The Complexity of Connected Devices, Germany's Energy Push and Singapore's Project Ubin
Off The Blocks, Vol 119, July 21, 2020
The COVID-19 pandemic is creating a lot of turbulence worldwide. These are challenging times for businesses and the key to survival is adaptability and agility. We are working with our partners, clients, and portfolio companies, creating strong ecosystems for their mutual growth. Simultaneously, we are trying to resolve some of the most complicated and challenging issues to create a trusted environment for people to go back to work and get the economy back on its feet. You can read about our efforts in a 4 part series here.
First Things First
Last week, I had the opportunity to share my thoughts on blockchain technology, innovation, and building tech ecosystems with the inimitable Shawn Flynn who hosts The Silicon Valley Podcast. I had a lot of fun talking to Shawn and I hope you find it interesting and enjoyable.
An ecosystem of Connected Devices
We’ve seen two years’ worth of digital transformation in two months
- Satya Nadella, CEO, Microsoft
Much has been said about the acceleration of digital services and enterprise transformation ushered in by the Covid19 pandemic. A large proportion of activities that previously required physical interaction has been replaced by virtual equivalents - remote teamwork, online education, sales, and customer service, etc. are all transforming to a virtual first model, ushering in an era of hyperconnectivity. While it is easy to associate connectivity with social networking and cloud-connected applications, it is worth understanding that underlying it all is an interwoven network of devices, data processing, and storage infrastructure that is enabling this shift.
There is a symbiotic relationship between the explosion of data and the corresponding compute and storage infra required. The system components and silicon are in for a big overhaul in a bold new world of industrial IoT devices. The pandemic is serving as a catalyst for the deployment of more technology. To the extent that stocks reflect the future earning potential of companies, technology stocks and the NASDAQ have significantly outperformed the broader market all of this year.
Companies have mostly adapted well to the demands imposed by the pandemic, starting with a dispersed workforce, replacing travel with virtual meetings. Even in industries such as manufacturing, logistics, utilities, oil & gas, retail, etc where field workers are essential, safety and security issues have become paramount and tech is fulfilling a critical need that may have not have been necessary for continuity of business operations absent the pandemic. Examples include smart devices that actively enforce social distancing norms, video processing to optimize workflow in warehouses, voice interfaces to replace touch, etc. In many cases, making remote and critical work efficient requires high-quality virtual connections with low latency that can only be addressed through improvements in physical devices and infrastructural upgrades.
The big opportunity here seems to be in creating dynamic ecosystems that allow companies across domains to network, share data, and collectively benefit by creating new pools of value. Take the COVID 19 testing and contact tracing ecosystem as an example - it requires companies with a diversity of expertise to come together - test kit makers, distributors, care providers, lab facilities, system integrators, data platforms, domain experts - even before a solution is ready for a potential patient to get tested. All of these players need to be agile and pivot as new information trickles in and orchestrate a solution as the needs may change.
It is very clear that tech enablement today is a very different beast than it was a few years ago. With the varied issues to be addressed, implementing and scaling solutions can be much more efficient with an ecosystem approach where solutions can be built more efficiently, at a lower cost and tailored to the demands of the ecosystem participants. But, make no mistake, ecosystems are different from digital platforms and work on an entirely new set of business models and principles.
In the recent past, big consulting companies took on some of the roles associated with ecosystem building. However, they were narrowly focused on industry verticals and justified their role (and costs) with the depth of expertise they brought to any engagement. However, with the horizontal (data) integration amongst industries and the complexity of data integration, capturing contextual value is a hard problem. This is where ecosystems need to be built for specific purposes. In some cases, it may be entirely feasible to split the ecosystem along two boundaries - infrastructural and data. Each of these needs to be orchestrated along with separate roadmaps, strategies, and vectors.
In a carefully curated ecosystem, each stakeholder benefits from the virtuous network effects and incentives created through the ecosystem. In our Covid testing example above, a robust data analytics suite can identify emerging hot spots quickly, reconfigure supply chain, divert medical supplies, and tackle the virus spread without much human intervention. This would not be efficient without an ecosystem approach where each player has a very limited view of the entire chain and there is no incentive to organize resources dynamically.
As edge devices grow in size and stature, infrastructural incumbents need to adapt to the data demands of the specific applications. Else, they risk playing in a commoditized setting. Similarly, data (or cloud) solutions need to be intricately tied into the silicon they utilize to accelerate services. Compounding the complexity is a yet underrated issue of trust. Which devices are authentic and which data can be trusted? Securing devices owned, operated by distributed entities across geographic borders, at the edge or in distributed hubs, is critical but can be excruciatingly difficult to plan for as new threats are uncovered. Without a central entity, who is responsible for maintaining a minimum level of security? The chain is as strong as the weakest link. These call for an added layer of orchestration, that requires a strong commitment, investment, and a continuous adaptation to market needs.
