Blockchain and Distributed Ledger Technologies in the new decade for data privacy and sovereignty

Introduction to Blockchain and distributed ledger technologies investors

Signature Ventures is a research-driven VC fund for early-stage blockchain and distributed ledger technologies start-ups. Their focus is on European start-ups, but they also look at worldwide companies. Blockwall is a VC platform, with a fund active in the market since 2018, focused solely on decentralized technologies and their applications in the evolution of the Internet and equity investment. Simply put, companies that apply and use Blockchain or distributed ledger technologies. Blockwall focuses on early stage pre-seed to series A investments, also mostly in Europe. Maven 11 was created in 2016 and since then they invest in pre-seed to seed phase in early stage companies in blockchain and distributed ledger technology. Tom Trowbridge has a different background. He is the co-founder of Fluence Labs, an open source distributed computing protocol and software licensing system, and former president of Hedera Hashgraph, which had received funding from Blockwall.

Just a few years ago, blockchain and distributed ledger technology companies started to appear everywhere on the market. Today, this infatuation is not so strong.

What are the most relevant applications for blockchain and distributed ledger technologies today and tomorrow?

Juri explains that they usually look at blockchain in 3 layers. There is a requirement for a fundamental layer for base solutions, then there is a second layer of innovation which is at the interface, and interacts with the fundamental layer, and then there is a third layer where the user accesses the blockchain through the interface and they usually do not know if they are using a blockchain or not. Currently, they start to see positive renewal mostly in applications It is important to know where we stand at the moment. Then we need to create categories within these layers: base layers or pure protocols or privacy/scalability enhancing layers, on the infrastructure side or the development tools you find things like wallet exchange, custodian solutions on the interfaces. All sorts of new applications can be found in digital identities and even in gaming .

Dominic agrees with this 3-layer scheme. Blockchain is more of a back-end revolution as opposed to the internet which was a UI/UX revolution, and that influences B2B business models. The technology has so far been built bottom-up, and it’s reaching the point where it needs the feedback of market needs. But sometimes, start-ups don’t realise the long time frame there is before adoption by a large corporate, with long cycles going from 18 to 24 months until they go into use. Companies are still testing it; this is very long and therefore this adoption phase ends up being  quieter than expected despite the initial hype. And we have to stop talking about use cases and start talking about real business cases, to highlight the gain in terms of efficiency and cost improvements. We invest in both decentralized networks and equity. Some mechanisms work especially well and not on the other: for instance, designing token economics.

To Balder, “it’s good that the hype has died off. We have the time in our industry to focus on very important topics, like scalability, solvent privacy, UI/UX”.

The underlying trend is extremely strong and is in one of these use cases of Blockchain and distributed ledger technologies usage which will probably be there for the decades to come. It’s very early stage still. Slowly but surely, corporates are starting to build on this basis of blockchain.

According to Tom Trowbridge: “Scalability will drive use more than use will drive scalability”.

Once you have real scalability that’s functioning, use cases start to become apparent. In the current state you can’t look at where we are right now and make predictions. When we were holding a Nokia phone, we couldn’t have predicted Uber, Airbnb, etc. Back then, there was not enough processing power, bandwidth, the maps. This advancement needed to appear in order to enhance the creativity and to become really usable. What we take for granted right now started in competitive crowded spaces.

What would be a good business model for token?

The bitcoin network for example, is designed in a way that the token itself has all the value. But if there is a model where they are producing their own token, and having a parallel equity case next to it, from an investor’s point of view, you always want to know where the value comes from, and what is the sense of the token itself. According to Dominic it’s always about the market you are trying to address and the features you want to cover in that token.

What role do Blockchain & distributed ledger technologies companies have in ensuring greater data privacy and data sovereignty?

Looking at European Projects for example, Juri explains that to him, it is always coming from above, basically telling people “now we have to do these specifications”, they provide a great framework, with the GDPR I’m not sure that they are providing a good environment to build it. Dominic on his side explains that GDPR was an answer to a bigger problem, which wasn’t changeable in any other way because the technology was not ready. But Blockchain can definitely help implement that.

Data privacy and data identity is the backbone of society in the economy.

If you don’t have identity, you can’t have access to land rights, to financial systems, to being educated, to schools. A study from the Melinda Gates foundation was explaining that if you don’t have identity, then there is no bank account and there is no taking part in a financial system. Distributed ledger technologies as a ground layer can help change that role and help create identities for those who are living without. 1.1 billion people are currently without identity, but most of them have a phone. You can manage credentials and claims with that. And it’s important to distinguish a private identity, and identity for things. If you split those, you already get more privacy. It’s not about regulation, but also about efficiency. If you are the owner of your data, you can onboard quicker, get rid of all paper processes… I see a lot of impact that Blockchain and distributed ledger technology can enable for data privacy and data sovereignty.

Tom agrees with Dominic: “Self-sovereign identity is a critical factor that will make life easier for all of us.”

He adds that customers don’t necessarily know they want it, but once they’ll have it they will very much appreciate it. On the other hand, the risk is that in an effort to protect consumers, overzealous regulation leads to significant unintended consequences. For GDPR it was not intentional but it did slow down the ecosystem. Therefore there is a need for businesses who have an incentive to create these answers and solutions, and innovate in order to solve the problem that the regulation is intended to address.

