Satellites Boosting Economic Development
6 Ways that Blockchain-Powered Connectivity Empowers the World’s Disadvantaged Billions
This article condenses key points of a more detailed Working Paper which you can download here. That paper outlines nine ways that Blockchains can contribute to scale out satellite-based data connectivity across the globe, particularly in low-income societies. It was triggered by my participation in the 2018 “Geeks Without Frontiers” 3rd Leadership Forum in Washington, DC.
Millions of people all over the world are trapped and excluded from global markets, especially in low-income countries. Though often educated, skilled, driven, and hard-working, they lack basic infrastructure that integrates them into the world economy. Without access to the digital world and an effective commercial and financial infrastructure, they can neither contribute nor compete. Because this prevents them from generating economic means to invest or establish market power, it introduces a vicious cycle sustaining dependency and poverty.
How could even possibly something as theoretical and boring as cryptography, mathematics, game theory, and shared database design help such people in need?
The short answer is “in a number of ways.” The somewhat longer answer is “by establishing profitability for investments and delivering money to those that really need it.” And the even longer answer is… following now.
Connectivity is not primarily a technical issue. Current plans show for the next decade over 25,000 satellites to be launched. The combination of geostationary (GEO) backhaul satellites and a multitude of low-earth orbit (LEO) constellations will technically cover every place on Earth multiple times. It then becomes mostly a matter of priority, scale and expansion via fiber-optics or even more satellites to increase bandwidth.
The real challenge holding back so many people is to define viable business cases and secure funding to implement them. Today, it is rarely profitable to provide connectivity in low-income societies. But to be sustainable and scalable, solutions need to make business sense for everybody involved.
Emerging technologies can and need to overcome these obstacles. And Blockchain and crypto-technologies can play a particularly important role. Their inherent trustlessness, transparency and mathematical foundation reduce risks, eliminate waste, and cut costs, particularly for cross-border financial transactions and supply chains.
They can drive value-creation and use tokens to share resulting value more equitably among investors and larger-defined communities. Commercial and financial platforms using crypto-tokens can then empower every skilled person to profitably contribute to the markets of the future. Ultimately, Blockchains can even upend and transform traditional thinking and their novel business approaches can introduce substantial new income opportunities.
While these benefits of crypto-technologies require connectivity, Blockchains can also provide additional ways of funding and investments to establish such connectivity in the first place.
Of Dignity and Commerce
The value and urgency of ubiquitous connectivity is rooted in recent powerful shifts of technology, dramatically altering the way economic and social systems work. Although for many thousands of years we did not need digital connectivity, technology nowadays directly affects the ability of humans to live a dignified life as individuals and part of communities. On the most fundamental level, such dignity requires economic opportunity and capability.
Development and dignity require economic opportunity and capability. In today’s world this means: connectivity.
In principle, access to the Internet can enable and empower the previously disadvantaged. But although connectivity is a necessary condition, establishing a data connection is not sufficient in itself. On top of data connectivity needs to sit an effective commercial and financial platform that functions efficiently and without interference by intermediaries. When conducting business is easy, costs are eliminated, fees disappear, corruption becomes difficult, and regulatory limitations are removed, then the smart, creative, and hard-working masses can create enormous amounts of new value — and translate it into income.
To achieve this key condition of connectivity, traditional approaches replicating the rich world’s multi-trillion-dollar and century-long infrastructure development are not feasible. They are too expensive and cannot quickly enough address the urgent needs of about a hundred nations and billions of underprivileged people, spread over vast geographical areas.
Economic success needs to be bootstrapped and scaled out using a combination of satellite technology and Blockchain-based business approaches. If the model is economically viable, a mere bootstrapping effort can launch profitable projects and make them self-sustaining.
Solar panels and ground receiver stations reaching out to a satellite can connect people to the rest of the world, enabling more advanced education and integration into more social and economic networks and business supply chains. An efficient and affordable commercial platform then increase these people’s ability to participate in higher-end and better-rewarded economic activities. This in turn increases their chances to pay for even better data connectivity, more electrical energy, improved computing, higher-value training — and a virtuous cycle has been triggered.
From Improvement to Transformation
Blockchain and crypto-technologies contribute to the above-described advances and the empowerment of the disconnected in several ways.
(1) On the most basic level they can fund development via cryptocurrency denominated donations, crowdfunding, and direct investments to fund or at least financially support connectivity projects. This helps although it is mostly just an extension of existing models, without going beyond their substance.
(2) More profound effects come from using Blockchains’ inherent characteristics and capabilities. Their transparency can track project progress and the use of donated or invested funds. Blockchains create openly visible and immutable records that are verified by a network of computers and not a centralized entity that can be corrupted or attacked. This makes them appealing to donors and investors.
