Some of the Things I learned about Decentralisation in a Year Like No Other*

*A Year Like No Other is the title of a New York Times special of 2020 in photos from which the picture below was copied

Olivia Grant hugged her grandmother, Mary Grace Sileo, through a plastic drop cloth hung on a clothesline. It was their first contact since the start of the lockdown caused by the pandemic. Al Bello/Getty Images

At the end of each year I share my personal thoughts on tech, blockchain, enterprise and strategy with my clients and friends and with these thoughts also links to articles, blog posts and videos that inspired me. But there’s so much more to this year that I can’t even find the right adjective for it. The fact that a small virus can disrupt our society in such a way shows the interdependencies in our increasingly complex world.

One of the people I started following on Twitter and here on Medium last year is Oliver Beige who has interesting insights into the kind of disruptions we are confronted with. It was Oliver who send me down rabbit holes on game theory, system dynamics and operations research. I was introduced to the term “Forrester Shock”, which is what we are experiencing first hand this year. I went on to get more insight into systems thinking, an approach which was refined by Donna Meadows and I can highly recommend her book on the topic. And it started to dawn on me that what I intuitively already knew: to understand the problems that decentralisation and blockchain solve, you need to unravel the economic and societal system we built so far. The simplistic approach of ‘cool new technology, now let’s find a killer app’ is not enough.

The implications of a technical construct that enables digital assets to be ‘real’ cannot be overestimated.

Both for good and for bad. Digital assets with an independent existence raise all kinds of questions which we surely cannot answer all before we start building solutions. But let’s not be as naive as in the early days of the public internet. A great piece warning us for a naive approach to decentralisation is written by Gary Zhexi Zhang on The Aesthetics of Decentralisation in which he states “[I] reject the implication that technological decentralization in our ever more informatic world is inherently aligned with a more progressive trajectory for society as a whole”. With that warning let me proceed and get back to the topic of what has been achieved in decentralisation in 2020.

Privacy-centric solutions ARE possible.

A year in which we witnessed that ‘privacy-centric’ solutions can be built and deployed. I am referring to the range of so-called ‘contact-tracing’ apps that saw the light. The DP-3T protocol developed by academics from leading universities in Europe has become a standard for many of the proximity tracing apps in use today. Adhering to requirements like data minimisation it ensures privacy while doing exactly what it intends to do, and nothing more. The ‘D’ in DP-3T stands for decentralised, and that is what matters in the design of the protocol. By removing central elements, you remove security holes.

Policy makers and regulators should start to realise that decentralisation is not a technology choice, but a reflection of values we hold high; especially in Europe.

Identity is key

We also see this in the development of digital identity systems, work that I have been able get a closer look at this year through my involvement with the Dutch Blockchain Coalition. There is an inherent tension between privacy and identity: without giving up some privacy, one cannot identify. But what if we have technologies that strike a better balance? Important work on this front is being done by the W3C working group on identity who developed Decentralised Identifiers (DIDs) to enable self generation. The Energy Web Foundation has used DIDs to give distributed energy assets -such as batteries that store energy from solar panels on your roof- an identity and therewith the ability to trade on a flexibility market.

I was referring to unintended consequences earlier. An interesting viewpoint on the unintended consequences of Self-Sovereign Identity is written by Philip Sheldrake. He warns “Put starkly, many millions of people have been excluded, persecuted, and murdered with the assistance of prior identity architectures, and no other facet of information technology smashes into the human condition in quite the same way as ‘digital identity’. Therefore, if ever there’s a technological innovation for which ‘move fast and break things’ is not the best maxim, this is it. We need to move together with diligent respect for human dignity and living systems.”

In that light, developing new digital identity systems which impact us as citizens, need to be done with care. Just handing over the keys of the kingdom to every individual might have grave consequences. And maybe, we would be better off trying our luck with inanimate objects first.

Tracking (physical) products

Blockchain and decentralised technologies enable digital assets to be real. Actually better than real as we create continuity since we know past and present of the asset in detail . That is why there is an immense interest from companies to digitise physical assets to enable granular tracking of products. One of the challenges when designing solutions for tracking physical products is the physical-digital interaction which requires a tight process. But as a consequence of redesigning the processes in a supply chain we increase efficiency and potentially decrease risk which in turn can lead to new financing models. The launch of Baseline, a protocol by EY, Consensys and Microsoft is a significant step in bringing mainnet Ethereum to enterprise applications. Physical products tracking can be interesting from a supply chain perspective, but also from an ethics perspective. Was child labour involved in the mining of the cobalt in your Tesla’s battery? Several initiatives in areas lik materials mining or automotive plastics have seen the light around these and other ethical sourcing questions.

Carbon Accounting

Two years ago at COP24 in Katowice, one of Shell’s EVPs lamented “if only we had global CO2 bookkeeping”. One company working on this is Mattereum, founded by the illustrious Vinay Gupta. In their manifesto we read “What we need here is clear and unambiguous records about what an object is, and for those records to be equally accessible to all parties dealing with that object: buyers, sellers, insurers, auctioneers, renters, repairers and scrappers, and everybody else involved could all use the same name for the thing, and share their records. People measuring and offsetting CO2 emissions could use these same record keeping systems too. We call this structure a Mattereum Asset Passport.” While an asset passport may be developed in for a different use case, Carbon Accounting could very well be the killer app for blockchain. This is something you cannot leave to ERP systems, or to a Third Party. It requires minimisation of trust and a global transparent registry. There is too much at stake.

What’s in store for 2021?

One of the questions we get a lot at WBNoDE is how to get these collaborative projects that are needed to build decentralised solutions, off the ground. The first thing to do is: involve independent help to coordinate the project and build the consortium.

They need to be independent of technology choice and independent of any of the parties that set up the consortium.

It could be an industry association, standardisation body or a consulting firm that has “been there done that” ;)

We will see supply chain cases take off at larger scale. Especially in Agri & Food we see uptake of projects and deployment of real solutions related to responsible sourcing. Also in healthcare we expect to see that privacy-centric solutions take off in the wake of the Covid-19 crisis. And last but not least, we will see more energy related cases as the transition to green and distributed energy continues and gets a new boost by the incoming administration in the US.

That’s it. 2020 is a wrap. I wish you and your loved ones a healthy and happy 2021!

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