Do you see space for blockchain and distributed ledger technologies based solutions in the area around portability of personal data?

According to Juri, there is so much fragmentation and so many different nationalities or cultures… different specifications. You can’t really build for all of them. It’s one of the problems, specifically in Europe. The data are not really standardized yet, so it’s difficult to address a market.

What about Open Source?

Balder explains that 30 days ago, a protocol that was being built for 2 and a half years and is entirely open source, which means you are able to copy the code and use it yourself, and even build a company around it. The company that created it started to lose some customer funds as the code was not a secured. The second thing is that when you build an open source software, the network is extremely strong. In the case of cryptocurrency for instance, if it is built the right way the effect that derives is very impactful, and it protects your open source business.

To Dominic, open source has its pros and cons, but a major pro is the decrease in development costs. This co-development atmosphere creating a community around a great project can really make the difference, in the sense that it will be continuously developed even if a team member leaves. That is a huge advantage. You can develop new systems in a broader and securer way. Open source doesn’t mean that it has to be used in every business aspect. It can be used for technology, but you can also choose to protect a certain environment. It is a lot about competitive dynamics. Open source is definitely a way to have market shares quicker. Juri adds that from his point of view, Open source is not a business model, but more of a development model.

Tom refers to a report from the Ford Foundation, written in 2016. The competitive edge of open source is not patents, it’s actually building a community and an ecosystem of users. And that’s where Open Source overlaps particularly well with blockchain and distributed ledger technologies. What Tom wants is to challenge the open source business model with relation to other less blockchain/non blockchain related projects. If you take Red Hat for example, there’s another 15, 20 of them. The business models break down into either a consulting type model, or the model of hosting the software and selling this service. There is often a combination of the two. Those are both fine, they’re very different from writing the core code. So, in order to monetize you have to build companies that are operationally intensive and people heavy. That’s not generally a skillset of talented developers who write great critical code. Tom explains that they are actually trying to create a model for these developers, who do not want to build these enterprises serving ancillary services, and instead just want to try to monetize what they built.

Q&A:

99% of the time, open source is scary for investors. What should the community do to change this opinion?

Tom: If you’re thinking about it from either investment, or capital raising perspective, you have to be sure that the person doing it is going to be able to write the code, and either they have a partner or they’re also going to be the same person to operate to go to market in business. Those are not always the same people. And if you are an investor, you have to make sure that it’s going to happen. And if you are the entrepreneur, you have to convince investors of both of those aspects.

Juri: You can build code that is very open, but you don’t have to open source everything about it. We have been talking to a company that is open development but not basically the fundamental core sort of algorithm. I am not from the entrepreneur side but if you are an investor you definitely want to see value somewhere.

Balder: It’s a very fair point. And I think that everybody here agrees that there’s a secret sauce in your company and you’re not going to giveaway the secret sauce. Definitely don’t do that.

Dominic: Also, it’s the backbone of the business model but it’s not the business model itself. So, you also have to think about governance, structures, how do you develop it further, who’s involved… Getting the right people involved in these business models to use it, to trust it, to be part of it, is a huge topic in designing these open networks.

Do you invest in specific business models?

Dominic: No matter what model you choose or how you come together to build something, it applies to general capital market rules. So, you will have to have a business model, the investor will have to see: does the team fit to develop it? Are you organized? How do you process yourself? How do you go to market? Do you know what the market need is, and can you address it and sell the product? What is your pricing strategy? We would never invest in something where we don’t see the upside – impact investing aside. You are promising multiples to your investor so it trickles down to pretty much “can I achieve these multiples when investing in that business model, and is the scale quick enough?”

Balder: I would agree, but I think society is moving away from a more shareholder focused interest, especially in the first two decades, and I think this technology is allowing us to do differently and be more stakeholder centric and aware in launching decentralized networks. It’s not only about the investor but I think to launch a decentralized network you need so much more, like realization. It’s very adamant with our industry.

Dominic: if you talk about decentralized networks yes, but if you talk about the applications, the businesses using it as a backbone end-tech, and having corporates as their customer, you have to find the same shareholder rules.

Juri: There’s a large debate around decentralized networks but they are very young at the moment. If the end is that you want to develop the network, you become a sort of company that builds around that network. It’s the ecosystem, but you still need a company that monetizes something and has some sort of IP. Because it is a token itself it’s not a business model. At some point they should reach an equilibrium where it’s not appreciating that much anymore, and won’t finance your company anymore. It might be 50 years down the road but it will be happening at some point.

Tom: I have to disagree there. If you have a protocol, that actually functions appropriately, with the appropriate token economics, you don’t need any equity value whatsoever. And if the founders have some share of those tokens, they have incentive for it to work, and if the ecosystem function is as intended, it should be self-funding over time. That’s a rare case but it really can happen. Now, most business model – and we can throw a bunch of people under the bus – simply fund themselves by selling tokens. And we’ve seen that over and over and over again. I think that the appropriately set up one is the exception not the rule. But there’s no enterprise that’s designed to be a self-sustaining token driven economy that’s fully decentralized. And I think that’s what people are trying to execute here.

