The future of IoT spells blockchain and AI – the reality of blockchain today mainly spells cryptocurrency and hype

The future of IoT spells blockchain and AI – the reality of blockchain today mainly spells cryptocurrency and hype

The future of IoT spells blockchain and AI – the reality of blockchain today mainly spells cryptocurrency and hype

An article by Nicolas Windpassinger**, Global Vice President of Schneider Electric’s EcoXpert Partner Program and the author of the IoT book Digitize or Die*.

The future of the Internet of Things (IoT) on various levels is an integrated one. Especially, the mix of IoT, blockchain and cognitive computing will lead to myriad new outcomes.

In my digital transformation and IoT book ‘Digitize or Die‘, blockchain technologies and artificial intelligence are mentioned several times. The standardization of the IoT, for instance will create the conditions for more interoperability, connectivity, “digital trust” with blockchain technologies and artificial intelligence (AI) distribution between heterogeneous components and systems.

Blockchain technology, in many cases combined with AI, doesn’t just promise to be the missing link enabling peer to peer contractual behavior without any third party to “certify” the IoT transaction. It also answers the challenge of scalability, single point of failure, time stamping, record, privacy, trust and reliability in a very consistent way.

How the mix of IoT, AI and blockchain is shaping the future of business

I am convinced that blockchain and AI will unlock the promises of IoT. In fact, we already see a lot of this happening in the EcoXpert environment of smart building and energy systems where convergence is the name of the game and existing silos are being replaced by new solutions. IoT ecosystems take center stage in these solutions and inevitably come with advanced data analysis, using AI, to meet changing customer expectations.

In a broader IoT perspective, blockchain is increasingly joining that mix of technologies as well. An example of where it fits, on top of the mentioned ones, and where it is gaining attention is that of IoT, blockchain and security.

Obviously, I don’t stand alone in seeing that convergence of IoT, blockchain and AI becoming ever more important and shaping the foundations of the future of business. According to research firm IDC the future of Enterprise Resource Software (ERP), which it calls Intelligent ERP, even largely consists of a mix of IoT, blockchain and cognitive (with other factors). IDC predicts that by 2021 a fifth of the largest manufacturers will depend on a secure backbone of embedded intelligence, using IoT, blockchain and cognitive, to automate large-scale processes and speed execution times by up to 25%.

Blockchain and cryptocurrencies: the different realities and views of the enabling technology of Bitcoin versus cryptocurrencies at the World Economic Forum 2018

Many people confuse blockchain with Bitcoin and other cryptocurrencies. While blockchain, as an enabler, is really the technological foundation of these cryptocurrencies, its application areas stretch far beyond. This does not mean that cryptocurrencies have no future. However, that future, is not easy to predict and opinions largely vary.

At the World Economic Forum 2018, cryptocurrencies were a highly discussed topic. In the wake of high fluctuations across virtually all cryptocurrencies, opinions on Bitcoin and others went from high skepticism, calls for regulation and statements that especially the blockchain technology mattered to concerns regarding illicit activity in the crypto world. Yet, there were also forecasts that, after the current state of concern, volatility and, indeed, hype, cryptocurrencies would enter a far more stable stage and be here to stay.

The craze and hype regarding cryptocurrencies and ICOs (Initial Coin Offerings) indeed is not really helping. January 2018 was probably one of the months that broke all records concerning the volume of opinions and news defending cryptocurrencies, skeptical and fear-mongering opinions and launches of more initiatives.

The cryptocraze: KODAKCoin and how to see your stock price boost

Kodak, the bitcoin effect
One of the most covered and surprising moves was that of Kodak. In my book I cover how Kodak missed the boat of digitalization, whereas its main contender, Japan’s Fujifilm entered the local market of Kodak, rapidly grabbing an increasing share of the market of digital cameras, which were invented at Kodak.

Yet, Fujifilm ended up taking the right decisions while Kodak wasn’t ready to embrace digital photography and, soon after, the smartphone with built-in cameras, two deadly technological disruptions that were dealt with entirely different by both companies.

