Say Goodbye to the Middleman! How Blockchain is Disrupting the Trusted 3rd Party Industry

6

October

2016

3.67/5 (3)
Blockchain and its applications in headlines
“In a report fromWorld Economic forum published in August 2016, it was predicted that 80% of the banks all over the world will have the Blockchain technology in use within the next year. Around $1.4 billion have been invested in the technology over the last 3 years and 90 central banks are exploring the uses of the technology.”
“The Crown Prince of Dubai announced yesterday that it wants all government documents on Blockchain by 2020.”
“This week, J.P. Morgan announced that it is developing its private blockchain network, Quorum, developing systems on Ethereum.”
“The Republic of Estonia e-Residency platform is partnering with Nasdaq to test blockchain for e-voting system to streamline proxy voting process.”
“Sydney Stock Exchange Completes Blockchain Prototype
“IBM Invests $200 Million in Blockchain that will enable sharing of IoT data in a secure private blockchain. (IBM, 2016; Crypto Coins News, 2016)”
“MedVault, the top prize winner of blockchain hackathon in November 2015, is a company that showed proof-of-concept that allowed the medical patients keep their medical history securely with rules created to control the access rights in various cases.”
These are just some of the recent headlines concerning the applications of blockchain. For financial services industry alone, the cost reduction in clearing and settlement costs are predicted to be reduced by 30% resulting in $16 billion saving industry wide (Autonomous, 2016).
So what is this Blockchain technology making the headlines?
centralized decentralized distributed
Source: Autonomous Research
Blockchain is a distributed database that maintains a continuously-growing list of records called blocks that are secured from tampering and revision. Each block comes with its own timestamp and needs to be accepted by each party.
These blocks and records of the database are shared among the participating parties of the network. When a new transaction is to take place, an exact copy is sent to all parties to validate it before it can be executed. As there is a network approval, transactions become more secure and ultimately discard the need of a central authority to govern the transactions. (WSJ, 2016; Business Insider 2016)

The blockchains cannot be altered. For any revision to take place, it must be approved by all network participants. Even then, once it is approved, the revision will be taken note of and an  additional timestamp and information block will be recorded, attached to the original one.

Arvind Krishna, the senior vice president and director of IBM Research claims that depending on the approval conditions, the transaction settlement time could happen in an instant and save time time for transactions, that may have taken from 3 to 30 days otherwise.