Dominic: That’s a great point. Because the clue is token designed, and if you don’t design it in such a way but you just use it as funding tool, it doesn’t work. Many of the start-ups that approached us in 2017, approached us again this year saying “now we’re raising equity”.

Along this panel discussion, many aspects of blockchain and distributed ledger technologies could be talked about. Our speakers gave very interesting highlights on the development of these technologies, its implementation in today’s society, and the monetization of these technologies. We will be keeping an eye on the horizon to see what the right model for implementing the token economy will be.

 

Blockchain for social good by The Magma Collective

Jaya Klara Brekke, co-founder of the The Magma Collective, held the keynote Blockchain for social good by The Magma Collective. She took this opportunity to talk about the project CoBox, funded through the NGI LEDGER program by the European Commission whose objective is to develop 32 human-centric ventures using blockchain and other decentralized technologies.

CoBox for decentralization and social welfare

The Magma Collective’s mission is to provide the infrastructure for a peer-to-peer cooperative cloud which would enable small organizations, cooperatives, freelancers and SMEs to easily set up a cloud infrastructure between themselves. They do this through CoBox, their collaborative cloud solution. In the past few years, more and more people have become aware of negative impact of centralized cloud infrastructures both in terms of surveillance business models that centralize the control of data and value produced in data infrastructures. There is a huge monopolization as a result of network effects. CoBox aims to be a broader movement to decentralize the Internet in a sense and give back control to people and communities of their own personal data. The goal is also to take advantage of the European regulatory landscape of the GDPR (General Data Protection Regulation) acting for more privacy and aware technologies. Lastly, there is rarely the scope for any competition to develop in this sector as many startups, for instance, get bought out by the big technology giants.

Blockchain for social good gathers different aspects. The goal is to launch projects that aim for broader societal benefit rather than narrow business interests. This can take the shape of public sector applications or  third sector applications which enable citizens and non-citizens to take benefit out of these new innovations. New technology and innovation spaces are popping up across cities all over Europe which prioritize communities. Accelerators, funding schemes and policy programs are being created, like the European Commission’s NGI Ledger program. These types of more formal initiatives tend to be around the Sustainable Development Goals and include financial innovation, supply chain transparency, identity and vulnerable populations, energy and environment, human rights, health and wellness, education and culture.

“That is distinct from the Wild West speculative developments and heavy industry that we’ve seen in recent years that tend towards speculation and not much else.” 

socialIt is important to rethink the way that we run our cities and manage data by focusing on the public and social good first and foremost. That how it is possible to link blockchain and social aspects. The Magna Collective emphasizes the history of blockchain DLT which comes from peer-to-peer and the hacker culture that is all about engaging with technologies in a manner that empowers people and favors social good. A good example would be the energy sector, there is a broader need right now to transform how we manage energy and the possibility of producing and consuming in a way of balancing a network. The Magma Collective is working on decentralization through DLT in a governance level of privacy. There are a lot of scopes within blockchain and disciplines of technologies that are going the wrong direction (e.g.: surveillance-based business models). We’re facing some huge technological changes in going into the future, for instance machine learning technology continues to increase in importance. How we manage our relations to these technologies and how to take control over decisions? There are already sorts of credit scoring which are an example of impacts on our lives. Nonetheless, there is good news for startups and SMEs operating in Europe: policymakers are really on there side at the moment because Europe is really trying to develop a homegrown technology innovation space. Europe is seeing new models for technology innovation that maybe look quite different from the US model that tends towards big monopolies. The European Commission is encouraging this trend but  there are difficulties with big funding programs and their practical management; also for new startups. It is also about creating new social and cultural practices transforming people interactions and use of devices. CoBox is for a more pluralist approaches to technology.

Social good thanks to DLT and blockchain technologies

To create a social key-recovery system and cultural practices around technology, some of the people in The Magma Collective were developing a project called Dark Crystal: different sets of friends are spread out in different places and each of them have a piece of your private key. These new interactions mirror normal human interactions as we know them before technology. Cryptography precedes technology and by these centuries, people have come up with new ways of sharing and creating secrets that only some can decode. There are all kinds of people creating free digital technology.

Finally, it encourages new anti-monopolistic ideas by encouraging technological and industrial diversity that allows different ways of living, producing and consuming, a future where people coexist and are able to understand, communicate and determine their own tools that affect their lives on a day-to-day basis. The Magma Collective focuses on distribution and wishes to empower people to be able to challenge higher powers governments.

Moreover, Impact Week places great focus on the environment. Bitcoin mining is criticized because of its power consumption and its ecological footprint. There are serious environmental challenges with computational technologies. There are also some interesting new possibilities that come out of blockchain and distributed ledger technologies, which act for social good, like new types of energy production and distribution, prosumer approaches to energy that are possible using DLT. GDPR will also help encourage approaches that really emphasize data minimization and deletion which could help data centers. The massive data sensors are underpinning huge digital economies and innovation in machine learning. That are good examples of technologies such as blockchain which act in favor of social good.