Kodak is now also – indirectly – entering the crypto-world. With an ICO on January 31st, a company that licensed the Kodak brand kicks off a blockchain for digital rights management for photographers under the Kodak brand (KODAKOne) and a cryptocurrency called KODAKCoin. Moreover, a second brand license partner is launching a Kodak-branded bitcoin miner, Kodak KashMiner, with a wrong ROI model as time and computer power are tightly linked to Bitcoin’s ROI.

While the initiative cannot be compared with that of ‘open cryptocurrencies’ and there is a lot more to it as mentioned in my blog post on the Kodak initiative, the reaction on the news was a clear indication of this current cryptocraze.

After the announcement, at the Consumer Electronics Show 2018, the stock price of Kodak skyrocketed. It has continued to be relatively steady with occasional spikes until now. Whether it’s a strategy of Kodak or a side-effect of a brand licensing partnership as the company has several, for now is hard to tell. Whether the initiative(s) will work is even harder to tell.
Chart: Kodak stock price
What is for sure, though is that it seems to suffice to announce a cryptocurrency and an ICO to see your stock price go up in a way that clearly shows an overvaluation of it. Creating a cryptocurrency is not so difficult, just have a look at the list of all the recent ICOs:

The difficulty is to create an ecosystem that drives value into your currency, making it unique and trustworthy. A cryptocurrency is only worth the trust people put into it. And as far as IoT is concerned, the technology enabling it all, blockchain, looks far more promising.

* About the Book
IoT book: Digitize or Die by Nicolas WindpassingerUnderstand, master, and survive the Internet of Things with one simple and pragmatic methodology broken down into four steps. Digitize or Die is used by front-line business decision makers to digitize their strategy, portfolio, business model, and organization. This book describes what the IoT is, its impacts and consequences, as well as how to leverage the digital transformation to your benefit.

Inside these pages, you will learn:

  • What the IoT means to all businesses
  • Why the IoT and the digital revolution is a threat to your business model and survival
  • What you need to understand to better grasp the problem
  • The four steps your company needs to follow to transform its operations to survive

** About the Author
With 15+ years of computer networking industry experience, Nicolas Windpassinger is the Global Vice President of Schneider Electric’s EcoXpert™ Partner Program, whose mission is to connect the technologies and expertise of the world’s leading technology providers, pioneer the future of intelligent buildings and the Internet of Things, and deliver smarter, integrated and more efficient services and solutions to customers.
As a result of his work, Schneider Electric’s EcoXpert™ Partner Program has been granted a 5-Star rating in the 2017 Partner Program Guide by CRN®, which is part of The Channel Company group. The 5-Star Partner Program Guide rating recognizes an elite subset of companies that offer solution providers the best partnering elements in their channel programs.
Nicolas has been recognized by The Channel Company’s Top Midmarket IT Executives list. This annual list honors influential vendor and solution provider executives who have demonstrated an exceptionally strong commitment to the midmarket. The Channel Company, has recognized Nicolas as one of 100 People You Don’t Know But Should in the IT channel for 2017.

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IoT Business News

The State of the Net Today – Why we must Act now for its Future

At the Internet Society, we are worried about the state of the Internet today. This global “network of networks” is now a critical part of our daily lives. We use it to communicate and connect with our families, friends, co-workers and customers. It is the engine that powers the global economy. It is our source of entertainment, of education, and of information. The Internet brings so many opportunities to all.

But… those opportunities are now under attack from several threats:

  • Lack of trust – We now find ourselves asking key questions: how can we trust that the information we see online is accurate? How do we know we are communicating with the correct people?
  • Security of the core of the Internet – The core infrastructure that creates the network of networks is now under constant attacks. Botnets, DDoS attacks, routing attacks – the public core of the Internet needs protection.
  • The explosion of connected devices – We are connecting almost everything to the Internet, and this “Internet of Things (IoT)” is being largely connected with little concern for security.
  • The growing divide between the connected and unconnected – Over 40% of the world’s people are not connected to the Internet, and they are being left behind as the opportunities advance.

We must secure the Internet and raise the level of trust in the system if we are to make the same opportunities available to all. As Kathy Brown wrote in her Chatham House editorial last month, we need new tools and new models to solve these issues. And as we outlined in our “Paths to our Digital Future” global report, we must ensure that humanity is at the center of tomorrow’s Internet.

