Real Estate Blockchain Ecosystem “ReBe”

ReBe

I was contemplating to title this blog “Enriching real estate buying experience with Blockchain”, but finally chosen the title “Real Estate Blockchain Eco-system” to brand the collation of ideas as “ReBe”. As you got the crux of the topic and let us dive into details.

Investment Opportunity vis-à-vis Technology Advantage of Blockchain is an ongoing debate. My focus on this post is to underpin technology advantage of the blockchain. While in-numerous use cases are popping up on the blockchain, I have been thinking about enriching real estate customer experiences expanding real estate market opportunity with distributed, trustless, auditable, and immutable nature of blockchain technology.

From the latest MSCI report, the size of the professionally managed global real estate investment market grew marginally from $7.1 trillion in 2015 to $7.4 trillion in 2016. Currency movements distorted national changes. Currency movements effectively reduced the size of the global real estate investment market by approximately 2.3% in U.S. dollar (USD) terms. Let us break down real estate opportunities and analyze areas where blockchain can show higher impact. I will start by asking a question, what if blockchain could help taking out currency movements? That itself leads to a potential of addressing $170 Billion opportunity size. How about addressing the following plausible areas with blockchain technology?

Blockchain Relevance to Real Estate

The six core characteristics of blockchain namely “Immutable, Consensus, Encrypted, Transparent, Programmable, and Distributed” positions the technology to handle/transact almost every element of a real estate value chain on a blockchain. In buying a real estate, whether it is commercial or retail, the current inefficiencies along the value chain can be replaced with a blockchain platform that can make it better, faster and cheaper. Here is a peek into details.

1) Property Search and Records: Search can be enabled by peer-to-peer listing platforms that allow buyers and sellers to transact directly with one another and reduce or eliminate commissions. One property is found the property owner has to be confirmed. For any kind of a high-value property (real estate, cars, art) it is important to have accurate records which identify the current owner and provide a proof that he/she is indeed the owner. A blockchain based property ownership recording system described in this article eliminates most potential failures and attacks through transparency and use of cryptographic primitives for authentication. Thus it can be used to eliminate reliance on trusted third parties, reduce costs (through automatization) and avoid number fraud and errors. For example, REX MLS blockchain platform provides an open, decentralized and democratized environment for listing and transaction processes

2) Property financing and lending: Blockchain can facilitate financing, investment, and crowd-ownership in real estate dealings.

  • Blockchain can leverage crypto backed native currencies as a means of payment in real estate transactions, which can involve considerable regulatory issues (e.g. KYC, AML) minimizing transaction fees and potentially eliminating cross-border currency fluctuations in a global marketplace.
  • Blockchain technology can be used as a means of crowd investing/funding in real estate tapping into funds beyond banks and institutional money.
  • Other possibilities include the noteworthy business models that seek to issue a regulated, blockchain-based cryptocurrency secured by shares in Real Estate Investment Trusts (REITs).
  • The current owners of real estate can monetize full or partial ownership of these assets creating liquidity with ease of technology. For example, the UK government’s “shared ownership” scheme helps first-time buyers get on the property ladder by purchasing part of a property and paying rent on the remaining value. Renters can buy additional equity in the property as and when they can afford it, a process known as “staircasing” Blockchain enables more efficient processing of financing and payments

3) Lease and Rental Management: Blockchain technology can automate most of rental and lease management processes leveraging “smart contracts” by shortening the cycle time of reconciling rental payment and property expenses cash flows by providing full transparency. This will finally lead to reduced accounting, property management, and compliance costs. Blockchain driven student accommodations is another evolving trend in this space.

4) Titles and closing: Blockchain enables transparent and relatively cheaper property title management. Distributed ledger technology combined with smart contracts can potentially eliminate escrows. This is possible by altering the real estate transactions by combining identity verification with escrow. In place of a title company, buyers could make a purchase in crypto backed native currencies by sending the funds to one party and title to another without the need of escrow. Another advantage is minimizing the wire fraud impacting the real estate industry. In the traditional real estate closing process, numerous intermediaries are utilized and get paid which increases the lead times and associated costs. By assigning each property to a digital address, blockchain can significantly reduce the number of intermediaries by reducing costs and lead times in multifold.

5) Add-on Services: Blockchain can potentially be extended to multiple add-on services enabling end-to-end real estate processes. These services include but not limited to expediting pre-lease due diligence, ease leasing and subsequent property and cash flow management, offering real-time rich data promoting smarter decision-making, blockchain based land ledger etc.

Real Estate Blockchain Ecosystem (ReBe)

Each of the above real estate services can be a blockchain offering in itself. But what I am trying to project in this post is a Real Estate Blockchain Ecosystem (ReBe), a portfolio of services to offer an enriched and optimal end-to-end real estate solutions. As depicted in the diagram above, ReBe ecosystem constitutes multiple layers.

  • First Layer – Blockchain Core: The center layer with a ReBe Token, crypto exchange, smart contracts, and a distributed ledger based financial system creating ReBe technology platform. ReBe token is envisioned as a hybrid token with a utility service to pay network fees and a security that backed by a real estate asset offering collateral and a possible monetization of assets.
  • Second Layer – Blockchain Services: A portfolio of services can be built around the core layer that forms the “Blockchain Services Layer”. Here a catalog of services either building a partner ecosystem of existing platform players or pay-per-use platform services for participating service providers.
  • Third Layer – Marketplace: The third layer is the marketplace of buyers, sellers, crowdfunding, banks, institutions and legal entities that leverage blockchain services. An example of a marketplace transaction could be Peer-to-peer property transfer or rent.