Get everyone involved in data control for social good

For anyone who wants to be part of a broader positive technological direction and wants to get involved in things like blockchain for social good, it’s important to understand that when it comes to network technologies, there is not a privileged position to address these technologies from. People should pay attention to how these technologies affect their lives and be informed about how technologies like algorithms are operating in the background. This is fortunately becoming more and more mainstream consciousness. The impact of technology on society is in the headlines now. For the Magma Collective, it is important to push for decentralization of governance, open source and hardware, the ability to read the code in an open source repository because it allows others who are trying to fight for your rights within the digital space to do so.

“It is important to explain to the general public what technologies can do even if they are novice and also about subjects such as DLT and peer-to-peer culture.”

People who are close to policymakers might also be close to engineers and mathematicians to, at least, understand and cooperate for the public good.

There is a push to have organizations to basically manage how personal data is dealt and to be GDPR compliant. It is easy for large companies and organizations but not for smaller organizations and cooperatives, SMEs, freelancers who don’t necessarily have an expert in-house that can deal with GDPR or all technical aspects of privacy. CoBox hopes to enable a platform layer where people can offer data officer services to smaller organizations to make sure that they’re following the law and more than just protecting people’s privacy, but to help organizations make the most of the data as well. It is obviously quite ambitious to set a different social and cultural attitude around how data is managed and taken advantage of, it involves a lot of training.

Independent technology spaces around Europe and a lot of projects are being set up like DLT4EU, a new accelerator program. The goal is to connect startups and innovators with “challenge owners”. That includes city municipal governments, large NGOs, etc. which have a set of needs that they need covered and they’re trying to match that up with innovators and startups that are trying to address those needs.

Jaya  recommended Decentralization off the  shelf seven Maxims, to see what are the main challenges to decentralized technologies at the moment and what can be done about them. It’s a neat report about decentralized.

 

Q&A

How are we supposed to avoid running into big enterprises?

We have internet and supercomputer computing power in our pockets due to 50 years of investment by big business and governments and scale economy. Everybody talks about this decentralization, etc., but it still needs to be run on real hardware, consuming real resources and about a scale economy. It will never be sustainable.

There are lots of different ways of looking at the understanding this world. The dream of the network has always been a kind of scale that doesn’t involve centralized control. Now, we are in the third wave of trying to reimplement that dream after several rounds of centralization. The early ideas of the Internet was this form of decentralization, this form of scaling by adding more and more nodes in a horizontal manner. And then, we’ve seen wave after wave of centralizing the control of these infrastructures by different means. I think right now, the focus for these or what people have understood is that this isn’t just a technological problem. It’s also an organizational and economic problem. I think that was what got people excited initially when Bitcoin was invented. It was this idea that here’s the potential to maybe solve the question of economic centralization and organizational centralization as well. I’m not saying that huge investment isn’t new, investment is definitely needed but new types of funding models are needed and there is experimentation happening on that front, both by the community itself. You know, ICOs (Initial Coin Offering) were essentially kind of fundraising and finance experiment that just went wrong. We have these new types of initiatives from the side of the government, too, when it comes to different levels of state funding.

If people keep full control over their own data, only sharing with the ones they want and they protect it with their own private keys, wouldn’t that solve the issue of GDPR?

This is what we’re trying to do in CoBox. We’re building on that, basically using kind of the cryptography key technology to arrange a kind of distributed ledger in the sense, it does solve the problem of GDPR to some degree. There are some specific challenges that we’re working on and that has to do with deletion. When you’re storing data across a distributed network like in CoBox, the data will be storage encrypted. But the fact that it can potentially be decrypted and the fact this data does stay on other people’s computers is still an issue. So like the question of how to delete it entirely is still a bit of an issue. In terms of compliance, it’s a gray zone because you could say that you can destroy the keys, which means that the data can never be decrypted. But, yes, we’re still trying to understand exactly how that sets in terms of compliance.

The European Commission is doing more to promote the I.T. sector in the eurozone. We see that funding usually goes to the largest companies that have little to no ethical nor inclusive goals.

This is a problem. But I think it’s important to realize that within big organization like the European Commission, you’ve got lots of different players and a diversity of agendas at play. There are people within the European Commission that are trying to push for less large centralized solutions and really try to push for investing in generating a real ecosystem of innovation across Europe. As I mentioned earlier, this DLT4EU accelerator program is one example. The NGI Ledger program is another example. There is definitely a growing willingness and interest to create a vibrant innovation ecosystem across Europe that isn’t just like the big industry players. Hopefully we’ll see more of that. There is the application process of applying to the European Commission grants that are really designed for the big players. I know there are people that are struggling to try to change that but it’s a process. We hope that the European Commission will be able to kind of cater a new process that’s less heavy. When people apply for European grants, many times, it really takes someone with significant experience in applying to these types of grants and very large institutional or corporate backing to do so. And easier access to grants, even if they’re smaller grants, would be very helpful. I think there is a tendency towards that direction, less reporting, more innovation. And Blockchain for social good is part of that.

What about the academic world?