Earlier today in Washington, DC, I was privileged to speak at an outstanding meeting of people – the State of the Net 2018 event. The event’s agenda is a strong one and while obviously focused on the USA, the topics discussed are of global impact, now and far into the future. Discussing the complex issue of Internet Governance, I highlighted the need for governments and other stakeholders to go a step further in their commitment to the inclusive, multistakeholder model of governance and to begin implementing policies based on this thinking in their home countries. It’s time to bring this vision of governance to life and to demonstrate its clear value as a model for the future Internet.

We believe that the Internet of the future must be built on the values just like this that have defined its past. It must be an Internet that is open, globally-connected, secure and trustworthy. It needs everyone at the table. Expanding the inclusive model of governance to more places around the world is a central pillar in achieving this kind of Internet but there are many other ways to work towards this goal and while we can expect setbacks along the way, we at the Internet Society want to do more and work harder to influence the outcome.

The Internet holds enormous potential to empower, inform and bring unparalleled opportunity to people around the world. This is the vision of the Internet – an Internet for everyone – that guides our work, but whether it ultimately delivers on this promise in the future or not, is up to us. All of us, together.

I ask you to please read the links I’ve shared here, to watch and share the videos coming out of the SOTN event today, and most importantly … to ACT to shape the Internet of tomorrow.

Editor’s note: Sally’s panel session at the State of the Net 2018 event
can be viewed online:

Image credit: Joshua Earle on Unsplash

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Internet Society

How You Can Protect Your Smart Home Today

hacking the IoT

An article by Marc, Editor at IoT Business News.

hacking the IoTWith so many consumers buying internet-connected devices these days, hackers are focusing on gaining access to homes and networks via these products more and more. In fact, in September the BlueBorne Bluetooth vulnerability allowed hackers to infiltrate around five billion gadgets simply by using a Bluetooth connection, recent news shows that issues can still arise just from this one virus. Armis Security announced last month that an estimated 20 million Google Home and Amazon Echo devices were vulnerable to attack due to the BlueBorne issue.

While the two tech giants released patches to fix this problem very quickly on their respective devices, the news only goes to show that you need to buy devices with top security protocols in place, as well as know how to keep your gadgets secure once you get them home. Read on for some key ways you can go about protecting your home and information today.

Choose Trusted Brands and Change Security Settings

For starters, think about security when you first go to buy a smart-home system. It pays to buy trusted brands which have a reputation for taking security seriously and making their products less at risk of hacking attacks.

Next, once you bring home devices, as you set them up make sure you change the default settings on each. The information guides which come with products contain instructions on how to do this, but most people don’t read or follow the guidelines, and leave their devices vulnerable as a result. The issue is, hackers can easily look up online, or elsewhere, the details on which usernames and passwords manufacturers use when they create products, and then use this information to gain access to gadgets and networks.

It is a good idea to change the default ID name that is set up on internet-enabled items too. Again, hackers know that most manufacturers ship goods out with the same identification details for each device under their brand name. If cybercriminals run a scan in your area to look for a way to get into your network, they could see the name of your device popping up.

When this happens, they’ll realize straight away that you’re using that particular brand in your home, and will guess you probably haven’t changed any other settings either. This will make them think you’re lax on security, which may compel them to hack into your devices over someone else’s.

Secure Your Wi-Fi

Smart-home products always use the internet to complete their functions. As such, another key strategy you should take to protect your information is to secure your Wi-Fi so hackers can’t use an unsecured wireless network to gain access.

Rather than leaving your Wi-Fi open for anyone to use, protect it with a comprehensive username and password that no one would be able to guess. Your password should be between eight and 12 characters in length and made up of a mixture of symbols, letters (both upper and lower case), and numbers. Avoid making the username or the code related to your own name, or that of any information about you that hackers could find online, such as the name of your business, pets, children, or partner; your birthdate, address, and email.

Install Security Software

Next, keep in mind that hackers often try to gain access to smart-home devices via the apps you use to control these devices, which you would have downloaded to your computer, smartphone, and/or tablet. To stay safe then, always install professional security software on your devices.