Blockchain technology is fast changing the property buying experiences and I foresee an existing opportunity in reshaping the real estate industry with ReBe. You can reach me @ kishor.akshinthala@gmail.com for a deeper mindshare on this topic.

Enhancing Gift Cards Value Proposition (Blockchain for Gift Cards – Part II)

Last week, I published a blog post titled “Blockchain Boosting Customer Loyalty Programmes”. In continuation of views on Blockchain relevance, highlighting the following 4 aspects of gift cards industry that encompasses open & closed loop cards, new age innovative cards such as gift cards for stock, lottery retail gift card, donation gift cards etc.

1) Transaction fees

2) Seamless redemption

3) Consumer wallet spends

4) Fraudulence

1) Transaction fees: Gift cards market in the USA alone is estimated >$170 billion and growing at ~20% CAGR internationally across channels of stores, web, mobile, incentives, employee engagement etc. As per GiftCardsdotcom, processing fees on various types of gift cards range from 1.4% to 3.94% and lower the value of card higher the fees even touching double digits. This as a result of cumulative effect of various stakeholders in the value chain including the issuer, distributor, reseller, buyer, & receiver. Can we bring them on DLT to checkout fees?

2) Seamless redemption: Gift card industry is set up to hide identities of unspent balances on gift cards called “breakage”, which accounts to ~20% total spend i.e. $34 billion. Combining gifts, rewards, loyalty and coupon credits in one place/platform, making them available for immediate use can be one solution to this. Such platform as well can enable auctioning, trading, regifting and donating to charity features creating value for unwanted cards that expire. Can blockchain technology be leveraged for generating net new revenues from seamless card redemption?

3) Consumer wallet spends: Lack of single source of truth and shopping data has been limiting the scope of consumer wallet spend expansion. Overspend dynamic is really an upside, and analysis shows that when consumers shop using gift cards they spend an average of 30% to 40% more than the face value of the card credit. How about combining AI+Blockchain+Cryptocurrency (ABC) to increase the effectiveness of advertising by retailers to increase consumer wallet spend?

4) Fraudulence: “Return fraud – thieves simply walk into Walmart, Target, Home Depot, Lowe’s or another big-name retailer, steal an item, return it at a different store without a receipt and receive a gift card in return, which they can then turn around and sell to a pawn shop or secondary store for a lower price” (dangerous than cyber fund) is a new form of fraud in Gift Cards environment. Retail return losses total of $9 to $15 billion per year, 2017 survey by the National Retail Federation. >50% of companies reported fraudulent gift cards or store credit in one or more locations. How about applying blockchain technology enabling people who don’t trust one another share valuable gift card data in a secure, tamperproof way making it extremely difficult for attackers to manipulate?

Blockchain technology precisely addresses these factors and fuels the growth of gift cards industry leapfrogging customer loyalty experience and enhancing gift cards value proposition.

Refer to Part I @

https://akshinthalakk.com/2018/06/23/blockchain-boosting-customer-loyalty-programmes/

 

Boosting Customer Loyalty Programmes (Blockchain for Gift Cards – Part I)

Untitled

Getting little bit into history, reward programs spans over a century (~120 years) with S&H Green Stamps in late 1800’s, the launch of modern programs by the airlines ~35 years ago, and to the recent coalition programs like Plenti’s initial marketing partners that include Macy’s, AT&T, Exxon Mobil and Rite Aid.

According to the 2017 Colloquy Loyalty Census, there are 3.8 billion individual loyalty memberships in the United States increasing from 2.6 billion in 2012. Every day we come across some sort of customer loyalty and reward programs in our daily lives while consuming products and services across industries that represent the spread of memberships in retail – 42%, travel & hospitality – 29%, financial – 17%, media & content, the cross-section of these industries and as well as others representing remaining 12%.

With that being said, loyalty and reward programs are facing the underpinning threats as well as bundled with few opportunities as described below. In view of this, Providers of loyalty programs should focus on their long-term sustenance and growth strategies. The following metrics are compiled from Kobie and Colloquy reports.

Threats:

  • Only 46% of loyalty memberships in the USA are active leaving behind more than half of all memberships inactive
  • Over 70% of consumers in the age group of 20 to 34 years old said they would change where they shopped to get more loyalty rewards

Opportunities:

  • 34% of USA consumer say they are loyal to a brand because of its loyalty program
  • Loyalty/reward programs with integrated sustainability, contribution to the environment and quality of life are scoring more than the rest

In the above context, Blockchain technology can play a significant role allowing the providers to integrate store locators, payment vehicles, loyalty programs, even games, in a platform that enables information always to be at the consumer’s fingertips. The blockchain based platform can offer convenience, rewards, ease of use and customer experience combine to build consumer loyalty, engagement, and advocacy.

