Trust Yourself – Final Part of the Trust Trilogy
In part 2 of the Trust Trilogy, I ended with the promise of larger ecosystems and markets made possible through a simple mind-shift, where collaboration is the norm and the blockchain is the default trusted execution environment. What we didn’t touch upon were the numerous path-breaking blockchain projects that progressive companies have embarked on all over the world.
So here they are, my selection of interesting projects that clearly demonstrates that the blockchain has arrived and its adoption, growing. This time, though, blockchain’s role in industry re-defining projects is minus the hype. Instead, these projects carry the kind of substance typical of fundamental and backbone technologies such as HTTP, TCP/IP, public key encryption, and the cloud, what I call the silent workhorses of our digital world.
Let’s get started.
The next step in the evolution of blockchains is the formation of industry networks. These create value by developing and operating shared industry infrastructures as well as shared processes and applications to be used by all its industry members.Source
Smart Cities. Key benefit: Efficiency
The European Union has permitted the +CityxChange consortium and IOTA, a distributed ledger technology that uses the directed acyclic graph, to embark on realistic smart city projects in Limerick, Ireland, and Trondheim. These projects will then be replicated in Romania, Spain, Czech Republic, Bulgaria, and Estonia. Total funding as of publishing this article: EUR 30mn.
The projects will be around the following themes: enabling a common energy market, creating connected communities, and recommendations for new policy interventions, market regulations, and business models. Best of all, this is not a water-tight public experiment. The seven cities are required to develop and test their solutions together with 11 large enterprises, 9 SMEs, 3 non-for-profit organizations, and 2 universities that span the entire value chain.
A similar scene is expected to unfold in Singapore, a country that has already received recognition for its smart city initiatives and for its blockchain-friendly environment. A key aspect of smart cities is the widespread use of technology to cut down on red-tape and increase accessibility to various services. Any such initiative would rely on secure sharing of citizen data across a large number of government agencies, and, when permitted, with private players. The next phase of Singapore’s smart city initiatives has identified five areas as strategic national projects. And my hunch is that every one of those will possibly rely on a blockchain for secure sharing of data.
Authenticity tracking. Key benefit: Assurance
Authenticity tracking might well be the killer app of blockchains. In this case, the blockchain will be perfectly hidden from customers. So well hidden that while they won’t have to bother with hashes and consensus, they can rest assured that the Dior or Louis Vuitton in their possession is, beyond doubt, genuine.
“So if you are a customer of a luxury brand, you are not going to see AURA; you are going to see the Louis Vuitton app or the app of another luxury brand.” About AURA-the blockchain powering LVMH’s authenticity tracking app.
Sounds like a first-world problem? Not really, considering that the personal luxury goods market is a EUR260 billion industry with manufacturing bases and employees world over. Not surprisingly, moreover, the market for counterfeit luxury goods is huge, possibly larger. The point here is not to discuss the raison d’être of these counterfeit markets. What’s important is that a legitimate industry can fall prey to customer distrust. When unwitting customers trust a brand and end up with an inferior product, the chain of distrust can impact everything from new to second-hand sales.
LVMH has recognized the power of blockchain to address this problem and, at the time of this article, is preparing to launch its authenticity-tracking solution soon. While the roll-out will be staggered, with almost 60 brands and $53 billion in revenues under its umbrella, there’s no denying there’s a lot of stake. What’s even better is that LVMH plans to donate its code to a non-profit third-party that even competitors can be part of. And with blockchain consensus algorithms and cryptography ensuring data privacy, true coopetition can finally start weaving its magic.
Cross-border Payments. Key benefit: Lower costs
Cross-border payments are somewhat like multi-stopover flights. They take a long time, add up in terms of hidden expenses, and are not the first choice. Moreover, it was unavoidable. Until now.
The reason for various inefficiencies is that this system still relies on the correspondent banking network, which is subject to counterparty risk, inefficient liquidity management, and cumbersome reconciliation. But blockchain is already changing that.
AJIB, Jordan’s leading investment and commercial bank, has become one of the Middle East’s Blockchain success stories after a successful near instantaneous fund transfer between its headquarters in Amman, Jordan and its subsidiary in Cyprus. Compare that to a pre-blockchain scenario where such a fund transfer would take 2 to 3 days.