Choose a product that provides protection from malware, spam, spyware, viruses, ransomware, and the like. In addition, it is helpful to have firewalls running on your devices too. These act as another line of defense against hackers, particularly when it comes to internet-based programs.

Run Regular Updates

smart home technologyLastly, you will keep your smart-home products safer if you regularly update the different software you use. For example, whenever there is an update available for one of your smart-home products, run it straight away so security holes which have opened up because you purchased the product, or since it was manufactured, get plugged.

As well, update the security software, firewalls, apps, browsers, plug-ins, and operating systems on your computers so you always have the latest editions running. Passwords need to be changed every two to three months too if you want to give yourself optimum protection. It is also wise to use different codes for different smart-home products and computers, so that if one does happen to be compromised, they won’t all be vulnerable to attack.

Although all the here-above mentionned tips may seem obvious to many of us, we know for sure that very few people, even among the “experienced” users of tech devices, do rigorously follow those security “best practices”. It is one thing to know and another thing to do! But considering the expanding number of cyberthreats, it is really time now for all of us to get serious about the security of our connected devices and take the time needed to properly lock the doors of our smart homes…

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IoT Business News

Could the Big Technology Companies of Today Be the Financial Advisers of Tomorrow?

The past decade has seen unprecedented levels of technological disruption in business. As evidence, one need only look at the way Inc. has used its formidable strength and scale to enter more than a dozen different major industries, including fashion, entertainment and web services1,2 On June 16, 2017, it announced its newest expansion with the acquisition of high-end natural foods supermarket chain Whole Foods Market Inc., leaving incumbent players in the supermarket industry shuddering. At what point should the leaders in the financial services industry fear a similar entry?

We argue that the answer is — immediately.

U.S. household assets are projected to grow from $ 87 trillion to $ 140 trillion by 2030. Of that $ 140 trillion, $ 64 trillion will be investable, equating to between $ 150 billion and $ 240 billion in wealth management fees.3 At the same time, 68% of U.S. adults do not receive professional financial advice, and 45% do not know where to get the help they need.4 This sizable underserved population has attracted a new class of wealth management advice providers: “robo-advisers.” Robo-advisers are the brainchild(ren) of wealth management companies that leverage digital platforms to provide automated, algorithm-driven financial advice or portfolio management services with little to no human interaction. Robo-advisers have focused their value propositions on offering low costs (usually 0.25% of assets under management, versus the 1% charged by most financial advisers),5 attractive digital interfaces, and little (if any) required minimum account sizes to the millions who comprise America’s financially underserved.

Robo-advisers have not only attracted mass-market individuals with a net worth of $ 50,000 to $ 200,000,6 but they have also grown in popularity with affluent and high-net-worth individuals who have financial assets from $ 200,000 to upwards of $ 30 million.7 This trend demonstrates a blend of new-market and low-end disruption, as based on Harvard Business School Professor Clay Christensen’s model of disruptive innovation.8 However, our research has shown that, given reasonable assumptions on customer acquisition costs of $ 300 to $ 1,000, the average client of a robo-adviser will not generate a positive internal rate of return for at least 14 years. In a study of robo-advisers, Morningstar Inc. analyst Michael Wong estimates that the assets under management (AUM) necessary to have a break-even business model for a robo-adviser is between $ 16 billion and $ 40 billion.9

Given the critical nature of scale, and the extraordinary costs of reaching it, the benefit to being an incumbent player in asset management is obvious; should you launch a “robo,” your current client base will allow you to quickly reach a sustainable level of AUM. Vanguard’s Personal Advisor Services (PAS) reached what Wong classifies as a sustainable level of scale after just one quarter by marketing to preexisting Vanguard retail clients. Meanwhile, despite nearly 10 years of operating, the largest stand-alone robo-advisers lag considerably.10 In fact, incumbent product launches have already profoundly affected the space. Since the introduction of Schwab Intelligent Portfolios (March 2015) and Vanguard PAS (May 2015), growth rates of the pioneer robo-advisers have declined 66%, according to the Form ADV disclosures of Betterment LLC and Wealthfront Inc.11

However, in our view, the incumbent players that have entered the space are still woefully inadequate to capitalize on the opportunity for automated wealth management services for fear of fee cannibalization and a brand/trust gap.