Blockchain Explained 
How it Works?
Any digital transaction has simultaneous two main problems: control of information integrity and avoidance of duplicates.
Four principal parts of information in a block (as depicted in the figure 1) :
  1. An ID, called consensus identifier, “proof of work” or “hash”. It is a random set of encrypted numbers.
  2. The proof of work from the previous block, which establishes the chronological sequence in the ledger
  3. Transactions contained in the block. They may vary from 1 or hundreds or thousands of transactions.
  4. Public key (identities) for the sender and receiver to identify the transfer of information.
Screen Shot 2016-10-05 at 21.04.11
Source: Autonomous Research
Encryption and Security
The difference among the traditional databases and distributed ones is that in the case of the former, each party would keep their own transaction records, administrated by their individual methods – potentially having discrepancies among the parties involved in transactions. Furthermore, if a hacking attack were to occur, it would typically involve an attack to the whole system which often have one unified layer of security for access. Which translates to that once the hacker is in, they have access to all the information in there. In contrast to that, every single message and exact transaction of the ledger is shared among participants and each blockchain is encrypted by a complex algorithm. Thus, giving an additional layer of security for each transaction.
Disruptive Potential
According to PwC view (2016), the blockchain technology has the potential to disrupt not only the traditional payments system but also an extensive variety of transactions.
The technology may be used in a number of industries and applications that require a verification by a third party or anywhere where records are stored digitally. Some of the examples from the financial industry are: transfer of digital and physical assets, verifying chain of custody and protecting intellectual property. As the technology encrypts every one block of transaction, it proves to be a highly fraud resistant system enabling the protection and authentication just about any type of transaction. In the times of cybercrime and rigorous regulatory requirements, such system has a potential of a revolutionary influence of the financial services industry.
Blockchain and Smart Contracts could disrupt just about any industry that currently makes use of a 3rd party intermediaries to ensure trust. For other industries, it may be a safe way to store information securely online – such as in case for governments or any sensitive enterprise information such as customer data or data collected from Internet of Things sensors. European Union is currently reviewing the use of blockchain technology for voting purposes, with Estonia taking practical initiatives to test the real life use of it.
Benefits
The benefits for an average person are security, convenience and time savings. If you transfer money internationally, the transfer in future may happen within seconds, not days. If you would like to vote in government elections, file a tax return or review your medical records, all you would need is to authorize yourself in the digital environment, at your fingertips in your own time and comfort.
What are your thoughts on Blockchain technology? How do you think this technology will disrupt the industry?
References
Autonomous (2016) [online]
Accessed at: http://www.autonomous.com/fintech/d9335db1-bf1a-4ab2-8d1d-a36cb747a6aeBusiness Insider (2016) What is Blockchain [online]
Accessed at: http://www.businessinsider.com/what-is-blockchain-2016-3?international=true&r=US&IR=T/#and-it-could-create-a-huge-amount-of-value-for-the-top-wall-street-banks-thats-why-theyre-so-interested-in-the-technology-6Coindesk (2016) Dubai Government Documents Blockchain Strategy 2020 [online]
Accessed at:  http://www.coindesk.com/dubai-government-documents-blockchain-strategy-2020/Crypto Coins News (2016) IBM Invests $200 Million in Watson IoT Blockchain Development [online] Accessed at: https://www.cryptocoinsnews.com/ibm-invests-200-million-in-iot-blockchain-development/Fortune (2016) Building a Blockchain Ethereum Quorum [online]
Accessed at: http://fortune.com/2016/10/04/jp-morgan-chase-blockchain-ethereum-quorum/Futurism (2016) Say “Hello” to Quorum, J.P. Morgan’s Private Blockchain Network [online]
Accessed at: http://futurism.com/say-hello-to-quorum-j-p-morgans-private-blockchain-network/Garfinkel, H. (2016) Blockchain Startups That Get It [online]
Accessed at: https://www.linkedin.com/pulse/blockchain-startups-get-haskell-garfinkel?trk=prof-postGarfinkel, H. (2016) Why Should Financial Services Industry Pay Attention [online]
Accessed at: https://www.linkedin.com/pulse/why-should-financial-services-industry-pay-attention-latest-haskell-1?trk=prof-postGulf News (2016) Dubai Launches Blockchain Strategy to Become Paperless by 2020 [online]
Accessed at: http://gulfnews.com/news/uae/government/dubai-launches-blockchain-strategy-to-become-paperless-by-2020-1.1907790IBM (2016) [online]
Available at:  http://www.ibm.com/internet-of-things/iot-news/announcements/private-blockchain/Wall Street Journal (2016) CIO Explainer What Is Blockchain [online]
Accessed at: http://blogs.wsj.com/cio/2016/02/02/cio-explainer-what-is-blockchain/Pwc (2016) Q&A: What is blockchain? [online]
Accessed at: http://www.pwc.com/us/en/financial-services/publications/viewpoints/assets/qa-what-is-blockchain.pdf
Wall Street Journal (2016) J.P. Morgan Has a New Twist on Blockchain [online]
Accessed at: http://www.wsj.com/articles/j-p-morgan-has-a-new-twist-on-blockchain-1475537138World Economic Forum (2016) The Future of Financial Infrastructure [online]
Accessed at: http://www3.weforum.org/docs/WEF_The_future_of_financial_infrastructure.pdf

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Smart Cities – How Will They Change our Lives? And How Do I Participate?

2

October

2016

4.5/5 (4)

Smart homes, smart cars, smart society, smart mobility, smart energy, smart building, smart care, smart heath, smart cities, smart everything..

What is a smart city?

“We envision a world where digital technology and intelligent design have been harnessed to create smart, sustainable cities with high-quality living and high-quality jobs. “ (Smart Cities Council, 2016)

Smart city is a city that uses information and communication technology (ICT) and Internet of Things (IoT) solutions in a secure manner to manage a city’s assets. It is influenced by population growth, technological advancements, climate change, among many others. Smart city initiatives involve various sectors, with main fields being energy, waste, traffic, pollution, health care and urban landscape. Municipalities, businesses and communities around the globe: New York, London, Amsterdam, Seoul, India are working toward shaping the future of more advanced, efficient, interconnected and smarter cities. According to the European Union initiative for Smart cities, the estimation of the market size is €1.3 trillion in 2020 (EU SmartCities, 2016).