Traditionally most rewards programs use a proprietary “points system”. Customers can accumulate points for purchases at a rate that was set by the issuer and finally uses the points to purchase merchandise at a redemption ratio set by the issuer which is somewhat regulated. 3rd party fulfillment usually handles the redemption hosting the user redemption via an online web framework, maintain and keep the catalog of rewards, administer point balances, manage promotions, ship rewards, and deduct the points in a systematic manner. As you can realize by now the multi-party loyalty systems are somewhat circumvented and that leads an opportunity for disintermediation. The recent developments with blockchain technology seemingly offers an effective alternative to run loyalty programs.

As depicted in the diagram above, the entire ecosystems of loyalty & rewards programs including providers, channel distributors, customers, incentives & payments firms can be seamlessly integrated onto a blockchain core to enhance the overall value proposition. Blockchain can enable a ledger of transactions to be shared across a network of participants. When a loyalty point is issued, redeemed, or exchanged, the blockchain’s AI algorithm-generated unique token could be created and assigned to that transaction and distributed across the loyalty network, updating every ledger simultaneously. Loyalty participants can validate the new transaction and link them to older transactions, creating a strong, secure, and verifiable record of all transactions, without the need for intermediaries or centralized databases. However, for security and privacy of loyalty programs, it may be logical to design a closed-loop rewards program, where only those parties involved in the loyalty program, issuers and merchants, would be allowed, which resembles a private or a permissioned blockchain.

If you can visualize, in loyalty platform backed by blockchain, the points associated with the rewards systems can be deposited by the issuer in a customer crypto wallet that would be available to immediately spend at any of the merchants that accept that cryptocurrency and participate in that closed blockchain. The issuer would no longer need to carry the liability for all unused points on its books, which is estimated at ~10% leakage of rewards that expire and can be written off with no redemption costs. To compensate this blockchain based systems can deliver cost savings in redemption by eliminating the third-party fulfillment function, along with the associated fees for those services. The cardholder would no longer need to log in to the fulfillment website to redeem points for merchandise or travel. Instead, the rewards currency could be used to purchase from any merchant, e-tailer, travel site or brick and mortar that accepts that rewards currency. Presumably, this would be a closed loop of possibilities, to avoid the problems that merchant consortiums such as Plenti had to deal with. Each merchant would then need to balance their prices, in the rewards cryptocurrency, in order to increase the potential for the cardholder to spend with them, but still maximize profitability. The inefficiencies arising from the issuer paying fees to a third party could be put back towards the issuer’s reward program, the payback for giving up the “breakage”. This, in turn, would allow the issuer to increase its rewards.

One would think now about how to handle a sporadic crypto price fluctuations? One way to address this is by keeping the rewards currency, not as a tradeable token on exchanges making the blockchain a permissioned network allowing only issuers who participate in the program, and merchants who are willing to redeem could be nodes keeping the expense and time delay of each transaction to reasonable costs and near-real-time. The participating nodes can be designed to perform a proof-of-cooperation calculation to maintain the integrity of the transaction.

To sum it up, leveraging customer loyalty blockchain platform,  the issuer no longer sets redemption ratios in the future-generation model of card rewards & redemption, removing any ambiguity as to what each reward point is worth. This allows merchants to price their goods at market rate to encourage purchase, removing hidden markups and resulting in loyalty truly becoming a currency.

Refer to Part II @

https://akshinthalakk.com/2018/06/30/enhancing-gift-crads-value-proposition-blockchain-for-gift-cards-part-ii/

 

Creating Business with New Reality (AR/VR) Value Chains

ar1One way to interpret AR/VR ecosystem is classifying it as a platform, what I am referring in this blog as “Platform 4.0”. Followed by personal computer, web, and mobile, AR/VR platforms fundamentally are transforming how present-day consumers interact in the physical world. One way to define AR/VR is as follows,

  • VR: Immerses users in an imagined or replicated world
  • AR: Goes closer to reality overlaying digital imagery onto the real world.

AR/VR offers significant business opportunities, but a holistically understanding on how to create a business from this very promising platforms is very critical. As per Statista, by 2021, the augmented and virtual reality market is expected to reach a size of $215 billion. For AR alone, ARtillry Intelligence projects consumer AR revenues to grow to $14 billion by 2021. The business models for capturing the market opportunity of AR/VR platforms preferably should encompass on upstream and downstream of “New Reality Value Chains”. The upstream part of value chains covers the core of AR/VR development needs and downstream part of value chains address the various channels to serving AR/VR demands.  The term ‘business model’ in this blog ties to either a segment of upstream or downstream of AR/VR value chain. While the detailed characteristics of each business model are slated for a separate blog, tried to summarize the various models with “AR/VR Business Opportunity Framework” as depicted above.

As mentioned above, while “New Reality Value Chains” offers significant business opportunity, the potential market opportunity sizes vary by business model and respective focus segment. With further market analysis, the indicative percentage market opportunity size by each of the business segment is shown in the chart “AR/VR Business Models and Market Size” below. Hardware, eCommerce, and Ads contribute to >2/3rd of market share. Another key observation is immediate whitespaces in Apps, Subscriptions etc. can be target areas to evolve innovative business models.

AR 2

The above-mentioned business models and their growth potential is estimated to be varying across verticals. The “AR/VR High Impact Sectors” with most promising opportunities are Games, Healthcare, Industrial, and Broadcasting Events. The relative opportunity size of AR/VR across various verticals and respective dominating use cases are summarized below.

