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By Gowthaman Ragothaman, CEO of Aqilliz
Published on April 10, 2019
Internet is the information backbone of our society today. The cost of building this backbone is being subsidised by the information that is shared on it. This subsidisation is the symbiotic relationship between those who build the backbone and those who manage the information on it. In this symbiotic relationship, information is traded for a value which is then exchanged for dollars. Society, at large, is benefitting from this value exchange and hence emerged the business of building platforms and the rise of internet intermediaries.
This value exchange is now under stress for two reasons. Firstly, the information that is being managed does not have any central authority, leading to its rampant abuse. This abuse is across all forms - news, views and entertainment. Secondly, the backbone does not have a common spine resulting in a large and fragmented technology ecosystem. Abuse of the very information that is subsidising the investment to build the backbone, which in itself is getting increasingly fragmented is a sure-shot recipe for disaster.
This disaster, for starters, is manifesting in the form of an asymmetric exchange of value between the consumers and the platforms. Even as the society (read consumers) is coming to terms with the reality that their privacy is being traded off for supposedly relevant and inexpensive content, platforms are balancing advertising dollars with subscription income to generate better content that builds their own consumer base. In between these two constituents are the marketers, who are assessing the real value of their advertising investments on these platforms, both across short term sales and long-term brand value. As the share of overall dollars on the internet crosses the 50% mark, the exchange of value between marketers, platforms and the consumers will become even more asymmetric. In essence, there will be no homogeneity to the value that is being exchanged between these three constituents.
There is a need to govern this value exchange for the larger benefit of the ecosystem. Distributed Ledger Technology (DLT in short) has the promise and the potential to do this. Blockchain (DLT) is to value exchange what internet is to information exchange. Due to its very nature, it is secure by design and relies on well-known cryptographic tools and distributed consensus mechanisms that governs persistence, anonymity, fault-tolerance and auditability. It can be made equally, resilient, with self-executing contracts that are enforced and executed by consensus. Some of the challenges with public blockchains like controlled data reversibility, limited data privacy, lack of scalability of transaction volumes, low system responsiveness and restricted protocol updatability can be overcome if we consider a consortium blockchain, instead.
The primary objective of the consortium blockchain is to govern the asymmetry in the value exchange between consumers, platforms and the marketers. Members from across all the three constituents participate in the network through their own client node. Each node can have a copy of the whole linked list. This network will be permissioned with only accounts that are restricted for access to ensure data privacy. Data can be encrypted at a transaction level to control visibility. Identity of the participants can be defined by their cryptographic asymmetrical key pair. This is the new ecosystem. Decentralised. Autonomous. Safe. Secure.
Consortium Blockchain combines the benefits of bringing transactions’ efficiency and privacy of private blockchain and the decentralized governance of the public blockchain. There are 5 distinct benefits:
1. Eradicate information abuse
An interconnected network developed, maintained and updated by the participants for their benefits on a common ground that is safe, neutral, disintermediated and universal is good for all. Data structures corresponds to a linked list of blocks with a pointer to the previous block embodying its hash value. This helps in tracing, managing and monetizing data and it need not be homogenous among consortium nodes. Data traceability also builds trust all across the ecosystem.
2. Managing the fragmented technology ecosystem
A decentralized infrastructure on multiple hardwares managed by different owners will help bring down technology costs for all the constituents. It also provides the much needed systems inter-operatability for process automation and brings down domain silos, creating conditions for process standardization through shared data, smart contracts and governance amongst the constituents within a domain or from different domains. This also helps marketers and platforms in understanding the customer journey a lot better. Build user base. Provide better value.
3. Token based ecosystem for shared governance
Tokens help materialize governance rules and maintain equilibrium amongst the participants. It also helps in managing and growing the ecosystem by leveraging digital assets, a lot better, not just tracking and monetizing but also in a safe and secure manner. Members share the authority and they can come to an agreement and alter previous blocks which helps in managing identities securely. They can also periodically publish the hash of a block onto a public blockchain to preserve auditability. These tokens are NATs (Native Alliance Tokens) only and will not be traded as a currency.
4. High throughput
Reduced complexity in the consensus protocol directly increases the scalability in terms of transactions throughput. Equally, since forking is not allowed there will be an increased system responsiveness for real time management. The ecosystem will be able to synchronise the software of known participants to mutually agree on upgrades, which today is the biggest bug-bear as its involves repeated manpower training and upskilling. Since each node participating to the blockchain has a local virtual machine (that executes smart contracts), it is helpful in delivering efficiency across the ecosystem.
5. Flexibility for service enhancement
Access to more shared data and more standardized processes helps the constituents focus their time and effort on building their own core competency and domain differentiation, in developing new features and services, that are both time-bound and campaign specific and/or sustainable long term personalized services. This helps in building proprietary products and services for all the member constituents.
At a time, when there are debates about the pros and cons of in-housing, consortium blockchain helps take a fresher look at the overall ecosystem. It is not about disintermediation. It is not about consultants eating agencies’ breakfast either.
Sooner we address this, better will it be for all the stakeholders. And the society at large as well.