The most beautiful and pure way of looking at what these technologies can bring you is encapsulated in the term self sovereign identity, which means I now have cryptographic mechanism, misses technology, but I use them now to basically establish my own identity through my own network. And we share, so I have the connection to you and you verify certain credentials. You say, yes, Harry knows a lot about blockchain and me Raj. I'm the one that confirms that. And based on that and kind of a social manner, but fully self-sovereign I do not take this from a government. I do not take this from a company. This is me self sovereign, me, the owner of myself, all of my data, all of my identity. And that's a beautiful dream to treat
Hello, everyone. Welcome to Frontier Talk. The world's first podcast on decentralized identity. I'm Raj Hegde. And in this podcast, we explore the intersection between identity technology and people joining me today is a technology thought leader who has broken new ground in building practical software solutions for finance and mobility. What's special about him is that he's a man who truly lives on the frontier. As you, as you listen to his journey, you'll notice his tenacity to venture into unchartered territory. Even before he asked the how figured out this innate curiosity to study, how technology has the power to change lives, led him to do a PhD in distributed AI at a time when no one really knew about artificial intelligence, he had to share a stake on how companies can leverage these centralized identity to build more personalized products. Dr. Harry barons, the head of blockchain factory at diamond mobility,
That it was a very, very strong welcome. I appreciate being here and I'm really looking forward to discuss, uh, how, uh, what is happening while things are moving around. And this is a very exciting field of technology and how now identities become a core part of how business and technology is being conducted in the next few years.
Likewise, already, it's great to have you on board. I look forward to learning a lot over this conversation today. Um, well, Harry, let's start off by talking about your journey so far. Um, how did this path ultimately lead you to the world of blockchain
Services? Well, I've always liked technology, especially software, and because software is how people bring their thoughts into real life and real business. That's what the beauty of software. So I've always, as soon as software became something that is accessible, I was into it. So I studied computer science. I've focused on where communication meets computation. So basically a computer does something in a box, but it gets really interesting where now there's computers or systems or devices. And they start talking to each other and a soul all through. Basically my career, I focused on what used to be called distributed computing. Then it became networking. Then it became internetworking. Then it got a name and that's the internet. And now it's becoming much more powerful and something is emerging that is fully disruptive. What it's called the blockchain, whether in the end it will be the internet of money, the internet of value, or simply the net or the metaverse.
Some of some people call it slightly. Poetically is not sure, but either way I got hooked on it. Um, preliminary hooked, very interested when Bitcoin came out, but I didn't really get having a handle into it. I'm not an investor stock type of person. So I admired the beautiful revolutionary concept, but you couldn't touch it. You couldn't program it, but then out came Ethereum and all of a sudden the world is our oyster as a software engineer, as a digital native, um, all of a sudden you had this world computer of transaction processing available, brought to us by this brilliant Russian Wizkid. And that's the moment I got hooked. Right.
Sounds fascinating. Um, for our audience, could you perhaps take a step back for a moment and summarize what the blockchain factory is and the stuff you're working
On? Yeah, so the blockchain factory is the blockchain team within diamond and mobility and diamond and morbidity is, was formerly called Daimler financial services. So we are the service arm of the diamond group. So we have one holding, we have two manufacturing companies, one producing passenger cars and vans, the other one producing buses and trucks. And then we have the service company. So we focus on basically taking products like a truck, like a bear sheeters and building services around them, the most obvious one being financing and leasing. But then you've got fleet car, poor management. And now as the world is changing, especially in the urban space towards mobility, which is why the company renamed itself from Daimler financial services to diamond mobility a year and a half ago. And I'm heading the blockchain factory there, which I founded, uh, as of the 1st of September, 2018.
Right. So that has perhaps double click, um, on your, on your time currently at the blockchain factory. So to say on this journey, were there any seminal moments that made you sit up and say, wait, hold on a second, we might be onto something big here.
Yes. The actually the beauty of is this seminal moment came before the actual founding of the black blockchain factory. And it was ultimately, if you wish, the reason that the board of management was convinced because we had looked at what is blockchain, what is decentralized? And then we have recognized if you look at the life cycle of a car, it, and you think about accounting. Now you stop thinking about accounting and booking and transactions from the perspective like you always do, which is company-based. So you have your ledger in your company, but all of a sudden you realize in the automotive world, in the mobility world, in the insurance around vehicles, there is no exception to the following statement. Every single contract management system, insurance rental financing purchase, leasing repair will always have the vehicle identity, the vehicle identification number, the VIN as the first or the second key in that contract.