Universities are a whole other sector that needs radical transformation. That’s a challenge for an industry that really values open source. I’m at Durham University but I’m in the geography department. So the work that I do there is more social, political and geopolitical research around technology innovations rather than R&D if that makes sense. My experience with the university so far has been not too much of a hassle on that front. But I can imagine people in computer sciences departments face some other challenges. I wish that I was outside of the European or outside of the academic framework, so that would maybe makes it easier.

About the speaker

Jaya Klara Brekke is assistant professor at Durham University and creative producer specialised in the political economy of blockchain for social good and consensus protocols, focusing on questions of politics and power in distributed systems. She is a founding member of the Magma Collective.

How deep technologies contribute to positive IMPACT

During Impact Week, 6 great speakers came to share their point of view on this important question: How can deep technologies impact  our future?

Part I: Green Digitization?

What is the vision of the European Commission with regards to digitization and especially the impact of deep technologies, in accordance to the European Green Deal?

Henri Rajbenbach, from the European Commission, explains that the technologies might be deep, but they are certainly very broad. What the Commission calls Key Digital Technologies (KDTs) include many topics such as Nanoelectronics, Bio-electronics, Wearables and flexible printed electronics, photonics and of course the software to run this. One of the challenges is to make the data usable, as they come in real time, as they come from the real world. They should be “good enough” to feed AI and make it as close as possible to the users for various reasons primarily privacy.

They are many shades of green, which makes it challenging to put together Green Transition and Digital transformation. There are two categories: Green KDTs and KDTs for Green.

A new holistic and agnostic approach is needed where the key approach is to start from the function. The idea is to then decide where at best we can develop. This often happens at the intersection of technologies: Post-Moore nanoelectronics; flexible and wearable electronics, and electronic smart systems.

While addressing a greener economy, it is important to bear in mind that manufacturing and use are equally energy hungry, in terms of equipment. One of the issues with this in Europe is sovereignty, and it could be clearly observed with the COVID-19 crisis.

Europe is especially strong in some sectors, many quality intensive ones. They incarnate European values: social values in health system, or human values for privacy, and technology aspect for sovereignty in particular for the defense sector. Key Digital Technologies play critical and complementary roles in digital transformation and green transition. Furthermore, access to leading-edge digital technologies is essential to achieve ambitious political priorities. The European Commission will further support that in Horizon Europe.

What is your vision and how can deep technologies impact our future positively?

Holger Meinel represents EuMa – the European microwave association. It was founded in 1998 and has 5000 representatives worldwide. 75% of those being industrials and 25% of academics. Their role is to foster the strategy of radio frequency-based research. They start to apply the same intersectionality in functional electronics as mentioned before. According to Holger Meinel the broad landscape is allowing to bridge the gap between microwave technolgies and other areas like infrared, enabling new possibilities like pollution control. This is fostered in Europe at very large scale.

Pertti Jauhiainen explains that with all the KDTs, there is a broad ecosystem and we need to make it efficient. There are green networks, and by connecting them it would be more efficient along the value chain, building amazing components, that build networks, devices and more. The use of networks or ICT in investor sectors and society is going to benefit from the green side. The other aspect is the use of ICT technology and the manufacturing of it. The use is even more energy hungry with consumers, networks and data centers.

Patrice Gamand, Business Development Manager at the cluster Alpha Route des Lasers reiterates that the 5 pillars are key: component, flexible electronics, IoT, printed electronics, photonics, and of course embedded software especially the cyber-physical systems. When it comes to green transition, integration is recommended. This means integrating more functions to save  components and power. This is a strategy to be pursued. According to him, everything is complementary so we need a global strategy.

What can you do to make the electronic world a little bit greener?

Neil Armstrong is CEO of In2tec, an SME specialising in one of the key pillars: flexible printed electronics.

In the past, the approach was “How do we reduce the energy needed to manufacture? How do we include some materials that are a little bit easier to recycle?”. Now for a real impact from deep technologies, what is needed is actually a paradigm shift, because we can only go so far down the current road given the law of diminishing returns . At the moment, on a yearly basis, 64 billion dollars’ worth of E-waste could be recycled and only 20% is actually recycled.

The idea is to look at how manufacturing is done. We create a system that is “unzippable”. We can unzip the substrate from the conductive tracks, we can unzip the inductive tracks from the components etc. The holistic approach is the trend we’re looking at here to change people’s perspective whether they are a user or manufacturer. It’s trying to take everything around us to move things ahead. It is complex because of the market’s need for catalysts such as the government or the consumers. The consumer is already going greener, there is a demand. Now, we can take a flexible material, unzip the components, and reuse them on new products. The amount of effort, power, precious metals are used is significant. Nowadays it is much easier to reuse and recycle them.

Circularity is new in the landscape. Are there any plans for the future to include circularity in the new projects from the European Commission? 

The need for circularity is increasing substantially. The first step is awareness at the business level. The reuse of material is important, especially in flexible electronics – the term plastic electronics is not used anymore since plastic isn’t as sexy as it used to be. It’s not really addressed by the projects now, but attention will be given to that in the analysis of proposals.

Part II: Can we afford the Bandwidth?