On citing the far-reaching impact of real-time settlement of cross-border transactions, a joint report from IBM, OFX, and Stellar has this to say: “Consider the plight of migrant workers and expatriates who transfer money to their families back home. Currently, they are paying about seven percent per transaction and sometimes much more in emerging economies… The goal is to make these types of transactions frictionless, or at least reduce friction for the benefit of 1.7 billion adults who remain unbanked.”
With the average cost for sending payments a whopping 7% of the total transaction, it is not surprising that IDC cites cross-border payment and settlements as one of the top three use cases of Blockchain in 2021. Deloitte has some compelling statistics too – stating that a blockchain-based payments system will be almost instant and result in a 40% to 80% reduction in costs.
Education. Key benefit: Transparency, convenience
Employers, educational institutions, government agencies – however advanced they might claim to be, there is no escaping the fact that they might demand to see your educational certificates as part of a verification process. And if they are dog-eared or lost, then getting a fresh one from the issuer (university, etc.) can be a painful or expensive process.
As per Odem, a project addressing the credentials problem and more, major U.S. colleges can take up to four months to deliver a hardcopy diploma to a newly graduated student. Further, it can also take as many as six weeks and a US$150 fee to replace a diploma that’s been lost, stolen, or destroyed.
Odem is using the Ethereum blockchain to give power back to the credential-holder, the student. Canada’s Southern Alberta Institute of Technology (SAIT) has already signed up to bring digital certificates and diplomas to over 4800 graduating students. The 2019 graduates will receive a cryptographic record of their certificate on the Ethereum blockchain along with their traditional parchment.
Education is one of life’s most valuable assets… we believe that students should have control over their own records, and blockchain technology makes that possible. – Richard Maghul, CEO, Odem
In Asia, GovTech from Singapore is doing something similar. Using the Ethereum blockchain, they developed OpenCerts, a platform for issuing and validating academic certificates that are tamper-resistant and permanent. OpenCerts has already gained significant traction amongst institutions in Singapore and is open for interest from institutions worldwide.
Building and Construction
Construction is a complex, costly, and inefficient process that is typically over budget and over schedule. By its very nature, it is fragmented and requires extensive coordination among numerous stakeholders. It is often mismanaged and results in lost productivity and spiraling costs. Effective construction management boils down to supervision at a granular level. This is where blockchain technology can help.
Blockchain can be applied throughout the lifecycle of an asset, from design to delivery to operation acting as a bridge among all stakeholders, allowing each party to track progress with the option to set up automatic payments for work completed. This technology can help to better manage construction progress as well as solve cash flow problems often experienced by companies. SiteSense is a step in that direction.
“Applying blockchain technology to the built environment will change the way people interact and how the projects are procured and delivered.” Joan Zhong-Brisbois Project manager WSP USASource
There’s more that blockchain can contribute in this space. Building Information Modelling (BIM), for example, serves as a common vocabulary among architecture, engineering, and construction professionals. In the words of Blockchain and the Built Environment from Arup, the leading engineering services firm, “During the design phase, this (the blockchain) is useful for establishing ownership of models and tracking incremental improvements and changes. Once operational, a BIM blockchain-aided virtualization can be linked with its physical manifestation, with changes recorded internally… This will benefit stakeholders by reducing the opportunity for corruption, inefficiencies and contractual disputes.”
Bimchain from France is already close to a market ready product that addresses the above. Among other things, its service offers the ability to create smart contracts that can ensure automated payments on stakeholders achieving their stated outcomes.
Several months ago, I started the Trust Trilogy as a series of articles exploring blockchain from inside out. I started from the concept of trust and collaboration, which is at the heart of this technology. I then proceeded to suggest blockchain-based collaboration for the enterprise as a next step. In this final piece, it’s been all about how blockchain is silently transforming every aspect of our lives. I am humbled by the fact that what I have presented is not even the tip of the iceberg.
A blockchain-based transformation will not be overnight, nor will it be easy. As I have argued before, it requires a paradigm-shift in our thinking. But the numerous projects worldwide are ample evidence that it’s all happening. To me, this is most reassuring.
What’s energizing is also the fact that as the CEO of Chainstack, I am seeing an increasing need for transparency, efficiency, collaboration, and cost reduction among stakeholders in enterprises and the government, and the blockchain is what all their research and insights is pointing them to.
Here’s to a trust-filled future!