What defines a smart city?

Four factors proposed by Deakin & Al Wear:

  1. The application of a wide range of electronic and digital technologies to communities and cities
  2. The use of ICT to transform life and working environments within the region
  3. The embedding of such ICTs in government systems
  4. The territorialisation of practices that brings ICTs and people together to enhance the innovation and knowledge that they offer.

What are the main drivers of smart cities?
One of the main driving forces of smart cities is urban population growth. In the USA alone, 62.7% of inhabitants live in cities which occupy only 3.5 % land area (US Census Bureau, 2015). The urban population in the Netherlands is currently at 90%, in EU 75%, in North America 82% and Worldwide 54%. The worldwide urban population has increased by 72% since 2000 and the trend is here to stay (Worldbank, 2015).

Another major force is the technological development. This includes:

  • Smart grids – controlling the production and distribution of the energy; smart meters, renewable energy, smart networks
  • Internet of Things sensors applied everywhere in the city
  • Open Big Data initiatives – to allow smarter solutions to be developed

The sectors involved are: energy, waste, online government systems, transport and traffic in the city, health care, water, urban landscape, climate change, economic restructuring, online retail & entertainment and urban population growth.

Which cities are taking part in this?
Cities and governments all over the world have started initiatives to become smarter. Notable examples are below:

  • Amsterdam has started a platform Amsterdam Smart City
  • New York has started its “Building a Smart + Equitable City” plan (NYC.gov, 2015)
  • London has open data platforms (London Data Store, 2016)
  • Barcelona hosts the yearly Smart City Expo (Smart City Expo, 2016)
  • India has started its smart cities platform
  • Seoul has set plans to become a Smart Economy city by 2020
  • Tel Aviv won the Smart City Award in 2014 (Israel Ministry of Tourism, 2015)
  • European Union has started Europe’s Digital Agenda and Digital Single Market with aim to provide a platform for digital union of the participating countries (EU Smart cities, 2016)

 

Ok, but how does this impact me?
What are the applications of smart cities?

Some of Smart Cities’ future applications include:

  • Smart Energy: Producing and distribution of (renewable) energy; and efficient use of city lights
  • Smart Mobility: Real time help in finding free car parking, city bike and e-charging spots; and predicting and regulating traffic to avoid traffic jams
  • Using heatmaps to see most “popular places” in the city
  • Use of Smart cards – for transport, parking, public places to collect data
  • Citizen online identity that enables citizens to do their paperwork online: file your tax return, change address in a city hall, enroll in a study, among others
  • Pollution sensors
  • Open Big Data – sharing of the publicly available data to optimize
  • Smart Building: urban planning and waste management

Ok, but do I have a say in this?
The visionaries and planners of the smart cities acknowledge that the future and viability of the smart city solutions is in part dependent on the society’s acceptance of its developments. As such, governments and municipalities encourage active community participation. Do you want to shape the future of smart cities? Become active now – one of the options – submit your ideas and projects to amsterdamsmartcity.com!
Some current ideas include renewable energy sharing, open data, amsterdam innovation hub, smart light, green living lab, IoT lab, hackable city project among many others! (Amsterdam Smart City, 2016)

For those of you interested in Big (Open) Data:

  • Amsterdam Open Data: www.data.amsterdam.nl
  • London City Open Data portal:https://data.london.gov.uk/
  • NYC Open Data: https://nycopendata.socrata.com/ and https://data.ny.gov/
  • Harvard Data Smart City Solutions: http://datasmart.ash.harvard.edu/

Challenges you can take part in:

  • Next Energy Challenge https://www.nextenergy.org/nextchallenge/
  • Submit Your Research Paper on topics: Smart Cities, smart networks and Smart Grids for Special Issue of IEEE Sensors Journals
    http://ieee-sensors.org/wp-content/uploads/2016/08/2016_07_29_CfP-Special-Issue-on-Smart-Grids-Smart-Cities.pdf