The financial companies most capable of leveraging their existing client base to build a robo-adviser franchise are the least likely to do so for fear of cannibalizing their own high-margin financial adviser businesses. Consequently, many financial companies have pivoted their automated services from business-to-consumer (B2C) to business-to-business (B2B). Examples include BlackRock Inc.’s FutureAdvisor, and Invesco Ltd.’s Jemstep Advisor Pro. While independent advisers using these platforms to augment their businesses may improve their capacity to serve, they continue to focus their efforts on serving high-net-worth individuals who already consume financial advice. Consequently, the population of underserved mentioned previously remains without wealth management services.

Large companies in the wealth management space also face difficulty in launching robo-advice because they are still suffering brand repercussions from the financial crisis. The 2017 Harris Poll Reputation Quotient, which assessed companies’ reputational strength based on the perceptions of more than 23,000 Americans across six corporate reputation dimensions, including social responsibility, emotional appeal, products and services, vision and leadership, financial performance, and workplace environment, ranked only one asset manager among the top 50 corporations, with Fidelity at No. 37.12 No banks made the cut. Trust is the most critical element in the decision of purchasing financial advice. No individual will invest with a company he or she does not trust, whether it is an exciting startup or a century-old bank.

The Opportunity: An Underserved Market

With disruptive entrants unable to establish viable business models so far, and with incumbents unwilling to cannibalize their fee revenues or unable to bridge the trust gap, the question remains: Who can take advantage of the opportunity posed by the financially underserved?

China’s experience poses an interesting potential solution; large technology companies used their reach and brand loyalty to enter financial services, beginning with payment solutions and expanding into financial management to underserved populations. The process started in 2013, when e-commerce giant Alibaba Group launched Ant Financial Services Group to manage Alipay, an online and mobile payment platform.13 Ant Financial provided users who held cash deposits on Alipay the opportunity to invest their idle cash into a money market fund to earn a return. Within the first 18 days, it boasted 2.5 million registered users.14 Less than four years later, the money market fund claimed 324 million users and $ 210 billion in assets.15 Gradually, Ant Financial expanded its purview to online banking, fund management, and other financial services. Today, it is China’s largest financial technology (fintech) company, overseeing the world’s largest money market fund, internet bank, and wealth management provider.16 This explosive asset growth was realized despite the fact that Ant Financial has attracted mostly small, low-income investors with average investment accounts of 5,000 RMB, or $ 750.17

U.S. companies have not ignored the mobile payments space. However, despite their efforts, only $ 8.71 billion in U.S. mobile transactions occurred in 2015, as compared with $ 1.45 trillion in China.18 Payments adoption in China is outpacing U.S. adoption because of the stark contrast in credit card penetration in the two economies, with the U.S. having over 50% penetration19 and China having only 16% in 2014.20 Alipay stepped into the void created by a low rate of credit card penetration and a fragmented financial services sector more broadly.

The success of Chinese technology players entering the financial market has already presaged similar success for U.S. technology companies. As of June 2016, Apple Inc. claimed its Apple Pay platform was growing at an impressive 450% year over year, leveraging Apple’s international expansion as a tailwind.21 Facebook is expanding its peer-to-peer payments to WhatsApp, announcing in April that it will enter India, where it has more than 200 million users, to compete directly with Alibaba’s Paytm.22

While the payments space has garnered considerable attention, we see it merely as a stepping-stone to the more lucrative business of wealth management. Though no major technology player has made the leap in the United States, we feel Amazon is in the best position. Though the scarcity of credit cards was Alibaba’s door into wealth management in China, the ubiquity of credit cards in the United States is Amazon’s way in.

