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Monday, August 22, 2016

TelcoFuturism: Initial thoughts on Blockchain

An area I'm currently researching, as part of my ongoing analysis of telecoms/futurism intersections is Blockchain. (See here for an intro to what I mean by telcofuturism)

For the uninitiated, Blockchain (abbreviated here to BC) is the technology underpinning Bitcoin and other cryptocurrencies. It's a way to create distributed, secure, unchangeable, peer-to-peer databases for "trust" and transactions/applications which require it. It removes the need for central coordination and storage to prove that you own/bought/sold/transferred things, and stops the "double-spend" problem of digital copying of things like e-money. This is potentially great for finance, where a lot of cumbersome back-office processes could be made hugely more efficient.

When more extensive definitions of "trust" are considered (eg authentication of documents or relationships), it potentially has the ability to dis-intermediate all sorts of other existing businesses and even government functions, beyond just banking and digital money. There are tons of books, conferences and think-pieces about BC, from everyone from FinTech disruptors to governments to major IT and auditing companies. It's definitely a "thing" at the moment.

However, it is debatable whether some of the more far-fetched concepts presented are truly visionary - or sci-fi hype peddled by people who are less-than-objective wishful thinkers. It could become as important and ubiquitous as electricity, semiconductors or the Internet - or else it could just be an interesting platform for diverse applications, but not really a global "game-changer". 

An historian from the year 2100 might point to Blockchain as the most pivotal enabler of the restructuring of global business and society - or else it might be a minor footnote to the much-larger impact of other innovations around AI, CRISPR gene-editing and nanotechnology.

I'm trying to look at Blockchain through the lens of telecoms, networks, communications and cloud platforms. I can't really comment on the full impact on banking or manufacturing or property markets.... but I think I have an idea of the practicalities for telcos to deploy blockchains, and also the realities of networks as they might apply to other use-cases.

I haven't yet reached firm conclusions about the most important use-cases for blockchains in telcos & other communications infrastructure, or the probable timelines, but I'm starting to develop some initial hypotheses. There's some good arguments about BC's use in billing systems, IoT/network registration and control, vertical-market services in finance and healthcare, and perhaps integral network/OSS functions. I can also see it dovetailing with eSIM, cloud/PaaS platforms and numerous other niches in telcos, enterprise comms/UC domains and beyond.

I'm cautiously positive about the technology, rather being than a full-on religious convert and evangelist, as some Blockchain advocates seem to be. I don't buy into the notion that it's going to magically remove all intermediaries from all areas of human interaction, and lead to some anti-capitalist utopia/dystopia (delete according to taste) where middlemen no longer have roles to play.

I see a few major problem areas and "gotchas" emerging, that lie between the vision and possible reality, especially in the medium term:
  • Often, blockchain is suggested as the "missing piece of the puzzle", after which a new low-friction process, or entire new industry can be born. Yet in many cases, it isn't transaction cost, or cumbersome trust arrangements that are the "gating factor" stopping deployment adoption today. There are other practicalities involved too - perhaps regulation, business model, customer preferences and loyalties, or 100 other factors. For instance, the idea that everything to do with IoT just needs a sprinkling of Blockchain pixie-dust, for trillions of dollars of value to be released, on interoperable open-source style platforms, is pure hyperbole. It might be desirable - even necessary - but it's certainly not sufficient for many things to take off.
  • A fair amount of envisaged blockchain use-cases require perfect, ubiquitous connectivity. That might be OK for banks and fintech companies using multiple data-centres and redundant fibre links, but it doesn't work well for mobile/wireless which is not going to be ubiquitous any time soon (if ever). Unless the applications have some way of dealing with "offline mode", or patchy/intermittent connections, that's a major obstacle.
  • Some blockchain architectures have significant time-lags involved, due to processing for verification and permanent storage/encryption ("mining" etc.) That's fine for things which operate on a scale of minutes/hours/days - say transfers of property deeds - but not ideal for network operations that involve subs-second decisions. As we move towards 5G and "millisecond latency" critical applications, this becomes even more imperative.
  • Blockchain applications will need to "play nicely" with all sorts of other technology trends, such as distributed clouds, telecoms NFV/SDN architectures, third-party PaaS, integration with legacy systems, security gateways, policy-managed networks (can they spot, block or prioritise BC data flows?), AI and machine learning creating unpredictable or novel transactions/interactions and plenty more.
  • Many suggested blockchain use-cases ignore what might be termed "immovable obstacles". It's all very well having a BC-based wireless mesh network, but if it's ignored by the companies owning big chunks of licenced spectrum, and creating non-BC back-office functions, it's a bit of a waste of time. The same thing applies to regulations, taxation and assorted other slow-moving areas of bureaucracy. It's all very well suggesting that your house can act as an autonomous business, renting out the WiFi to passers-by all by itself when you're out, and using the payments to pay the utility bill - but that my well cause consternation among people who tax and regulate such things. Other ideas - such as micropayments for IoT sensors selling weather data by themselves - sound great until people realise that the billing systems only support 2 decimal places, or ask the user to click "OK" or answer a captcha. There are many, many devils in the detail.
  • A lot of the rhetoric seems to suggest that everyone wants a completely peer-to-peer, decentralised, no-intermediary, no-brand economy. However the evidence seems to suggest that humans actually quite like intermediaries for many things and are prepared to pay for them - Apple running an appstore, curators for a museum, editors and brand for a news service and so on. Add in the clear need for designers as the new uber-class of intermediaries, and the over-riding importance of UX in any situation, and the "fully automated world" seems even less plausible.
None of this means that blockchain based services are a bad idea, or irrelevant to telcos and network/software vendors. There are, undoubtedly, many important and possibly huge opportunities in blockchain-based telcofuturism.

But at the same time there is a lot of hype. Outside of financial services, we're still mostly at the napkin-diagram/Powerpoint/very-early prototype stage of telecom/BC use-cases. I'm hoping to get some more clarity over the next few weeks - and will try to assemble a realistic timeline that blends vision and pragmatism for comms and network applications.

Please get in touch with me if you'd like to discuss Telecoms + Blockchain combinations. I can be reached via information AT disruptive-analysis DOT com, or via Twitter or LinkedIn.


InfoStack said...


Are you looking at the concept of fat protocols?

Much as with your question/criticism of distributed vs centralized, it seems the proponents of fat protocols never contemplate the layer below them. Merely above them.

It's inconsistencies like that that lead me to question their fundamental soundness.


emsdesigncompany said...
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