And the moment you realize that you hit jackpot, because first of all, well, I got a one-to-one unique identifier. Not only that I know everybody in the whole world has got the very same identifier in each and every single one of their contract data. So I don't need to take care of that. And now I understand that blockchain is a distributed ledger. So how about we think about it the following way? Yes, we have a ledger, but it's a ledger built around the car. The car keeps its ledger around and as it travels through time and space, it passes companies and it rests a little bit on the, on the general ledger of this company. And then it leaves that company as it's being sold and it parks itself in the general ledger of yet another company, it never loses its identity. And internally, also it never loses its own lifecycle of transactions.
And the moment that was clear, basically the mobility blockchain platform was born at that point in time. It was still called smart VIN, which by the way is also a good name, I believe because VIN as in vehicle identification number, and there's actually also where you see, you cannot separate something like blockchain, which very much focused on transactions from identities, especially if you're in the corporate sector where we do need to know how our counter parties and when we do booking accounting pain, we always need to be aware who is what and who did what with whom.
Right. Sounds interesting. Um, could you perhaps double click on this concept of Wakil identity? I think it is a concept that is definitely interesting. Um, as a mobility Westran you have closely seen the evolution of awakened. So to say from being this purely mechanical entity to the more computational platform that it is today, and there is talk going on, are going on around rather, uh, about a connected economy where wakers are expected to not only interact with each other, but also with infrastructure around them. So what's the role of identity in making all of this possible. Uh, I'm curious your thoughts on Wakil identity and perhaps the standards built to secure such identities.
It's actually very, very simple because each, uh, each vehicle is a registered subject. It gets actually registered you when you, obviously you have it, you have a number plate on your car, there's a title on your car, which is the ownership of that document. And so it's not only that you have the physical object, but it's actually a registered object in many governmental or half governmental authorities. Your insurance needs to know about it, et cetera, et cetera, et cetera. So the identity of this vehicle and that it is totally immutable and that it is totally unique, has always been clear that it needs to be there. So there's been, was not invented in the time in the times of blockchain. It's 20, 30, 40 years old. And the beauty of it, as I said, it's universal. And the reason it was built is because exactly you need to be able to find that vehicle wherever it may be and whoever may own it.
But now as you move towards digital services and which basically means fully automated services, because it means software. And as you realize that software is eating the world, and if any of you who are listening, do not know what that means. Do go to the Google and find the article by Andreessen Horowitz, why software is eating the world. It's beautiful, it's crisp, it's short. And it tells you everything about the internet and platform economics. From the point of view of somebody who saw it coming before it came. And the point important point is software scales unlimited, but software scales are limited because it automates completely. If you want to, however, to automate something completely, you must not allow media breaks. That's a simple one, but you must also not allow the possibility of dispute because in case you have disputes or doubt, then that would stop the flow.
Because then you would have to say, no, I didn't drive five kilometers. Yes. You drove five kilometers. And if there's any doubt about this or that machine sent me five, whatever units in this transaction and the recipient says, no, I only received for the moment you got that. You cannot fully automate because you will have to bring in four eye principles. You bring in humans and humans slow down software by a factor of millions. So if you truly want to scale and you truly want to automate, you must make it possible for the chain of automation to be unbroken. And if you go that route and you also think about that, every transaction don't forget, we're in the business of doing business each and every one of us needs to be booked. So you want to basically book the liabilities and book the revenue. And at that level, at least you will understand this must be audit proof, fully legit, legitimate, fully verified, and with all credentials there, because otherwise, again, you want to automatically settle them.
Otherwise there's no way I can automatically settle their liability. If there's any doubt how it was created and who was involved, long story short for this, you need the identities of all parties involved. You need a secure way of having them state facts, meaning you need a secure way for them to sign on whatever data they send you or whatever statement they send you, or on a contract that they have signed on this contract. And once you got that and you make it unbroken, then you truly achieve seamless automation. And for that you have in the life is really simple in this, in the whole automotive and mobility sector, you need only three identities. And that's the identity triangle around which everything we do with the mobility blockchain platform we've evolved. There is no exception company customer car, and you can extend the car concept to any smart device charging stations, whatever it just rhymes, nicer car CCC company, customer car, any transaction at all that you can possibly think about will involve the identity of the car with the VIM, the identity of you as a person. Obviously when you sign something, we need your identity and the identity of the company whoever's offering the service, possibly paying another company. And once you got that down and then all of a sudden you see, wow, the world has gifted us with convergence. We didn't only have IOT already smart devices. We've got blockchain and hello, welcome did decentralized identifiers. Life is complete. We can start building everything we've been dreaming about for the last few years, right?
