Ocean Protocol
February 11th, 2019 | Written by Max Hinchman
2,500,000,000,000,000,000. No that is not the Jeff Bezos’ projected net worth in 2 years. That 19-digit number is the actually the number of bytes of data that world creates EVERY DAY. Actually, it is certainly much more because that number was pulled from a 2018 article. In addition, more than 90% of the worlds data has been created in the last 2 years alone and is projected to grow exponentially. By now, I am sure that literally anyone that hasn’t been living under a rock for the last 5 years has heard that data is the new currency and that the companies that control data effectively control the world.
The issue is that even though insane amounts of data are being generated every day, only a tiny percentage of the data is actually being used. The main solution to this issue is the development of a functioning data marketplace. Accenture’s Data Marketplace report described the data marketplace of the future something like a website like Amazon, where customers have millions of data sets to choose from. An example of a customer of the future data marketplace is real estate developer purchasing the data generated by a connected air conditioning unit in order to create a design for a building that was more energy efficient. Another example future customer are AI researchers, who in constant need for massive high-quality data sets in order to continue to develop their tech.
What is Ocean Protocol
There are two main issues that the current data market faces:
1) companies that do have the IoT devices that are generating the data but are just sitting on the data because there is a lack of control, privacy, and security associated with sharing the data.
2) The data that is available is mostly held by the large tech companies, like Google, but they have their own in-house AI development teams. This siloed situation is setting the stage for a monopoly of the development of AI tech by large internet companies that have readily available access to huge amounts of data.
Trent McConaghy, a co-founder of Ocean, said that “Blockchains are incentive machines — you can get people to do stuff by paying them.” An “incentive machine” like blockchain, can create a decentralized neutral platform that addresses the control needs of the supplier, compensates the suppliers of the data, and also compensate independent network participants for maintaining the security of the network.
The Ocean Network is a layer 2 protocol built on top of Ethereum that aims to create the ecosystem for exchanging data and data related services. They are building the foundation for data buyers and sellers to meet while providing the necessary control for suppliers, the proper auditing trail, and a system for compensation. Ocean envisions a network with thousands of peer to peer data exchanges on top of the Ocean Protocol, with access to secure and high quality data sets.
How it basically works is that the data is initially uploaded by the data owner and the data owner is compensated once the data is used. Payment is made using the network native token, the Ocean Token. However, the token owner must stake some of the Ocean token until the data is verified as original and of quality. Suppliers that upload “stolen” data will lose their tokens that were staked. The network also offers value added services such as data curators that act as quality control for the data. The final part of the Ocean network are the independent keepers of the network that are compensated in the Ocean token for their work in running and maintaining the network.
Blockchain’s Value in Data Marketplace
McKinsey’s Data Marketplace report listed 6 things that are necessary for a successful data marketplace: building an ecosystem, opening new monetization opportunities, enabling crowdsourcing, supporting interoperability, creating a central point of discoverability, and achieving consistent data quality. While these are the fundamental needs of all data marketplaces, marketplaces will also tailor their services based on the “kinds” of data that is being offered. Similar to how there are many different types of retailers, the same will apply for data marketplaces. For example, there is another blockchain-based competitor to Ocean, called Oasis and is focused on keeping the data private.
What value does Ocean bring to the data marketplace space? McConaghy, also said one other thing that is critical to understanding the value of the Ocean and that is to “decentralize access to data before it’s too late.” Too late referring to before the large tech companies with access to the large data sets dominate the AI ecosystem. It really comes down to providing the tools for smaller AI companies and even larger traditional business looking to establish their AI related businesses without being completely reliant on the large tech giants that already have a substantial AI division. The beginnings of the battle that will take place against the tech giants in the AI space is already happening with car manufacturers searching for ways to keep up with Google and their autonomous driving efforts.
Ocean is the company neutral decentralized platform powered by the incentive machine. This collaborative platform is in the best interest in it is in the best interest of the companies that see the large tech companies’ AI efforts as an existential threat to come together to collaborate. and not
Three important things to remember about Ocean
1) Their focus largely seems to be on IoT devices generated data for distribution to AI projects. The development of this market, however, will take time to grow as the usage of IoT devices are still in the early stages
2) Their numerous partnerships with companies and organizations in Singapore. Singapore is making a national concerted effort to create the next generated economy powered by AI, IoT, and blockchain. PWC Singapore, the IMDA of Singapore, SGInnovate and AI Singapore.
3) Their partnerships within the crypto space. Their use of the interoperability chain, Polkadot, will give them access to other networks like Enigma, SingularityNet, and Filecoin. Having access to the additional toolkits like the ones listed above will allow Ocean to develop an optimal platform for their core customers.
A Few Questions
While it is still largely speculative, but the total market value of data transacted over a data marketplace could possibly reach $3.6 trillion by 2030. It is clear that Ocean is in a position to be in the middle of the data economy. But there are still a few questions
1) There are others that say that data market main hindrance is the fact that there is a lack of understanding of the clear value of the data set. The value can only be derived once the data is bundled clearly and the users are guaranteed some sort of an outcome with the data. How does Ocean meet these needs?
2) What is going to be required to get the finance departments of the companies supplying the data comfortable with accounting for tokens?
Recommended Additional Reading
https://blog.oceanprotocol.com/ocean-protocol-partnerships-in-singapore-1e9e10ef42f6
Disclaimer: Investing in cryptocurrencies and related projects is highly risky and speculative, and this article is not a recommendation by the writer to invest in cryptocurrencies or crypto-related organizations. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions.