  • 1/3rd of the VR/AR market opportunity comes from the Gaming industry. Leveraging VR to enrich the video gaming experience offering players with illusory environments by porting games onto playing fields offers a significant business opportunity. The recent success of “Pokemon Go” is a use case to showcase.
  • Next 1/3rd market opportunity prevails in Industrial, Healthcare, and Event Broadcasting verticals. For example, in the industrial sector, AR/VR can help engineers to test scenarios and designs allowing rapid prototyping and yield cost reductions fixing known errors before mass production.
  • Remaining 1/3rd market opportunity comes from other verticals including Retail, Real Estate, Entertainment, Education, and Military. For examples, Retailers can revolutionize the way consumers shop by elevating the shopping experience and promoting emotional connection to a brand or product

In summary, i) AR/VR Business Opportunity Framework, ii) AR/VR Business Models and Market Size, and iii) AR/VR High Impact Sectors presented above can be used as a starting point in carving out specific target business initiatives in much promising AR/VR space.

You can reach me @ kishor.akshinthala@gmail.com for a deeper mindshare on this topic.

Living in an Artificially Intelligent World

imagesI was reading an article on new research led by the University of Adelaide on the subject of an AI’s ability to predict a patient’s lifespan simply by looking at images of their organs. After taking a deep breath picked up my coffee and started walking thinking about the deeper engagement of AI in human life. While paying for coffee a few minutes ago, I realized that my credit card got misplaced and called the Bank customer service to inform. A bot attended my call and navigated through the issue and without getting a human agent involved, bot blocked my lost card and placed a new one. I am sure it would have simultaneously updated records in the backend with lost and new card information in multiple systems beyond handling customer communications. This is a classic example of automating a standard business process and corresponding workflows. Then I realized ANI (Artificial Narrow Intelligence) has already made inroads into human daily life.

While contemplating further on AI reach on our lives, reached my home. My ten-year-old daughter approached me handing over the home phone and said, I am holding a call for you and it seems that “bot thingy” is on the line. She was right, it’s an automated calling service from credit fraud services. The bot enquired about the recent loss of my card, security, and privacy related queries. Then transferred the call to a human agent, who confirmed card replacement and started offering adjacent services like fraud protection, started analyzing the credit situation identifying potential needs offering a new credit card that in a way precisely address my requirements. My surprise went to the next level, as AI started traversing deeper in my life routines. Of course, post my last call to the bank, cognitive AI might have picked up from ANI and started advanced analytics on data deriving next level insights and triggering a bot to make a follow-up call. As bot done its preliminary job handing over to the human agent, this cognitive AI started helping him in offering adjacent products the make perfect sense in my scenario. The bot may sooner completely replace human interface. Isn’t it nothing but AGI (Artificial General Intelligence)? A machine that could successfully perform any intellectual task that a human being can or aid human being in doing so.

Perfect! I walked into the kitchen and got into a dialogue with my wife. We decide to go shopping. She was on her iPhone as we walk through the aisles, and I noticed that an NLP chatbot advising her on retail product recommendations with a greater personalization with rich images and connecting to VR interface enabling product tryout. What an intrusion of AI in every walk of life. This I call it ASI (Artificial Super Intelligence).

Albeit, in a day of life, I traversed with all three phases of AI with increasing degrees of influences on daily routines, needs, and decisions. Going back to the article I read in the morning, I felt humans natural dependency on AI is on a rising path. 

Can Blockchain Technology fail?

1Technologists, entrepreneurs, innovators, public and governments are having a different point of views on practical limitation on adopting blockchain technology, even the existence of bitcoin and thereby relative performance of cryptocurrencies. Blockchain implementation is like implementing a 360-degree performance review where the managers appraise the teams and vice versa, practicality impeding into power balances as is the context of centralized vs decentralized phenomenon of Blockchain. We assess in this blog on whether a new technology called blockchain distributed ledger technology is capturing enough attention or on a path to failure?

The first limitation of the technology is its scalability and speed of processing transactions to apply to the real world scenarios. These limitations allude to the processing times whether it is time taken to post a transaction in the block or the time taken to reach consensus in approving the transaction. Lightening Network for Bitcoin and Plasma & Raiden Network for Ethereum are developing scenarios. Leaving the success to the best of the of cryptocurrency brains, we are about to attain the reality of off-chains to speed up and reduce transaction costs to scale up the technology adoption.

What are the other constraints limiting the blockchain technology success?  Next limitation is whether blockchain scales to enough network size pressing the necessity to regularize the underlying currencies and technology promoting common man/woman adoption. Blockchains tend to become less resistant to bad actors as responding to attacks and grow stronger. Obviously, this requires a large network of users . If a blockchain is not a robust network with a widely distributed grid of nodes, it becomes more difficult to reap the full benefit. The blockchain community has to respond overcoming such flaws of both in permissioned and permissionless blockchain projects. But the network is growing and unstoppable to expanding beyond critical masses.

Another misnomer is blockchain technology readiness for production or a real use case. It is true that few enterprises are marketing blockchain as a mature technology, while bitcoin and ethereum platforms are starting to showcase expected kind of scale. With over the 70+ different blockchain platform technologies available, most blockchain platforms to be candid are immature as of date. We need continuation on multi-ledger experimentation and PoCs based on “test and prove” outcomes.