I would highly recommend, uh, the article by Marc Andreessen title. Software's eating the world. I think it's a fascinating read. And just like the blockchain factory is leveraging software to say transform the mobility industry. We at KuppingerCole with the Frontier Talk podcast are leveraging the power of media to, in a sense, give decentralized identity a human voice. Um, and I think that's a great segue to dive into the identity sphere. Um, digital identity has evolved from being, say heavily centralized to now being more used to now being more user centric. However, while such user-centric identities are interoperable, the ownership of such identities still remain with large entities with questionable motives, the ones who cannot be named, um, how would you perhaps describe decentralized identity and where does it fit in these Kema of identity? As we know it today?
Well, let me start with the maybe most beautiful vision of decentralized to which I have to add immediately, which is not usable in the corporate world, the most beautiful and pure way of looking at what these technologies can bring you is encapsulated in the term self sovereign identity, which means I now have cryptographic mechanism. That's just technology, but I use them now to basically establish my own identity through my own network. And we share, so I have a connection to you and you verify certain credentials. You say, yes, Harry knows a lot about blockchain and me Raj. I am the one that confirms that. And based on that in kind of a social manner, but fully self-sovereign, I do not take this from a government. I do not take this from a company. This is me self sovereign, me, the owner of myself, of my data, of my identity.
And that's a beautiful dream to dream and on the technical level and on the kind of crypto on our kiss tickle level. And I mean this in a positive, not in a derogatory manner, this is being pursued. No doubt about this. And technically speaking, however, they're just call it more neutrally, decentralized identifiers. It's a web threes, a web world wide web consortium standard in the forming. And it basically describes the necessary protocols for this. Now, having said this beautiful song about the self-sovereign identities, let us not forget one thing you Raj, I think you're a citizen of the UK so that when you go and sign a contract, whatever you think you might have as your personal identity, whatever your mother and your father and your friends have given you as their form of identity, that is not going to interest anybody. When it comes to the contract signing, you show me your government approved identity.
And with that, that is the one we confirm that is the one we check that the signature matches on that identity document. And that's the one you're going to be signing your contract with otherwise, no contract. So the point I'm trying to make is human identity in the legal sense of the word when it goes on to a contract and when it enters business is, and there's simply no way around, this is the identity that you respective government has given you in Germany. It's in my personal ID document and possibly in my passport, ultimately tied to my birth certificate has the master file. And it will always come from that. So you now have decentralized technology, which is beautiful, but you still need to, if you want to use it in the corporate sense and have it clickable to contract business transactions and accounting records and cash transactions where everything is governed by know your customer, which is a government prescribed regulation, you need to map it to the fact that you have a route authority of identity, which will always end to no exception, be your government. It, and that is where the interesting hybrid forms of decentralized identity come. The purist will say, oh, that is betrayal of a beautiful concept of a beautiful technology, but the pragmatist will have to go down that route because otherwise this beautiful technology stays either not utilized or only in the hands of a few idealists. Right?
So you just mentioned that, um, decentralized identity in a more corporate setting, slightly differentiates from the core concept of self-sovereign identity. So what is the business value for an enterprise say off this hybrid decentralized identity model, is there anything in it for enterprise? I'm
Not sure how many of your audience will be from big corporations, probably a big percentage. And then I don't know how many of them will have had direct exposure to what is happening in each and every single one of their companies, which is the very famous or notorious master data projects. So every few years, big corporations, especially multinationals run this master data cleanup projects. They used to cost single digit millions. Then that costs double digit millions, and they're approaching triple digit millions. They usually now by now take one to three years and they're almost always failed in the sense that one year after they're finished, everything has helped us get there again. So what's the master data problem. Well, me Harry barons, I used to lease a car in China with a company called MBA IFC, which is a subsidiary of diner. Then I also used to be a customer of car to go, which happens to be a subsidiary of that very same MBFC then I'm driving a Mercedes now in Germany, where I have a mercy dismia account, which is here in Germany.