Wolfgang Templ from Nokia Bell Labs explains that mega trends are changing the world, and the ways we connect with it. There is an exponential increase in traffic, that is going to continue for the next decades. It has been triggered by certain key applications, with the era of discovery, then sharing, and now automatization. All of this needs to come at a moderate cost. There are 3 phenomena: requirement for more bandwidth, requirement for more bits per Hertz, and then to reuse the spectrum. And this is the trend that 5G is following, allied with the use of technologies for things like increasing battery lifetime and flexibility of the network.

Among the various building blocks of technologies, where do we need the most effort?

Pertti Jauhiainen thinks that it might also depend on what is more used. Now, 5G is in its development stages and it is not fully processed yet. Cybersecurity is also a challenge that is getting bigger, because of high data use and how to make it secure as much for personal matter than for industrial use.

We want to have more bandwidth, but at a lower cost. Do you think that thanks to new technologies, maybe with the use of microwaves, it is possible to have the same room for improvement for energy saving?

Holger Meinel thinks that with different materials it is possible to change the need in power consumption, and save energy. The only thing is to decide which frequency will be used for what. Patrice Gamand answers that we have to use advanced semi computer technologies for different reasons. Bandwidth is not a problem itself, it’s more about cost and power consumption. But having a good technology can optimize performance. This is software designed hardware. It allows us to think of concepts to meet the requirements.

In parallel to that, Neil Armstrong explains that the growth of 5G and the utilization to more data fuels the need for more sensors, on vehicle, on body. The consequence is that when more is needed, in the process of manufacturing they need to improve the longevity of the sensors, as well as the circularity especially for devices such as smartphones. It needs to be at the design level. This all comes with new virtualized networks, with a sort of fusion of software and network.

When trying to achieve versatility, speed, and all the other abilities that we need: does adding AI impact energy consumption? Is it possible that through software, we can optimize energy?

Software will help, but it is not the only solution. It is paramount to have an infrastructure which is by design a little bit greener. Henri Rajbenbach explains that on this topic, we should link component and architecture as explained by Wolfgang Templ since it is really at the core of the best use of bandwidth, time wise but also with space and cost.

In conclusion, the solution to achieve impact using deep technologies is through intersecting technology, while staying as close as possible to the user.

Open Source as a Vector of Social and Economic value

What is Open Source?

The panelists all agreed that a precise answer to the question “what is Open Source?” can’t be defined in one sentence. According to Cedric Thomas, the CEO of OW2, it started 30 years ago and four models emerged since the beginning. Open Source software has been evolving a lot.

The four models’ approach

The original model was established for developers by developers, which defined how you share the rights to use and reuse softwares.

The second model was the industrial or commercial one which appeared in the end of the 90s. Free software became commercial, Open Source and software vendors started to be more famous. Vendors appeared and leveraged business models by giving away the software and selling services to support the use of the software as a market. In that way, proprietary vendors like PeopleSoft, Business Object or other companies were overcharging the users.

The last one is the research Open Source model, an easy way to share IP or a vehicle for collaborative innovation allowing companies to put their efforts together, invent technologies together, and without any battle over who owns what. The foreground and background were based on consortium agreements. Companies develop technologies, grab market shares and make sure that nobody goes straight spending all their energy and money developing their own technology. They’re all converging towards the same technology. OpenStack Foundation  is really representative of that for example.

The fourth model appeared when Open Source became mainstream and within the big industry, used by big players and funded. Management teams actually invest billions of dollars in numerous companies. For instance, Microsoft acquired getable, IBM acquired RedHat, but there were also small Open Source companies.

These models are combined and each are layers with a cross-section. Users have to understand how to play the different types of models. That is why there are Open Source, good technology, legal sharing, open source marketing strategy, operations vehicle for sharing innovation and opportunities for making money.

Open Source software based on sharing

As the founder of DYNE.ORG, Denis Jaromil Roio explained, the software movement was started by Richard Stallman in the 1980s who developed it as a viable economic model. Open Source software is an ethical stance that says that we should run a code, that we know what it does and can study it, modify and distribute it. This is not just the incubator. What they want to do with the free and Open Source software movement besides making money is to allow people to use their software for free to circulate their creations.

“I would never get tired to say that there is a big market opportunity in actually defending the freedom kind of principles of free will.”

Daniel Kastl used the analogy of recipes. If someone would like to have a recipe of  one of his grandmother’ meals, she has the choice to say “yes, of course, you’re free to make it” or she can say “no, you can buy it for me”. This would be the first difference between proprietary software and Open Source software. The difference is in the word free. And then anyone can add a little bit of another ingredient in the recipe, like with Open Source software. Nonetheless, Open Source does not mean that you have to publish the source code, you can keep it and pass it to customers under a license.

What about the moral debate regarding Open Source?

The origin of free software is based on ethical principles. Then it has been used by corporations. The point of view has evolved. It always might be a good idea to do Open Source if a company or an individual is leveraging it in order to grab market shares and maximize your profits, if it’s not a leader but a smaller company or a follower. Major corporations who can actually break new ground, invest and create new technologies with no competition have a distinct competitive advantage and they don’t have the same incentive. The situation is evolving since many small companies are leveraging the existing huge assets of Open Source to create new software, new technologies, and this innovation from Open Source is gradually eroding the old school attitude of these large corporations that would not put anything in the Open Source because their lawyers have to apply the rules.