In the true spirit of a propaganda of a good or bad, the real world of blockchain has an anomaly to the early days of the Internet. During the early nineties, in fact, there were warnings about the stability of fast-growing world wide web. As the end truth led us to taste the financial incentives, encouraged believers to maintain the stability and security of the underlying systems.

Ecosystem readiness is the following topic of blockchain survival. As the consortiums and public developer focus garner, Blockchain continues to lack the maturity and standards to reasonably promising interoperability among competing ledgers and platforms. What we as a blockchain community should prepare is lead from the front on integration challenges between blockchain technologies and legacy environments to demonstrate incremental success and power of distributed technology.

Lastly, I would sum up emphasizing the technical limitations and way forward for Blockchain, referring to Emin Gün Sirer, PhD, an associate professor at Cornell University quote Failures will happen, as long as you have thought it through, you’re okay.” Dr. Gün Sirer shared his research on how blockchain can fail at the Business of Blockchain conference during 2017. Blockchain technology is roughly 30,000 lines of code, leaving ample room for error, according to Dr. Gün Sirer. This consideration is serious, he said, since most blockchain clients run on the same code – meaning one error can inhibit an entire system. “It’s amazing that we haven’t found as many mission-critical bugs as one would expect, and in fact, that’s a testament to people who have worked behind the scenes on it,” Dr. Gün Sirer said, according to MIT Technology Review. Although developers should keep these issues top-of-mind, Dr. Gün Sirer also stressed the potential for failure should not discourage them.

Watch video on What Could Go Wrong? When Blockchains Fail.

 

Combating Counterfeiting with Blockchain Technology

UntitledLet’s visualize, you walk into a jewelry store and see a very aesthetic diamond necklace you were dreaming to buy to your fiancé on Valentine Day. What if you have a technology at hand that make sure the jewelry is authentic. Self-authentication is seemingly the need for many consumers buying various products before making a purchase to avoid fake in a world of counterfeiting. As per OECD estimates, global trade-related counterfeiting accounts for 2.5% of world trade, or 461 billion USD in 2016.

Going back to the diamond necklace purchase scenario, let us visualize that you have an application on your phone and scan the necklace. The application tells you if necklace is real or not. Further to that application (a DApp on a Blockchain) displays a video of the designer explaining why you should select that precious necklace. You may find out that the necklace you like is a very limited edition and only 50 persons on the globe can have such a necklace. You can’t resist anymore and you just buy the necklace. After buying it, you ask the seller to transfer the ownership to you. They show you a QR-code, for instance, on their phone, you flash it with the app and declaring to everybody in the Blockchain that this necklace, one of few of the limited edition, only 50 pieces in the world, belongs to You.

The use case explained above is very much coming into reality with Blockchain enabled ant-counterfeiting platforms. Startups like Everledger, veChain, Chronicled, BlockVerify, Digmus etc. are offering Blockchain solutions for anti-counterfeiting. In today’s world counterfeiting plagues supply chains affecting consumers and businesses in many ways including the product under your possession can be a counterfeit or a products on the go can get diverted to a new destination or products gets stolen or products tied to fraudulent transactions / money laundering. Counterfeiting is widely present across industries ranging from luxury goods, diamonds, pharmaceuticals, wines/whisky, electronics, semiconductors, many retail products.

Why Blockchain Technology is promising in anti-counterfeiting?

Counterfeiting is basically a double-spend problem – the very problem the initial bitcoin blockchain was designed to solve. Blockchain offers a transparent environment where it is impossible to duplicate products. Enterprises can create registries of their products and monitor supply chains leveraging cryptographically secure mechanisms for anonymously transferring the identity of products as they move through multiparty supply chains.

Anti-Counterfeiting Blockchain Platform (ACBP) primarily has two key constituents. One is a Blockchain that acts as the storage of unique products identifiers and history of product transfer between parties. Blockchain technology can check the brand authenticity, issue crypto certificates and stores product information and additional data to verify authenticity. The second constituent is offering better UX to end user with a DApp which will be used to verify the product and provide verification for additional authenticity. With the advent of core technology and UX, ACBP identifies the product as it moves through the supply chain and alert the blockchain network if a duplicate shows up to the existence and location of a counterfeit.

Challenges of Blockchain anti-counterfeiting platforms and future focus areas:

Enterprises and blockchain communities have t aim overcoming the following potential challenges to deploy Blockchain Technology for anti-counterfeiting solutions.

  • High volumes and underlying transaction fees: Blockchain comes very handy for very high value goods with low volumes without above said problem. But for Anti-counterfeiting blockchain platform to scale up to serialization in overcoming counterfeiting, it has to provide individual tracking of high-volume items with relative low value may not be viable. A potential solution to this is moving certain types of transactions into off-chains where they are processed, freeing up the blockchain for its primary role as a distributed ledger. The popular off chain solutions being piloted recently are
    • Lightening Network for Bitcoin
    • Plasma & Raiden Network for Ethereum
  • Public vs private blockchain for anti-counterfeiting: As decried above limitations of public blockchain like Bitcoin Blockchain is lack of handling high volume (consider a manufacturer producing a millions of products per day) at speed and underlying fees for these transactions would be several hundred thousand USD per day. However, going with private Blockchain has its downside: it give an opportunity to fiddle with data in some scenarios. To get the best of both worlds – performance and low cost of private Blockchain, and trust of public Blockchain, is a hybrid blockchain. Data is kept in a private Blockchain, but on regular intervals the control checksums of private Blockchain are persisted in a public network, which makes it is impossible to corrupt or modify existing records.
  • Data Privacy: Anti-counterfeit systems need to find a balance between privacy and transparency. Blockchain was designed having transparency and anonymity in mind, while leaving enough freedom for developers to decide on the level of anonymity and transparency Blockchain-based solution should have. Finding the right balance is one of the toughest challenges, as increase in transparency kills anonymity and vice versa. One way to handle data privacy is separating public data that is necessary to validate product from sensitive data. Sensitive data is then encrypted and securely stored off-chain. This way only users who possess eligible identity, such as representatives of governments or controlling organizations, are allowed to read protected data.