Then I actually go and rent a car from NB rent, which is Mercedes Benz rent, which is fully owned subsidiary of the very same conglomerate. That is four different records for different records, master data, not only do I have to go through the pain of registering myself each and every single time providing my passport, my KYC, my this, and my that, no, the con the whole company as a total total doesn't know that this is the same area. This looks like four customers. And every it line, the big corporations notice, and there's simply no way around it. With existing technology, you can run incredibly smart search algorithms that cost a lot of money. And a lot of time they have, depending on how good you are, you might get close to 80, 90% ratio. You have a lot of false positives. You have a lot of false negatives, and those are very expensive to finalize.
And anyway, it immediately diverges again because you have no way of keeping under control. And now if you think about their identity and most people don't get that, most people make the mistake. An account is like an identity, but note that I can have many accounts, you can always verify that account is hairy. Yes, but identity is by the definition of the term one to one. So not only can you prove that this account, but is Harry Barron's no, it must be the only account that Hardy balances, just like you have only one government ID. Think of it as the voting problem. You wouldn't be able to hold public votes if you didn't have true identity to one-to-one because otherwise I could use the one identity on that voting booth and go right next door to the other voting booth and vote again. So you need identity in this strict form of the word, the technology of decentralized identities gives you that capability.
And then you bought, if you then develop the concept of a trust provider that handles this KYC master data, once the customer only entrusts her data to this trust provider who keeps it in a mutually secure way between the wallet of the user and the backend of the co of that trust provider. And then if anybody asks me for validation, then I would be confirming. So a little bit of the self sovereignty stays and that process provider will then sign with their credentials as being a regulated, certified, recognized trust provider will confirm yes, me trusted and appreciated and registered. He does conform trust provider here with confer, with my digital signature, which again has been verified by a trust provider that verifies company's identities. I have verified that indeed, how they manage the solid balance. He is over 18 and he has a valid driving license, which has been visually inspected in the last six months.
Once you've got that, then you use that as the golden record, and you put that in all of these distributed companies records, but it's a one thing just like your personal ID is one thing. And that just solves the pain of all of this master data. And if you go into any sales organization in the company, they all want this 360 degree view on the customers. You know, every person will tell you that user centric view, you cannot achieve that if you haven't unified identities, because otherwise you're looking at four shadows of the same person, right?
Identity is one-to-one. I think that's a great statement. And that leads me onto my next point, which is that identity traditionally has been a very innately physical concept. Um, today, I mean, as you mentioned earlier today, I can walk into a store and simply authenticate myself by say, showing my passport or ID for just the driving. However, it's not so simple when it comes to say authenticating yourself online. Um, can we anchor digital mechanisms to physical identity in order to perhaps solve some of these challenges, uh, pertaining to the interoperability, uh, of decentralized identity. So to say and scalability,
And if you always have one thing and be aware of the technical fallacy, so you have perfect software. So in a way, blockchain in an ideal way as a kind of perfect software, but just because something is on the software does not mean it's true because I could state that the moon is a gray green cheese and commit that to the blockchain and that in no way makes it a fact that the moon is green sheets. It just makes it a fact that Harry's talking nonsense and has access to a blockchain. So what I'm trying to say with this, don't fall into the technical fallacy of thinking you can solve the problem. If you've got perfect software, always think of the, what used to be called the cyber-physical link. So in a good and well-educated cryptographer will always tell you, in order to assign an identity to something, there must always be what is called a ceremony.
And the ceremony is a very regulated ceremony in which certified specially in trusted people or organizations make the match between the physical object, the car, or you as a person or the company identify that they have been certified registered. They are so they are vetted and they are special pre people. And they then make a ceremony where they take a public key. They take a face, they take a government ID. They say MI certified trust provider in this ceremony, in this notary of identities here with the certify that I have seen the face and the body of Raj Hegde. I have seen the personal ID document with number of Raj Hegde. It, I have seen the public key that he plans to use for his digital identity. I confirm all of this with the current timestamp under oath and in my qualification as, and now I put a timestamp on it and notarize it on a blockchain.
