Big Data

Is Blockchain the Ultimate Enabler of Data Monetization?

Bill Schmarzo By Bill Schmarzo March 21, 2017

ForwardSpecial thanks for the help on this blog to the coolest, most hip group of industry experts that I have ever met: the Pathfinders. The Pathfinders is an elite forces group of master system engineers inside of Dell EMC who tackle our customers’ most difficult and inspiring challenges.  I am honored to be part of that club!

Suppose an autonomous vehicle learns of a more efficient route and wants sell this knowledge to other autonomous cars for a fee (using blockchain to handle machine to machine transaction). Suppose the autonomous vehicle could start to monetize itself; to self-fund its own operations and the acquisition of goods and services such as gas, repairs or vehicle upgrades (using blockchain to conduct commerce).  Now suppose the autonomous vehicle could couple real-time analytics of vehicle performance and maintenance with real-time bidding for maintenance servicing and replacement parts (blockchain inserted again). Lastly, think “intelligent” vehicle depreciation and salvage value optimization where the autonomous vehicle continuously scours used car and auto parts markets for vehicles in need of older chassis, transmission and electrical components (again leveraging blockchain).

Is blockchain the ultimate enabler of data and analytics monetization; creating marketplaces where companies, individuals and even smart entities (cars, trucks, building, airports, malls) can share/sell/trade/barter their data and analytic insights directly with others?

The impact that has on a company’s financials could be overwhelming, or devastating, depending upon what side of business model transformation you sit.

What is Blockchain?

An extensive explanation of blockchain is beyond the scope of this blog, and way beyond the capabilities of this author, but in its simplest blockchain is a data structure that maintains a digital ledger of transactions among a distributed network of entities.  Think of a “distributed ledger” that uses cryptography to allow each participant in the transaction to add to the ledger in a secure way without the need for a central authority or central clearinghouse.  Figure 1 provides a nice visual of the workings of a blockchain.

For example, imagine a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is smart enough to automatically update this spreadsheet any time someone makes a change to one of the versions of the spreadsheet.  Information held on a blockchain exists as a shared — and continually reconciled — database. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable and easily shared.

A shared, distributed ledger (blockchain) has the following big data ramifications:

  • Common access to the same data for all parties involved in the transaction. This should accelerate data acquisition, sharing, data quality, data governance and ultimately, data analytics.
  • Provides a detailed register of all transactions or engagements kept in a single “file” or blockchain. It provides a complete view of the entire transaction, from engagement start to engagement finish.  No need to integrate pieces of data from multiple systems in order to create a single view of the entire engagement or transaction history.
  • Provides the ability to manage and control one’s own personal data without the need for a third-party intermediary or centralized repository.

Blockchain provides the potential to truly democratize the sharing and monetization of data and analytics by removing the middleman from facilitating those transactions (potentially acing out those middlemen).

Blockchain And Big Data

BusinessWeek published an article titled “Wal-Mart Tackles Food Safety With Trial of Blockchain” that describes about how Wal-Mart is using blockchain to manage product recalls and the related safety and health issues (being a big fan of Chipotle, I understand fully the ramifications on recalls and safety!).  The article states:

“Like most merchants, the world’s largest retailer struggles to identify and remove food that’s been recalled. When a customer becomes ill, it can take days to identify the product, shipment and vendor. With the blockchain, Wal-Mart will be able to obtain crucial data from a single receipt, including suppliers, details on how and where food was grown and who inspected it. The database extends information from the pallet to the individual package.”

And while Wal-Mart is concerned from pallet to the individual package, what if we could leverage the rapidly decreasing costs of sensors by placing low-cost sensors on individual product in order to extend that supply chain view all the way through to individual consumer’s product consumption and usage?  What if manufacturers and distributors could monitor consumer product usage patterns in order to better service the individual consumer by placing sensors on every product (tube of Crest, bottle of Tide, package of donuts)?  Having detailed insights into the consumer’s product consumption and usage holds untold business potential to manufacturers, distributors, retailers and consumers alike.

Now imagine how the individual consumer would control or manage who has access to that data through the use of blockchain.  This could put consumers in a position to negotiate with manufacturers and distributors (either individually or through consumer associations) pricing discounts in exchange for their personal consumption data.

The combination of blockchain and product-based sensors could enable Consumer Goods Manufacturers to develop detailed customer usage and consumption insights including:

  • How often does Jane Smith use the detergent?
  • Are there certain times and/or days of the week where Jane Smith is using the product?
  • How much does she use per load?
  • How much product does she have left?
  • When do you expect that she will need to refill or reorder?
  • Are there variations in how much she uses?

Summary

Blockchain holds the following ramifications for Big Data:

  • Access to granular, detailed transactional and consumption data around which to build detailed analytic (behavioral) profiles for individual suppliers, products and the sources of products and the product’s components (acreage, trees, plants, livestock, crops)
  • Integrating detailed transactional and usage data from source through consumption
  • Analytics that address supply chain and consumption chain including waste, shrinkage, safety, tampering, laundering, fraud, theft, obsolesce and optimization

Access to the detailed consumer product usage and consumption data would explode the potential of big data to optimize key business processes, reduce regulatory and compliance risks, uncover new monetization opportunities, and create a more compelling consumer experience.

 

Sources

Bloomberg: Wal-Mart Tackles Food Safety With Trial of Blockchain

cmswire.com: How to Use Blockchain Technology to Retain More Customers

Is Blockchain the silver bullet needed by the IoT industry?

Wallstreet Journal: “CIO Explainer: What Is Blockchain?” The Wall Street Journal

blockgeeks.com: What is Blockchain Technology? A Step-by-Step Guide For Beginners

Bill Schmarzo

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6 thoughts on “Is Blockchain the Ultimate Enabler of Data Monetization?