Security & Privacy

Wow.. our cities are becoming smarter and ever interconnected, how thrilling is that!? But with being digital and online comes also the concern for security and privacy. As.. (almost) anything that is digital can be hacked, cybersecurity will become more important than ever. If a hacker can get into the WiFi that communicates with these sensors, he may just be able to control them.. And..what happens with our privacy? When there are sensors cameras literally everywhere? Will we experience The Truman Show kind of scenario? Will we live knowingly that every step we take is observed by NSA? These are questions that shall not be forgotten when designing the smarter cities. They are a concern for every one of us.

Smarter cities are in the making worldwide. Technology, IoT sensors, smart grids and data analytics are at the core of it. We are getting closer every day to higher living standards, more efficient cities and more advanced economies. More open data sources are becoming available for researchers. Cybersecurity importance increases.
Do you think you can contribute to make this system better?
You can be part of the smart city movement and shape the future of your city!

 

Bibliography:

Amsterdam Smart City (2016) [online]
Available at: www.amsterdamsmartcity.com [Accessed 20 Sept. 2016]

Data NY (2016) [online]
Available at: https://data.ny.gov/ [Accessed 20 Sept. 2016]

Deakin & Husam (2011) From Intelligent to Smart Cities [online]
Available at: http://www.tandfonline.com/doi/abs/10.1080/17508975.2011.586671  [Accessed 20 Sept. 2016]

EU Smart Cities (2016) [online]
Available at: https://eu-smartcities.eu/about/european_context  [Accessed 20 Sept. 2016]

European Commission (2016) Digital Agenda [online]
Available at: https://digital-agenda-data.eu/ [Accessed 20 Sept. 2016]

European Commission (2016) Digital Single Market [online]
Available at: https://ec.europa.eu/digital-single-market/en [Accessed 20 Sept. 2016]

Government of India (2015) Smart Cities [online]
Available at: http://smartcities.gov.in/ [Accessed 20 Sept. 2016]

Harvard (2016) Data Smart City Solutions [online]
Available at: http://datasmart.ash.harvard.edu/ [Accessed 20 Sept. 2016]

IEEE (2016) Special Issue on Smart Grids Smart Cities [online]
Available at: http://ieee-sensors.org/wp-content/uploads/2016/08/2016_07_29_CfP-Special-Issue-on-Smart-Grids-Smart-Cities.pdf [Accessed 20 Sept. 2016]

Israel Ministry of Tourism (2015) Tel-Aviv wins first price in world smart cities award [online]
Available at: http://www.goisrael.se/Tourism_Swe/General%20information/news/Sidor/Tel%20Aviv%20wins%20first%20price%20in%20World%20Smart%20Cities%20award.aspx [Accessed 20 Sept. 2016]

London Data Store (2016) [online]
Available at: https://data.london.gov.uk/ [Accessed 20 Sept. 2016]

NYC.gov (2015) Building a Smart + Equitable City [online]
Available at:  http://www1.nyc.gov/assets/forward/documents/NYC-Smart-Equitable-City-Final.pdf [Accessed 20 Sept. 2016]

Seoul Metropolitan Government (2016) 2020 Smart Economy City Seoul [online]
Available at:  http://english.seoul.go.kr/policy-information/economy/seoul-economy/1-2020-smart-economy-city-seoul/ [Accessed 20 Sept. 2016]

Smart Cities Council (2016) [online]
Available at: http://smartcitiescouncil.com/article/about-us-global [Accessed 20 Sept. 2016]

Smart City Expo (2016) [online]
Available at: http://www.smartcityexpo.com/en/ [Accessed 20 Sept. 2016]

US Census Bureau (2015)  U.S. Cities are Home to 62.7 Percent of the U.S. Population, but Comprise Just 3.5 Percent of Land Area [online]
Available at: http://www.census.gov/newsroom/press-releases/2015/cb15-33.html [Accessed 20 Sept. 2016]

Image Credits: eMunicipality (2016) Smart City European Perspective [online]
Available at: http://www.emunicipality.com/city-smart-city-european-perspective  [Accessed 20 Sept. 2016]

 

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