“While large corporations start being interested in Open Source too, the old-fashioned approach of high protection is being eroded, at least in the software industry.”

Is Open Source a business model?

It actually depends on the background. Some people might just not want to hear Open Source as a business model at all and see Open Source as a way to collaboratively develop software. Actually, a specific business might be referred to a specific license. According to Nick Dijkstra, co-founder of DGEN, this question provokes many other questions. How do you treat the additions that you make and how do you treat the contributions that you are making? Do you feed that back to the community? Should I apply open source or should I adopt an open source software model within my business? Can I still make money?

There are moral reasons to be part of that community. But how do I make sure that when I, as an individual contributor, talk to my investors that I still make money? In the blockchain space, people are building free Open Source software that can be modified and even open to outside contributors. There are ecosystems where the business model isn’t based on charging admission to use the product. The goal is to build a bigger ecosystem around that Open Source platform and to see if we can build a thriving ecosystem that the contributors and the workers can benefit from.

This is tremendously difficult. In Berlin for instance, people from bitcoin are trying to solve this issue about how making sure that it’s okay to make money by building and contributing to Open Source software, but also have a model for continuous maintenance and improvement of that software without anybody manipulating the whole software or building that for a non-transparent reason.

Is Open Source a competitive advantage that a business model could be based on?

In the Open Source community, it is common to hear that at the beginning it was impossible to think about business model while talking about Open Source and Daniel Kastl from Consento feels this way.

“Working with Open Source has been finally quite successful because as a business, we rebuild trust with Open Source and we provide transparency. I don’t think of a business model, when I think about open source but more of a trust model or a development model.”

He explained that over the past fifteen years, the users of his software or customers did not accept any more of black boxes. Especially large corporations sometimes don’t accept it because they don’t want to be locked into a technology. This puts Open Source workers at an advantage.

Mustafa Al-Bassam, cofounder of Lazyledger, said that cryptocurrency and blockchain space are indeed not seen as a business model, but as a compulsory requirement for all projects in space. Developing software that uses cryptography implies using Open Source software, otherwise no one can really trust the software. The whole principle of cryptocurrency is that you control your own account balances and finances through cryptographic piece. If the software that you’re using to do that is the source, then how can you manage to trust it? Today, there is an increase of decentralized projects that need Open Source code to be valid like fundraising strategy of doing initial coin offerings. It is possible to raise billions of dollars and that’s how it really increased available funding.

There are also a lot of experiments in this field for incentivizing and finding Open Source tools and developers to work on various projects. Web sites exist where people can publish proposals of what they want to develop and others can fund it. The ways that it’s funded might be slightly unusual. For instance, quadratic funding is used: people vote for projects which deserve, according to them to be funded, then donations are matched by a pool of money dedicated to fund public goods, the number of contributors is higher than the total contributions. A project which got more votes will be executed, rather than another which reaches a bigger amount of money but less votes. These funding methods emphasize the democratic aspect of Open Source community because the project which will be funded by thewhole  ecosystem (organizations, companies, foundations, etc.) is supposed to interest more people.

The expanding community

When Open Source is discussed as a business model, it is about the viability of a business model for an organization. Panelists agree on the fact that the sector is reaching a scale now where it should be right for developers to get paid for their contributions and what they do. Open Source workers don’t want to become giant companies, but stay individual developers and maintainers and be able to live on that. That’s why building on any kind of this model around Open Source should be celebrated, as Cedric explained, especially if that means that people have the capability to take a source code and don’t pay for it. It is important to step outside of this kind of business model. Companies continue to pay for specific software, but individuals are becoming less likely to pay for software, for instance if they want to use Office software, people can simply use Google Doc or whatever. There is a lot of web-based software today. Developers then consider that they gain more revenue from other sources.

A lot of products are being offered for free and a whole generation is growing up expecting for them to play games for free, to participate in certain things for free. Open Source might be close to Android which is free because Google has found different ways to make money from you. If you have the knowledge, you could take an Open source software and run, and it’s where Google doesn’t get to take all your data and take everything away from you.

What are the investment opportunities for startups that choose Open Source with moderate to highly favorable license? What do investors look for and where do they look for value?

There are different types of revenue streams for  Open Source. It is possible to see business models that can incorporate a proportional footprint source. There are also other models that only incorporate a portion of Open Source software but minor, what is called Open Source washing because it is proprietary software. How do you make money with free software? As a startup trying to raise money and develop a competitive advantage, it is possible to leverage Open Source software as a development model or a legal model for your software to access a market share, the market footprint.

Billy Joy who co-founded the company Sun Microsystems in 1982 said that there is value in numbers. A real Open Source creates some resilience for your software and that is something that investors may be looking at although it is difficult because a large number of conventional investors want to build assets.  The startup has to find the advantage for the investor somewhere else or add other advantages. The right way to make investors invest in Open Source is to build a community around a software and use the capital to gather community and find a proper way to monetize a value proposition.