  1. Interesting take on the topic and a much simpler and easier to understand explanation than some I have encountered. The focus centers on the new business streams available, which are definitely interesting and of value. The other side of the exchange, however, is the way in which Blockchain can make assurances/verifications a more fluid process that can travel at the same speed as the data flows they attach to. This, suggests the removal of more static labor intervention into the increasingly fluid flow of commercial transaction data. Cost savings use case for this spring to mind around things such as real estate transactions that then require different government and legal entities to file paperwork and certify the paperwork has been filed correctly.

    Industry mavens typically talk of this as Decision Support opportunities accretive to the traditional ICT market. That decision support appears to me to be the way in which analytics and blockchain technology can strip human error out of our commercial transactions.

    • Geoff, as always, a very thoughtful and provocative comment. Greatly appreciated.

      I think that you are spot on with respect to “making assurances/verifications a more fluid process” which occurs with the removal of the middle-man clearinghouse. In fact, that’s the part of blockchain that has really caught my attention: what happens to things such as the cloud when we have a trusted, peer-to-peer business model that eliminates or mitigates the need for a middle-man to clear these transactions? Lots of data that these third-party clearinghouses were holding captive (and monetizing for their own benefit) will no longer be available to them. What happens to their business models when peer-to-peer transactions are working around them?

      In the customer, product and operational insights arms race, there will be new winners and losers courtesy of blockchain.

  2. This is one article that has explained block chain technology in the simplest way I have ever come across. I think this is also very relevant in view of the European Commission’s drive for the development and establishment of a European Data Economy. Block chain will enable secure and transparent flow of data across borders and value chains.

  3. Bill

    I enjoyed reading your article. I think (and I’d welcome your comment on this) that the problem for any explanation of blockchain is that to understand it, someone needs to understand what we have now. To my understanding, blockchain is just another distributed database with massive partition tolerance, and an in-built mechanism for non-repudiation – so the data can be made public without worrying about it being changed. This means that when I read about it and can’t find a need for both of these elements, I wonder why blockchain is there? Why they are any different to what we can do without a blockchain, and in most cases, why would we take something being done efficiently (or even inefficiently) in a single place, and do it inefficiently in a thousand places? Mostly what I see is the burdern of lots of redundant and useless data in lots of places.

    Take the walmart example, I actually can’t figure out why blockchain is there. I don’t think they did anything unique or even actually very interesting. It sounds like they identified an area in which a lack of data resolution was costing them money, built a business case to increase the resolution of the data available – and did it, they just happened to do it on blockchain. Probably because someone thought it was interesting rather than for any technical reason. The only thing I can think of is that maybe they found that they had a data quality issue because of changes being made to cover up dodgy product – or something along those lines.

    Everything in IT is cyclical. As an example, cloud computing exhibits basically the same access pattern as mainframes with terminals. As I’m seeing the collapse of record structure that happens in blockchain – it’s basically a change in atomicity and a collapse of normal forms – I also see the change from hierarchical to flat, in lots of other places. I think it makes more sense in other places, the computing power and algorithms that we have now make hierarchical structures less important, and the volume of data means that we very quickly get past the point at which even well structured data is human usable/useful without a machine to do the analysis and present what’s relevent.

    The change from hierarchichal to flat structures and different ideas about atomicity is interesting. As a consumer, maybe it’s interesting to consider the full journey a transaction, and have all the origin information attached to it. If a transaction can move around with all information about that transaction then perhaps that’s useful to the full supply chain as it is at Walmart, but it’s a lot of data, a lot of technological change, and at the end of the day, walmart just want the data – and a 10 word change to supplier contracts could also solve that very efficiently.

    I keep seeing blockchain popping up, mostly it’s being used to do something novel that 50 other technologies could solve more efficiently. It seems like a solution looking for a problem – which, to be fair, is where most ground breaking tech starts.

    Thanks for the food for thought
    Karl.

    • Hey Karl, love your detailed assessment. You are asking lots of important questions, but I also gleaned some very interesting perspectives from your post. Let me see if I can further the conversation:

      1) Why use Blockchain / Distributed Ledger technology? I think the ability to package the data all together is quite interesting and ultimately will not only provide more security (less vulnerable to cyber attacks), but could speed decision making in certain situations by not having to go somewhere else (likely the cloud) to first gather and align all the data, and then perform analysis on it.

      2) Potentially eliminates need for the cloud in real-time situations. The peer-to-peer nature of a distributed ledger I find very interesting. What if I don’t want the risk of having to communicate with a cloud to get my job done? What about cars flying down the highway and the need to communicate their intentions (need to get off at the next exit) to all the cars in their vicinity in order to safely complete the maneuver. Peer-to-peer seems like a better fit than a cloud-based solution.

      3) Potentially eliminates the security and privacy risks of third-party cloud-based intermediaries. I no longer need to send my financial data to a plethora of third party processors who I’ve never heard of who are busy monetizing “my” personal data. Maybe I don’t want them doing that. Maybe I’d prefer a direct transaction with the financial institute, or maybe even better, a direct transaction with the other individual or organization.

      4) Ultimately, a distributed ledger could put the consumer back in control of all of their data. The consumer could dictate who gets access to what data and when with a distributed ledger.

      Finally, I love your observation that “The change from hierarchichal to flat structures and different ideas about atomicity is interesting.” Hierarchical structures take time to build and even more time to maintain. Moving to a flat structures world is faster to implement and much much easier to modify.

      To be honest, I don’t understand the technology that well, but I think I understand the monetization potential of a distributed ledger that aces out third-party players who are monetizing my personal data at my expense.

      Love the conversation! Thanks for posting!