(3) The potential impact of financial and supply chain efficiencies goes even further. Faster and peer-to-peer (P2P) cross-border financial transactions can reduce foreign exchange costs by up to 20%. And, Blockchain-operated computer code, called “smart contracts,” can introduce significant efficiency gains by automatically processing transactions without interference from outside parties. As a keeper of immutable transactions on a shared ledger, Blockchains also increase auditability and reduce project costs by eliminating the costly duplication and reconciliation of records.
Connectivity can create more value when using mathematics and inherent Blockchain functions and tools, like transparency, tokens, immutability, and distributed governance.
They reach even larger benefits by introducing new business models that cut out intermediaries. By fostering network effects they scale out and lower costs, using tokens and math to align interests. Mostly, Crypto-communities are built on decentralized governance models, the tokenizing of value generation, and the integration into global digitized supply chains.
(4) Of these, Blockchain-based distributed, or even “on chain”, governance expands on the basic concept of transparency. Using mathematically defined and enforced economic motivations and rules, they encourage the reaching of consensus about what is the shared “truth.” Together with direct or delegated voting among widely distributed members, the nodes of the network, or the owners of tokens, can go beyond such automated consensus mechanisms. In either way the results are jointly made decisions that cannot directly be influenced by external parties and traditional “political” ground rules. This way, people can self-organize and use tokens for exchange of value, making networked communities independent of corruption or inefficient reliance on intermediaries.
(5) New business models can tokenize a mix of services, like the provision of renewable energy and data connectivity, education while using data services, or the delivering of medical services using the Internet. It blurs the distinction between you paying for more efficient access to energy, education, or medical services — or for Internet connection. Tokens can even drive the funding of such endeavors. If they create a clear link to future monetization, and in combination with the above-mentioned superior transparency of Blockchains, such investments can be appealing to private investors in ways that connectivity-only projects are not.
The Biggest Bang
The most dramatic impact of Blockchain-driven connectivity involves business models that anticipate future technological and economic trends and provide a mechanism to take advantage of them from the outset.
(6) This is mainly based on the integration of skilled labor into global digitized supply chains. The underlying logic is that automation, robotics, and 3D printing keep reducing the value and impact of traditional supply chains. In their global search for low-cost (manual) labor, such physical supply chains for mass-produced standardized products had enabled and driven the rapid development of East Asian and Southeast Asian societies since the 1950s.
However, the relative value of physical labor keeps shrinking. It is being replaced by automation in the form of robots, software-driven processing of transactions, and simulations using virtual and extended reality. Future economic growth is linked to the continued digitization of global supply chains and the personalization of products and services. As a direct consequence, the value of data transfer and virtual interactions increases dramatically.
The flip side of the reduced demand for physical labor is then an increased need for flexible, creative, and skilled brains. Humans need to define, guide, consult, operate, review, translate, and identify requirements for personalized products and solutions. They consult and advise via extended reality/XR-driven simulations, design solutions in interaction with customers, define and specify them by programming software and supervising and maintaining the machines and robots producing them, while engaging with customers when the products get delivered. Many or most of these services will be delivered electronically and remotely, whether sitting next door or a continent away.
The output of virtually connected and empowered human brains will increase in value. And this points at low-income societies, because the majority of the world’s young population lives there, like the 800 million Africans below the age of 30. Connecting these people can therefore show an excellent ROI. In the wake of this, it also can radically transform economies, benefiting hundreds of millions of people.
“Crypto-economic motivations” built into Blockchains can be the foundation to design highly profitable business ventures. Their premise is that sustainable business models for connectivity are linked to economic growth, and that future growth is directly linked to the continued digitization of global supply chains.
Earned, not Given
The key to reach this is not welfare, but using data transfer and communication as the key infrastructure component to connect “things” and services of skilled humans to their markets.
Blockchains can govern these investments and use smart contracts to ensure that investors get properly compensated out of the actual transfer of data when users deliver high-value services. They can provide the commercial and financial platform for training professionals in poor countries and then delivering their services into the rich world. The mathematical governing of business activities via Blockchain tokens and smart contracts can then ensure profitable payment models for investors amid equitable compensation for the newly-empowered. All is effectively paid by the customers of digitized products.
This results in a massive influx of revenues into low-income countries — “earned” instead of “given.” It would in itself justify using Blockchains to facilitate, fund, creatively design, and execute connectivity projects. But it does even more: their empowerment of each person through income, opportunity, and capability creates dignity and value for the whole world.
In my recent book “Techies, Trust, and Trillionaires” I laid out how data connectivity initially focusing on innovation hubs can integrate skilled, educated, and trained young African brains into global digitized supply chains. It enables them to provide services as if they were living next door, or in Sacramento, Barcelona, or Busan.