To summarize, Blockchain enabled distributed ledger technology can provide a way for large groups of unrelated companies to jointly keep a secure and reliable record of their products and transactions.Reducing costs and time by eliminating the need for third parties that administer ledgers and clear transactions has business benefits that can improve the profitability of blockchain adopters for anti-counterfeiting. The promising features of blockchain is undoubtedly positioning this new technology a means for anti-counterfeiting.

Pragmatic Approaches to Blockchain Adoption

Adoption

As Blockchain Technology is gaining a broader acceptance, one of the lingering problem is on mainstream adoption of new technology. Blockchain as a technology can be used as an exchange network to complete transactions, move value and assets amongst peers on the network without the need for any 3rd party intermediary to validate or maintain these movements, and presumably at a lower underlying fees.

The core principles of blockchain sound great promising the blockchain technology’s viability across many fields with an opportunity to serve part of $3 Trillion global markets as follows,

  • Address part of global remittances which are of the magnitude of $444B annually (2017 world economic forum data),
  • Online/ecommerce payments of $2.1+ Trillion (based on latest data compilation from Invesp),
  • Global micro transactions of magnitude $500B+
  • Think of transactions of 2B+ unbanked people as per World Bank statistics.

While blockchain technology has potential in shaping the various markets and industries, let us dive deeper into finding pragmatic approach to adopting this new technology, key areas of concerns and evolving solutions in an attempt to sustain the innovative edge.

Blockchain adoption approaches:

The anomalies and contraries of public vis-à-vis private blockchain plays an important role in evaluating adoption approaches. The optimal adoption approach of blockchain depends on the nuances within the context of a company or group of companies or industries. The top two characteristics that drive the adoption is utility and speculation. While utility is to do with means of enabling transaction of buying or selling products and services, speculation comes from the investment eye of user/investor in terms of returns expected from adoption of technology. We drive deeper on these characteristics in determining the pragmatic approaches in adopting blockchains.  Refer to my blog page to brush up on basics of private vs public blockchain @ https://akshinthalakk.com/blockchain/

Public blockchain:

“Public Blockchain” offers an ability in maintaining both anonymity and transactional transparency. Most popular public blockchain like Bitcoin blockchain facilitates Monet-over-Internet-Protocol (MoIP) with progressive track record of use cases in B2B payments, remittances, online payments etc. Cryptocurrencies or “Coins” such as bitcoin are just value exchange applications built on top of blockchain technology. Cryptocurrencies were instrumental in demonstrating the power of blockchains and the many applications that blockchains will support and power. Due to technical limitations of Bitcoin blockchain like lack of coding Loops that limits proliferation of distributed applications on Bitcoin and complexities of UTXOx (Unspent Transaction Outputs) that makes implementation of smart contracts tougher, led to other popular public blockchains like Ethereum blockchain. Ethereum enables ease of creation of smart contracts and democratize application on top of underlying blockchain. Similarly the race for privacy has led to other public blockchains like Monero, ZCASH and DASH.  All the above public blockchains underpins both utility and speculation. Utility by virtue of completing transactions and moving assets paying premium for utility with localized cryptocurrencies bitcoin, ether, litecoin, monero etc. and drive speculation with sheer value appreciation of cryptocurrencies over time. Collectively there are close to 900 “Coins” are available to steer the public blockchain adoption by incentivizing the utility and as well as fueling the speculation.

“Blockchain Platform” is another means of driving the public blockchain momentum. Platform allows development of various applications (a.k.a dApps) serving numerous use cases. Any of the above public blockchains can offer Platforms for the development of dApps, but the technical limitations of Bitcoin as narrated above allowing Ethereum to drive the momentum of public blockchain adoption with robust community building applications on the Ethereum platform. Alongside Ethereum, there are a variety blockchain platforms came into brining decentralized ledger technology (DLT) one step closer to the reality. As per the Coinmarketcap.com data, there are more than a dozen blockchain platforms like Counterparty, NEM, NEO, Omni, Waves etc. exists today for the user and business to choose from based on their specific needs of privacy, security, scalability and gas requirements. When adopting to these Platforms, blockchain community got another flexibility in terms of “Tokens”. Tokens differ from cryptocurrencies.  Instead of developing application leveraging native cryptocurrency based public blockchain platforms, nonnative currencies known as tokens can be used to incentivize the utility of the Platform. Such tokens are EOS, TRON which are used as an alternative to “ether” currency on Ethereum platform. Collectively there are nearly 540 tokens available across 13 Platforms as of Jan 2018 that could potentially expedite the adoption of public blockchain. By embracing the full power of tokenization and platforms lead communities to deliver on the full promise of blockchain technology and ultimately, the allure of the public network.