This is where conceptually a ‘silicon root of trust’ model can be trustworthy and cost-effective. A simple way to implement would be to embed cryptographic firmware into edge devices. As each device boots up or interacts with its connected servers, infrastructure, or other counterparts, it can verify that the startup sequence has not been tampered with and exactly matches the last known good configuration published by the vendor. Once a trusted network has been established, such connected devices perhaps provide the strongest argument for ecosystem building. The horizontal span across industries combined with the allure of data insights has all the potential to orchestrate cross-industry and cross-border business strategies.
Now for some news from the world this week:
Singapore CBDC | Project Ubin, the Singaporean Money Authority’s Blockchain Initiative, Moves Closer to Commercialization: The Monetary Authority of Singapore (MAS) and state investment firm Temasek announced today that Project Ubin, its blockchain-based multi-currency payments network, has proven its commercial potential after tests with more than 40 companies. The initiative was launched in 2016. A prototype developed by Temasek and J.P. Morgan began undergoing testing last year to see how well it would integrate with commercial blockchain applications. A report released today, commissioned by MAS and Temasek, said Project Ubin’s prototype was validated through workshops with more than 40 financial and non-financial firms. Its potential uses include faster, less costly cross-border transactions; foreign currency exchange; and smart contracts for escrow and trade. The report also said that Project Ubin’s prototype can potentially pave the way to enable more collaborations with central banks and other financial institutions to build better cross-border payments networks. …Read More on Techcrunch
China | Chinese Capital Beijing Unveils its Grandest Blockchain Plan to Date: Beijing is forging ahead with its blockchain ambitions. The Chinese capital unveiled plans for a blockchain-based governance system for its administration. Beijing will build a system for digital governance, create avenues for data-sharing between agencies and businesses, and enable cross-regional collaboration. All of these will be carried on a national blockchain platform. It’s the first step towards making Beijing a global blockchain hub by 2022. Twelve use cases have been identified in the plan. They range from implementing blockchain applications at airports, to customs, to finance platforms for small businesses, and to general municipal and governmental services for the citizens. … Read More on Decrypt
ETH | Focus on USDT and DeFi as 5-Year Anniversary of Ethereum Approaches: Industry experts say Tether and Decentralized Finance tokens will play large roles in the future of Ethereum as the blockchain approaches its five-year anniversary on July 30.
USDT is among the biggest and fastest-growing stablecoins in DeFi and we will ensure that Tether continues to play an important role in supporting this alternative financial system and remains the reserve currency of DeFi.
- Paolo Ardoino, Chief Technology Officer (CTO) of Bitfinex and Tether
Tether (USDT) had a market share of 78% among Ethereum-based stablecoins, with most tokens being on the blockchain. USDT remains the biggest user of gas on Ethereum, a trend that may be exacerbated as other blockchains continue to migrate to the network, like the recent $300 million transfer of Tether from Tron. … Read More on CoinTelegraph
Payments | Didi Chuxing To Accept Digital Yuan: China’s push into the world of digital currency is poised to take another big step forward. Ride-hailing giant Didi Chuxing is teaming up with China’s Central Bank to develop a digital yuan for use in the transportation industry. In an announcement on Wednesday (July 8), Didi said it will be working with the Digital Currency Research Institute of the People’s Bank of China (PBOC) on the project, with a launch reportedly being eyed for next year. The Central Bank’s decision to partner with Didi comes as the ride-hailing service rebounds after its business took a hit earlier this year with the onset of the coronavirus pandemic. Ride-sharing orders on Didi’s platform recently surged past the 30-million-a-day mark, CEO Cheng Wei has said, with the company claiming 550 million users. … Read More on Pymnts.com
Energy | Blockchain Plays Leading Role in Germany’s Renewable Energy Evolution Germany’s renewable energy push is taking shape as the country abandons coal and nuclear-based energy generation. The country has set itself the target of 2022 for the decommissioning of all nuclear-based electricity production. The energy transition or the Energiewende as the Germans call it is changing the pattern of energy production from a national level to more of the regional or local level. The present slightly centralized power infrastructure may not be adequate for energy production involving a huge amount of biomass, solar energy, wind, and other types of low energy-producing stations. DLT is gradually becoming the foundation for several systems developed in Germany’s push for advanced renewable energy. … Read More on BBHQ
The US Securities and Exchange Commission and the Commodity Futures Trading Commission today launched a joint-strike against Abra, a crypto investment platform that let its users trade tokens that represent stocks. Abra, which also operates under the name Plutus Financial, must pay $300,000 in fines—split evenly between the SEC and the CFTC. Abra also agreed to stop offering tokenized stocks, which were the products that made the California-based startup stand out within the crypto space. Now, Abra is back to being a plain ol’ crypto investment platform and wallet.
Those tokens Abra sold, though, weren’t actually backed by stocks; they just represented them. So why did the SEC and CFTC both offer cease-and-desist orders?
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. Velocity, our innovation hub, invests in and accelerates the time to market for startups and emerging ideas.