Once you got that, you got your identity digitized, but you can never get around this physical site, physical to digital ceremony, because as you said, you're a physical beam. So you're not going to be able to jump that gap without one ceremony, which is half physical and half digital. And because this is the most important case of birth and all of this for the digital, it must be highly ritualized. And it must be under a very strict ceremony in order to fully do its purpose, which is because technically speaking, you have the capability to break the security in this context. So you need to ensure the trust in it by the ceremony and by the special people that you allow to do it, for instance, for contract it's the notary. And if you don't have that, you will never achieve this, but once you do this and the ceremony is in place and smooth, then you can move forward. And the, after it has been done, we took your public key. Okay. We are free. Now, digitally speaking, the software engineer can come out and say, now let's do some stuff because now I got your public key. Now I have all the software I assign a did to it. Yes. Rock and roll. We got you on there. My software works. I got you on KYC through welcome to the platform, right? I
Believe now is a great time to look at the applicability of decentralized identity in the mobility industry for that matter. Um, the mobility industry for one is highly fragmented. As you might know, you have a large number of scooter operators, riding operators, car sharing platforms, all competing in one shared urban space of sorts. Um, and with more players coming in eventually means more identities. So does decentralized identity. I hire
You as a sales guy, as a business developer. You explain this better than I could.
You'd have to contact, uh, yeah, my superior is that KuppingerCole. But, uh, yeah, we, we can talk about that, but, but for now, um, yeah, so with more players, it eventually means more identities that play. So two decentralized identifiers have a role to play in the industry. Oh yes.
Oh yes. Because especially, let's jump a few years ahead just to make the point really clear. It's not fully at that level yet, but it will be each vehicle should when you rent it, when you find it, when you use it, and that can be a scoot over a car or the bus door or whatever, you don't want to have a human interaction having to open the door for you or having to give you the car key and tell you the car is on parking lot, P 67 or blah, blah. You want to have this fully digital, right? So including the door opening or the engine on whatnot, whatnot. So for that to happen, you need to be able to locate that device. You need to be able to somehow interact with it. First of all, legitimize yourself, Hey, I am Harry that in that company has sold me a ticket, which gives me access to you as a vehicle.
You vehicle, would you be so kind as to verify and then be at my service and then the vehicle go, okay, let's have a look here. All right, Harry. Okay. Who's vouching for you. Oh, that company's lodging for you. Do I know that company? Hmm, yes. I know that company does my own and all that company, my own animals, that company. Okay. Did my owner and that company have a deal that allows my company to deliver services to you. Yes. All right. The school does switches on for that to work. The identities of everybody involved here needs to be, need to be undoubtable and irrefutable, and they need to be in an unbroken chain of verification because otherwise you've got all kinds of security attack vectors. So it must be unbroken. And this can only be done. I believe on what is now called decentralized identifiers, where ultimately the keys for this technically in the pure way of the word being at the edge, meaning the key and therefore the control over this identity.
This is why they're centralized. Decentralized is with the person. So in the, in my wallet here, in case of the car in what's called a hardware wallet, which doesn't have much to do with money. The wallet is like most males in Germany, the right pocket, right hand, pocket, right pocket behind. They have the wallet, you take it out, you always have your identity documented. You also have your credit cards. So the wallet is the container for your identity. That's what that means. You can also put cash into it, which is then tied to your identity. But a hardware wallet is mainly that piece of hardware, which has a secure enclave. So it keeps your keys safe. And then it allows you to assign a one-to-one unbreakable identity to a device and also to companies and for the car. This is very important because remember you want to automate all of this.
So then you get what we call billing records in the telecommunication industry, or call detail records. So you basically get from the device, it sends you, I just drove X kilometers, GPS, route, blah, blah, blah. I just, my state of charge was reduced by, I don't know how many Watts, whatever, whatever, but in order for you to send you that they all already can do that. But if you keep those in your record, you want those records to be immutable. The only way you can do that is if what you have, what's called the digital signature, because the moment you put a digital signature under any type of data, the moment I change, even one, i.one dot on the I, and I verify that record. It tells me no, no, that is not the original data. I cannot reconstruct the original data, but I can verify as the original data or not.
And only then again, remember for this to be fully automated. It needs to be irrefutable. You can send data even now, but then all right, I'm the database admin right now to get your login SQL update. Thank you. That was now I didn't drive a hundred kilometers. I only drive 10. I love SQL. So in order for that, not to be doable, you need this data at the moment. I do that. And then the moment somebody extracts the data, they run the crypto graphical protocol. Okay. Check the signature on the data, the group, this is breaking something's fishy. That is not all a record. So this is also why identity for devices are so important. And they also another point about these decentralized identifiers. And that is what makes them so beautiful from the design perspective, they are, what's called you are eyes. So in order not to get too detailed, which is this more or less the same thing as a URL, as in, when you go to the browser dub, dub, dub KuppingerCole dot D E that's.