Let us look at potential real life use cases of public blockchains. What if a vending machine that can monitor and report its own stock, and accept bids from distributors and make payments automatically via micro transactions for delivery of new SKUs? Bitcoin acceptance for online payments at many mainstream businesses such as Microsoft, Dell, OpenBazar and Overstock are few real life examples. This is how public blockchain may drive value convergence in future endeavors.

Private blockchain:

“Private Blockchain” becomes relevant if anonymity in transactions is not the top priority for companies or group of companies. Private blockchain can be secured by the familiar model of user rights and secrets that organizations are comfortable with over a longtime while still maintaining many kinds of partial guarantees of authenticity and decentralization that blockchains provide. Another use of private blockchain is for testing and experiment purposes. Private blockchain mainly focus on utility with or in most cases without any incentives and without aiding speculation as there need not to be an underlying “Coin or Token”.

Private blockchain can be started as a first step in blockchain adoption. Enterprises with a private blockchains start operating like distributed databases and notary services, often with very specialized objectives, such as tracking product origin and status. Private blockchain ca reduce transaction costs and data redundancies and replaces legacy systems, simplifying document handling and getting rid of semi manual compliance mechanisms. While private blockchain can be a useful start, but not a permanent solution as at maximum it offers hacker-proof database, where the software replaces a central bank as the intermediary of choice. Another downside is with write permissions being kept centralized to one organization and read permissions may be public or restricted to an arbitrary extent, the owner with a master key defeats the purpose of having a blockchain database in the first place. In a way private blockchain can be compared to an intranet with private LANs or WANs instead of using the public Internet and not leveraging full potential of blockchain technology. Private blockchains typically start with a single application and progressively extended to building interfaces across multiple applications and then extending to bigger ecosystem of cross-company landscape. That being said let us examine some private blockchain examples.

MultiChain is an off-the-shelf platform for the creation and deployment of private blockchains, either within or between organizations. It aims to overcome a key obstacle to the deployment of blockchain technology in the institutional financial sector, by providing the privacy and control required in an easy-to-use package. The other one is MONAX open platform private blockchains.

Federated Blockchains or Consortium Blockchains:

A mid path to public and private blockchain is a federated Blockchain that operate under the leadership of a group or Consortium. As opposed to public Blockchains, they don’t allow any person with access to the Internet to participate in the process of verifying transactions. Federated Blockchains are faster (higher scalability) and provide more transaction privacy. Consortium blockchains are mostly used in the banking sector. The consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which 10 must sign every block in order for the block to be valid. The right to read the blockchain may be public, or restricted to the participants. Examples of consortium blockchains include, R3 for Banks, EWF from Energy, B3i for Insurance, Corda etc.

Vitalik Buterin, co-founder/creator of Ethereum said as follows on private/consortium blockchains:

“The consortium or company running a private blockchain can easily, if desired, change the rules of a blockchain, revert transactions, modify balances, etc. In some cases, e.g. national land registries, this functionality is necessary; there is no way a system would be allowed to exist where Dread Pirate Roberts can have legal ownership rights over a plainly visible piece of land, and so an attempt to create a government-uncontrollable land registry would in practice quickly devolve into one that is not recognized by the government itself….

Blockchain-as-a-Service (BaaS):

While blockchain adoption approaches of public vs private vs federated is an ongoing debate, leading technology providers has started offering blockchain as a service construct in setting up an environment to test and research blockchain adoption approaches leveraging their cloud offerings. Microsoft has partnered with ConsenSys to offer Ethereum Blockchain as a Service (EBaaS) on Microsoft Azure. IBM(BueMix) has partnered with Hyperledger to offer BaaS to its customers. Amazon announced they would be offering the service in collaboration with the Digital Currency Group

In summary..

As enterprises mulls on pragmatic approaches to blockchain adoption, from the above description one can draw few primary approaches to blockchain adoption as described below.

  1. Jump start with ready-to-go public blockchains”. Start developing blockchain using the tools provided by the Ethereum, Bitcoin, Ripple etc. Serves the need of trust less, anonymous, transparent system with low transaction fees.
  2. Leverage ready-to-develop private blockchain platforms”. Get on to blockchain bandwagon leveraging open development tools of MultiChain and MONAX overcoming a key obstacle to the deployment of blockchain technology in the institutional financial sector, supply chain management, asset origination & servicing, claims management etc. by providing the privacy and control required in an easy-to-use package.
  3. Adopt industry specific consortiums in building blockchains”. Leverage the vertical solutions offered by industry specific consortiums like R3 for Banks, Clearmatics for building out financial market applications to streamline payments and clearing and settlement processes etc.
  4. Build-on-demand blockchains with BaaS”. Take advantage of as-a-service models of ConsenSys to try out various scenarios and use cases to evolve the right path of adoption of blockchain technology.