The panelists also talked about the importance of building a pan-European development in the field that can actually leverage quality and especially value quality over quantity. It is important to adapt legacy systems to keep the trust into Open Source infrastructure. Concerning startup, there is a need for expertise and good software developed by them will be paid a lot. One CEO that knows how to organize the company and do it well without wasting money, it is actually a valuable asset. There is a need to build a network of quality trust, as Daniel said, and not just a quantitative KPI (Key Performance Indicator) that tells us how fast we can scale and fail. The founder of Consento sees Open Source as a requirement to compete easily. He concludes by this rhetoric question:

“Is it acceptable for an investor to not use Open Source in 2020? Is it possible to do innovation without Open Source technologies?”

About the speakers

Denis Jaromil Roio is the founder of DYNE.ORG , a technical coordinators team and a community-based organization which offer a free and Open Source software. It is a non-profit organization which promotes interdisciplinarity and sustainability in terms of ecological standards concepts behind ledger project and the human centric concept. It actually pushes forward a vision that goes beyond the economical startup model, which was mostly ordered from the US to develop a European identity of ecological and economic development of technology. This aims at taking communities and participation as the real KPI, not commercially but socially.

Nick Dijkstra is  cofounder of DGEN which means decentralized generation, and a founding partner of BEYOND VENTURES. DGEN is an independent non-profit think tank based in Berlin which is trying to help society, the public and the private sector in Europe to prepare for a more decentralized future, for instance making people familiar with blockchain or other technologies. They write research reports on specific topics to help people understand how specific industry might change because of emerging technology. Beyond Ventures are focused on blockchain and other technologies too.

Mustafa Al-Bassam is the cofounder of Lazyledger, a blockchain based project that develops a scalable data availability layer of applications. The activity is divided between low-cost storage, scale-out and off-chain execution.

Cedric Thomas is the CEO of the OW2 community, a European independent nonprofit organization focusing on Open Source organizations. Their mission is to promote Open Source software for information systems. They concentrate on application platforms, middleware, cloud software, identity management software, etc. The organization founded in 2007 has hosted some 100 projects, developed by a community of 2500 individual developers and some 30 corporate members as well. They have recently launched the initiative on Open Source good governance in order to talk to larger users who should stop being consumers but applies best practices in terms of compliance, security, dependency management. This also a community of individual developers or companies which represent the ecosystem, the real value.

Daniel Kastl is the founder of Consento project, which has been selected as one of the pending proposals by the NGI Ledger program. For him, free and Open Source was a life changer. He starts a technology company in Germany and Japan with teams from open data and Open Source communities. He is also a maintainer of some software projects (e.g.: for Amazon).

The disruption of the Space market

The space conquest has turned into a booming market and has become an accepted investment theme for Venture Capital. This topic has been selected by the INPHO committee and it will be discussed in Bordeaux for the next INPHO Venture Forum that will take place in October 2020.

The Future of Mobility and Urban Living

The future of mobility and urban living is a major issue that companies need to focus on today to plan tomorrow. Indeed, in 2050 almost 6 billion people will live in an urban area. The growth of the population will multiply the number of transportation modes and housing in the cities. To fulfill the increasing need for transportation mode and housing the offer has to change. Besides, the environmental crisis makes necessary to use cleaner alternative to fossil energies and pollutant activities within the cities.

Will the wind of change blow through the EIC?

In its proposal for the next EU Research and Innovation program, Horizon Europe, the European Commission proposed to invest 94,1 billion euros over seven years. The new program, to run between 2021 and 2027, would be implemented through three pillars – with one-fourth transversal pillar referring to “Strengthening the European Research Area”. Nicolas Sabatier, advisor to Jean-David MALO, Director “Open Innovation & Open Science” at the DG Research & Innovation of the European Commission will attend the next INPHO® Venture Summit 11th &12th in Bordeaux, France, and accepted to share with us his vision of this new architecture.

Interview with John Suh, Hyundai CRADLE

John Suh, Vice president and founding Director of Hyundai Center for Robotic-augmented Design in Living Experiences (CRADLE) is one of the Future Shaping Innovator eager to empower disruptors through Open innovation. John Suh will join INPHO® Venture Summit on the 11th and 12th of October in Bordeaux looking for open discussion and collaboration with participants.

Interview with Michel CUI from ALIBABA CLOUD EUROPE

A panel discussion at INPHO® Venture Summit will be dedicated to ubiquitous high-performance computing. In this interview, Michel Cui, head of Mid-market & Internet Industry and Benelux country manager at Alibaba Cloud Europe shares a first taste of what will be challenged during this panel discussion in Bordeaux, France on the 11th and 12th of October at INPHO® Venture Summit.

Smart4Europe: Catalysing Digitisation throughout Europe

6 September 2017

Smart 4 Europe is the new Coordination and Support Action set up to reinforce Digitisation in Europe and to strengthen the outreach of the European Smart Anything Everywhere Initiative. As one of the main European Innovation accelerator, BLUMORPHO is part of the consortium driving the project and firmly committed to make it a success.

Smart 4 Europe main objective is to create an Innovation Portal as a central contact point for digitisation in Europe, a one-stop-shop helping to build a global ecosystem to stimulate growth.