on Blockchain basics:
tuka aligns the primary needs of a creative market–to promote, transact and connect–through three integrated digital technologies. These are an online social network (OSN) that is more accurately termed a online media network; a peer-to-peer (P2P) filesharing protocol to exchange digital media; and a blockchain transaction ledger to keep track of information data flows and transactions.We might put it more simply in these terms:
OSN + P2P + BC = tuka.
The purpose of the OSN platform is to share and promote content. It’s different from Facebook because postings are limited to sample files of creative content. In other words, good-bye to white noise and push ads. Through a timeline feed, users curate their feeds so creators can discover their audiences and vice-versa.
Resulting transactions among users are enabled over a peer-to-peer [P2P] file-sharing distribution and payments network.
The flow of transactions data and shared information is recorded by the Blockchain (BC). Peer networks are managed through a dedicated user dashboard.
Control Your Peer Network.
Blockchain is a distributed public ledger that records all transaction/data flows between users, whether monetary or non-monetary (read more here and here). Smart contracts can be programmed into the metadata of digital content so the Blockchain can distribute value to every user who contributes to the final transaction, meaning promotional efforts by fans can be rewarded by content owners, contingent upon sales. Successful promotion and marketing receive remuneration after the sale; while unsuccessful or free promo incurs no costs.
A Blockchain ledger system also means users have the power to build out and control their own peer networks on the platform. Users can reap the value of their data networks rather than surrendering that value to network servers.