Blockchain offers a radical alternative to the data ownership war by creating a public data marketplace, says Lawrence Lundy, head of research at Outlier Ventures.
OPINION It’s well understood that there’s little economic incentive for most people to do much more than give their data away for free.
However, one of the promises of blockchain is to unpick this problem, by offering a data layer that is capable of fulfilling the original decentralised vision of the internet.
Blockchains: the new data infrastructure
Arguably, public blockchains are in some ways worse than existing databases. They are slower, have less storage, use more energy, and are less private. But these are design choices made to improve one feature: censorship resistance.
This resistance is against both governments and private companies. For cases in which state censorship or corporate control of core infrastructures must be avoided it is worth using public blockchains. For example, is it a good idea to allow Uber to control all public transport, Amazon to control all logistics, or Google to have control over all genomic data?
In today’s digital world, data is power, and therefore ownership and control of data is ultimate power. When all communications, money, and healthcare becomes digital, the data infrastructure will be too powerful to be controlled by one nation or company.
And the good news is we now have the tools to ensure that no single entity controls data in that way.
A data Airbnb
Never has so much data been available for collection and analysis. But the challenge is that everyone wants it. As sensors are embedded in everyday objects, and as we move to a world of ubiquitous computing, everybody is fighting to ‘own’ the data. But that is yesterday’s war.
Global data infrastructures should be a public good, and they can be using blockchain.
Blockchains are an open-source, shared data layer in which everyone can view and edit data based on pre-agreed rules. Creators of data will own their data and use blockchain and other decentralised technologies to rent and sell that data in much the same way they rent spare rooms on Airbnb.
At the start of 2018, we are beginning to see the emergence of this new data infrastructure. We aren’t there yet: we still need to process more transactions, at faster speeds, and use less energy in doing so.
Data needs to be private, but stored in an accessible way, and shared across different blockchain flavours. This will ultimately provide the foundation for a new, global data marketplace.
Individuals, organisations, and machines will be able to buy and sell data on a public market, finally providing a business model for data creators rather than data hoarders. And, via this system, both individuals and organisations will be able to use data exchanges to earn money by sharing data.
As more data comes online, we expect increasing amounts of it to be accessible to data scientists and AI algorithms, enabling greater access to AI, and reducing the barriers to entry.
Blockchain-based data exchanges will provide the infrastructure for individuals, organisations, and machine data creators to sell their data.
The end of digital monopolies?
2018 is seeing the birth of this global data-sharing and monetisation network. Data creators will begin to earn money from uploads, Likes, retweets, and steps. This is a far more profound change than it may seem.
Blockchain-based networks won’t just disrupt particular companies; they will go much further by disrupting a digital norm: the assumption that we should be giving away our personal data for free.
Digital monopolies, including Facebook, Google, and Amazon, get data from users for free. Every Like, search, and purchase feeds the learning system to further improve the algorithms; in turn bringing in more customers and engagement.
In value chain terms, data is supply, and AI algorithms are demand. Digital monopolies are searching everywhere for more and more data to feed their algorithms.
This is the real reason Facebook bought WhatsApp and Instagram, and Microsoft bought LinkedIn; and it’s why Google is investing in self-driving cars and Google Home, and Amazon has produced its Alexa Echo and Dot.
Blockchains and decentralised public infrastructures change this game. Blockchains reduce the value of hoards of private data. They make proprietary datasets much less valuable, because as more and more machines, individuals, and organisations use a public data infrastructure, a global data commons becomes more attractive to data sellers.
As this data commons grows with more datasets, it will attract more data buyers, creating powerful network effects.
In other words, data becomes more of a commodity; and it is no longer the more valuable point in a market. As a result, firms that control the supply – i.e control data – no longer dominate markets.
As data becomes less valuable to those organisations, the customer relationship will become more important. Startups and incumbents alike will compete for customers’ data based on trust.
The global data commons will also mean that individuals can choose where their data is sold or rented. At first, this will attract individuals that care about privacy and self-sovereign data. However, machines will soon follow as their operators and owners look for new revenue streams.
Some organisations, especially in the public sector, will be attracted by the non-corporate-controlled nature of this decentralised infrastructure, as well as by the cost and liability reductions in not storing consumer data.
Smaller organisations and startups will sign up to access standardised data that would otherwise take too long, or cost too much, to acquire.
Disrupting the disruptors
Today, most data is siloed with no business model for data creators to monetise it. However, blockchain technology and other decentralised systems are emerging as a new data infrastructure to support machines, individuals, and organisations in getting paid for the data they generate.
Disruption comes in many guises. For Google and Facebook, disruption will no longer come from some upstart they can acquire: it will come from the move away from a centralised model of data ownership, by which they have grown powerful, to a decentralised, collective model of data sharing.
Ultimately, this will lead to the downfall of digital monopolies that are only powerful because they collect and control more data than anyone else. Blockchain-based data infrastructures, including data exchanges, will commoditise data and help to realise the vision of a global data commons.
Internet of business says
Lundy makes a persuasive and attractive case, as many are currently doing.
The underlying issue is consent – consent as a new currency for the digital age. Whether the mechanism for delivering that is blockchain, or a personal API in which the terms of our consent can be managed as a form of digital rights – citizen data-backed CSR, perhaps – its proponents believe such a system would prevent hyper-companies from owning the data keys to everything.
Whether these visions of self-owned digital identities (aka the quantified self) are Utopian, or are being speculated on by investors who fail to hedge against the new system being abused, is a moot point. For just such a radically different view, check out this article in The Atlantic, which suggests that blockchain could beat a path toward forced behaviours and a new authoritarianism.
What do our readers think?
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