Why Amazon Is Best Positioned to Take Advantage

Why should Amazon enter? It already is a leader in cybersecurity, is a highly trusted brand, and has a strong preexisting customer base. Amazon has a competitive advantage via its Amazon Web Services as well as its recent acquisition of cybersecurity company And while trust between millennials and financial institutions remains frayed, the 2017 Harris Poll Reputation Quotient recognized Amazon as the most reputable brand of America’s 100 most visible companies.24 In a proprietary survey of 314 individuals across ages and incomes, 203 people listed Amazon, among companies like Google and Facebook, as their most trusted brand. Finally, Amazon boasts that 80 million people subscribe to its Amazon Prime offering, paying a flat fee each year for free shipping and other perks such as streaming video and music. This group represents fertile soil upon which to cost-effectively launch an investment product.25

Amazon credit card offerings present an interesting platform from which to launch. Consumer Intelligence Research Partners estimates that 15% of Amazon users hold either the Amazon credit card or the more recently launched Amazon Prime Rewards Visa credit card.26 Cash-back rewards from purchases made with either credit card offer an opportunity to launch investment services. Amazon could offer its credit card holders the option to hold their cash-back rewards in an automated investment product. The amount of money eligible for this opportunity could be sizable: Amazon Prime members spend nearly twice as much as non-members, and Amazon credit card holders’ average annual expenditure exceeds Amazon Prime members’ spending by 16%.27 This opportunity can be structured to encourage further spending within Amazon’s ecosystem by offering a bonus investment deposit should a user spend above a certain level. By enabling credit card users to invest their cash-back rewards via its robo-adviser, not only could Amazon eliminate barriers to customer adoption but also could achieve an immediate critical mass of clients with minimal customer acquisition costs.

The B2B Opportunity

Amazon should also launch a business-to-business offering for this new investment management service. Over 100,000 companies generate more than $ 100,000 each in annual e-commerce sales on Amazon’s platform.28 Having already established brand loyalty as a trusted vendor through holding those companies’ cash deposits and handling their payments, a natural progression for Amazon would be to offer small business owners, who tend to have less time and resources to dedicate toward designing retirement plans, the opportunity to house their retirement plans at Amazon as well — one less thing for them to worry about.

Data collection from retirement plans would arm Amazon with important information on both small businesses and individual employees. This data could not only inform Amazon’s marketing efforts to an individual, but could also be used in retirement product innovation. Today, retirement plans often provide participants a default investment vehicle, such as a target date fund, offering a portfolio tailored to a participant’s age. Imagine if that portfolio could take into consideration all of the other data Amazon stores for customers beyond their age: A target level of income might be determined by the amount an individual spent on groceries; higher allocations toward domestic equities might be prescribed to individuals working for an overseas employer; a 529 plan might be recommended for someone buying baby toys. If an individual had Alexa, Amazon’s cloud-based voice service, retirement advice could be given at a customer’s convenience in their own living room. The possibilities for innovation are limitless. Indeed, a simultaneous business-to-business and business-to-consumer go-to-market strategy would mitigate risk and improve Amazon’s probability of success.

Managing the Risks of Fintech Innovation

Execution risk and financial regulations are considerable obstacles for any technology player with their crosshairs on investment management. To mitigate these risks, Amazon should partner with an incumbent, as they did with Chase Bank on their credit card. The question then remains: who? We feel that the largest asset managers, BlackRock and Vanguard, stand to benefit the most from partnering with Amazon, and vice versa.

Amazon would benefit from having Vanguard as a partner with which to tackle regulatory threats. In return, Amazon could offer Vanguard not only a gateway to millennials but also the world’s most advanced cybersecurity infrastructure, both areas of focus for Vanguard.29 Given their similar scale-oriented business models and customer-centric cultures, Amazon and Vanguard could afford to launch a joint robo-adviser for free. Amazon could gain deeper customer insights and increase its Prime membership and credit card users, while Vanguard could continue to achieve record fund inflows and grow its mutual fund and Personal Advisor Services businesses.

BlackRock would also benefit considerably from a partnership with Amazon. BlackRock operates primarily in the B2B realm, selling through intermediaries. Increased industry competition has dramatically compressed mutual fund margins and shifted leverage to these intermediary players. BlackRock is highly motivated to pursue margin-boosting opportunities. A consumer-facing wealth management business could provide an opportunity to sell direct-to-consumer; Amazon represents a prime opportunity to establish a foothold in the business to consumer space.

Incumbent financial institutions in America should be asking themselves, “How could Amazon disrupt financial services?” Every fintech start-up should be asking itself, “What can we offer that Amazon cannot?” Finally, Amazon should gaze across the business landscape and ask, “What’s next?”

MIT Sloan Management Review