Mindfulness . Leadership . Digital [Part I: Spiritual Trip to India]

Kish2

Recently I had a trip to India what I refer to as “Spiritual Tour”.  Followed by that, while I have been contemplating on the title of the post to summarize some of my experiences from the tour, one title came up for consideration “Being a mindful leader in digital age”. I broke that into 3 words, Mindfulness – Leadership – Digital. Calling it “Spiritual Tour” primarily for a reason that it happened at a time when I was trying to reboot myself in many dimensions and trip covered inspiring places ( to name three Pushpagiri https://en.wikipedia.org/wiki/Pushpagiri_Temple_Complex, Ahobilam http://www.ahobilamutt.org/us/information/visitingahobilam.asp , Chilukur http://www.chilkurbalaji.com/about.html), gave a chance to meet with intellectual gurus, and got an opportunity to try encountering authentic self for a clarity of mind and true purpose. Spiritual tour constituted 10 days of my 3 week India trip. To be candid, this 10 day tour is not a tourist camp or a guided tour but rather a self-directed tour with an intellectual curiosity and little guidance.

Mindfulness:

Day one started with an attempt to be truly myself. Disconnected from routine, no cell phone, no laptop and walking from one place to the other which included not very crowded old temples. As I got into a discipline to be myself, various thoughts started triggering in mind. Once I am on the go being myself, as a next step started realizing importance of bringing myself to the that day, to that minute and to that vey second or minutest part of possible time is important, though found it more challenging. That was kind of a psychological process of bringing my attention to experiences occurring in the present movement. It was a starting point to be Mindful. I started practicing three things with some external guidance.

  • Accepting my thoughts, anxiety and feelings in an attempt to calming down
  • Self-inquiry mountain meditation to better deal with thoughts and feelings of “me”
  • Practicing “self-advocacy” promoting self-esteem inhibiting my true wills for compassion and lovingkindness

The people I encountered here and there were far off from gig economy mindset, but rather people of various walks of life and I have to self-reincarnate to have a true and engaging dialogue with them. And the days pass by and in tandem I started contemplating on “Leadership”. I will be adding more on “Mindfulness” in follow up posts.

Leadership:

The depth and breadth of subject on leadership is vast. My specific self-questioning focused on – what are the most important traits of new-age leadership? Realized that I got into a tricky topic and started navigating beyond leadership styles, decisiveness, awareness, focus, accountability, empathy, confidence, optimism, honesty, and inspiration. Boiled down to two, i) problem solving and ii) communication. In a one-on-one dialogue, a priest asked me two questions,

  • What is a better way to lead life?
  • How to communicate effectively?

After few hours I walked away with my interpretation of responses as follows. As an individual, as a student and particularly as a professional, I have been facing the world with one thing in constant. Progressing in life leading “everything that I come across movement by movement”. Which I call “problem solving”. As a child I developed solving known/unknown problems with decently known or a guided criteria. In an attempt to sustain as a leader in the world, I progressed building an ability solving unknown problems with unknown criteria. Another way to interpret contemporary problem solving is “being a driver in driverless car – – sit tight and avoid the mis-happenings ensuring the success of untested or progressively tested situations”. That struck me as an important trait to be a “leader of lifetime”. What does it mean? That is finding one’s path of solving problems to continue with fulfillment of progress.

Dialogue on communication was very intriguing. I am parking in-person communication to a later discussion, and focus now on remote communication, i.e. communication between two persons not co-located. In late 80’s when I started in college, mode of communication with someone beyond college town was via a letter (a post card or an inland letter) or book a “trunk call” to speak to a person. Telegram was used for an emergency. That mode typically had one to two weeks of lead time to complete one cycle of communication. Later STD/ISD came to availability. Followed by mobile phones – first voice and then voice and data (profoundly email) leading to present era of social media and hyper connected world. Two things changed with this progression. Availability and responsiveness to communicate. Availability has become “round-the-clock” and responsiveness reached to “a near real time” phenomenon. Hence to be a better communicator, one has to figure out,

  • How to be introspective and mindful being highly available (two weeks communication cycle in 80’s shrunk to real time today)?
  • How to be efficient and effective in spontaneous responsiveness?

With respect to availability, I felt to define hours of “productive availability” and figure out a subtle way of deferring on unproductive availability. On responsiveness, I have to be incrementally efficient and effective. As communication becoming constant and spontaneous, I should have an ability to carry a big/holistic picture constantly connecting dots on “strings of communication”. That lead to an important question on, how many strings of communication in parallel and/or in tandem I could handle being productive and effective. Watch out on this! I will add more anecdotes as this dialogue on communication progresses to forthcoming blog posts. Next topic is how Mindfulness and Leadership ties to new digital age? Kish1

Digital:

Towards the last few days of the tour, got into contemporary discussions on life in digital era. We started with a discussion on Indian metropolitan commute. In most of the metros, if one has OLA or UBER app, taxi/cab fare nearly matches to auto fare. So as technology penetrates further increasing adoption levels, people get a better and safer rides realizing a superior value of money. On the other hand, what will happen to Auto drivers? May be with time autos get replaced with cars. Further to this, what if driverless cars becomes reality? Drivers either find alternative ways or get reskilled to endure. In view of leading life in digital age, we touched on the following three topics

  • Survival of the fittest – man (human) vs machine
  • How far we can raise the bar on being insightful from data and information?
  • What is the ultimate goal of digital world?

I need a separate post to touch enough on these topics and hold my thoughts to share in next post.

In a nutshell, my “spiritual tour” is very refreshing and I am planning to budget time and resources to repeat such tours periodically to “self-reboot” finding my path of solving problems attaining fulfilment of progress continuum.

Welcome your comments and thoughts.