Your URL right at did is exactly like that. So it becomes addressable, which means that very same did can now have it say its own URL by which it answers. So you address it and you look okay, who are you? And then it states about itself. I got these features. I provide you with these functions. And if you, if you interact with me, I will always digitally sign. So you really really know you're dealing with that identity, very similar to HTTPS. So when you have that sweet little lock in your browser, you know, you're dealing with microsoft.com and not somebody who's impersonating microsoft.com because there's a trust authority and cryptography in place that makes sure this is microsoft.com. And all of a sudden you have provided this very same level of security to each and every possible endpoint. So that's humid that's companies. And most of all, that's the billions and tens of billions and hundreds of billions of devices out there. And as we move towards autonomous driving, smart cities, internet of things, factory automation, you name it. And each one of these in a not too long future will have digital identities because that way, you know exactly what is, what, who is who, and you don't have to check and waste a lot of time of doing verification reconciliation for high principle, blah, blah, blah. That's the beauty of these technologies,
Right? All of this sounds very fascinating, but I would like to shed the light on your statement in the very near future. So to say, so all of this talk about autonomous driving and interconnected Wakefield sounds brilliant, but the mobility industry, at least for now is totally focused on this thing on the singular Waco. So to say, and when it comes to the blockchain and decentralized the decentralized identity industry. So to say there has been a lot of criticism along the lines of too much sizzle, but not too much stake. So is there a platform out there that is currently in the works or is there a platform out there that is live well? There's something we need to know.
Now it comes to time where I do have to mention what we do and I apologize for the plug for the pitch, but it's just true. So we have at diamond morbidity, we did develop what we call the mobility blockchain platform. And if you Google that on the mobility blockchain platform, you will see there's a number of very renowned ventures that built it together with us. And this is a really production ready software that is addressing a diff a very fragmented urban mobility ecosystem, where the main product is not that scooter or that bus or that car, the product that you consume and that you want as a consumer is single entry. So single channel, I move through the city in a way that suits me best. I walk then obviously I don't even need an app. I walk, I took, I take a rent, a bike.
I hop on a scooter. I identify myself to the bus. I hop on the taxi. I provide my QR on my NFC and all of this, ideally in a way that after having been identified once, then the whole rest, it should be like roaming. The whole rest is happened automatically through verification of credentials on the B2B level. And based on that, then introducing now then synonym of blockchain, distributed ledger, which means distributed bookkeeping, which means dif distributed revenue distribution. You then use that to make everybody whole in real time and fully consolidated in a way that no accountant in the world can realistically dream about now because the sum of all records across the whole ecosystem are net sum equals zero in real time. At any point in time. Now that is something that was simply impossible before the age of decentralized ledgers or distributed ledger, right?
And the necessary verification of identities, because any accountant in the world will tell you, you want to book a record, show me the identity of the counterparty. That is also, there's another break in paradigm here because on the pure blockchain public world, trust the transaction, not the person. So I don't really care who you are on Ethereum public. I don't really care who you are on Bitcoin because the transaction itself through this very, very strong consensus protocol vouchers for itself, that does work. It's true, but it doesn't work for accounting. And at the very latest when the tax man comes, it really doesn't work because when you tell the tax man, well, who is the counterparty? Oh 0 6 7 8 bump bump, bump, bump, bump. Ah, and you took money from that zero six, ha ha. Okay. I think you better come with us. We have a nice car downstairs. Say to the back, please, you get that point, right,
Absolutely. Right. And um, in our conversations, uh, privately, you had mentioned that identity is a means and not an end. Uh, could you perhaps double click on the statement in the context of the mobility blockchain platform? So did decentralized identity play a crucial role in building this program?
They build a crew. It's a crucial role. You couldn't do it without it, it provides just the right layer. That's traction. It makes all business facts, or Prudential's all tickets, all value perfectly portable across one blockchain to the other, but it is not a business model. Nobody is going to make money on decentralized identity. Nobody's making money on identity documents. And if you look at, and I've been around, I've seen a lot of hypes and I know the dynamics of hype. There's an incredible hype now in the idea. And everybody wants to be in it from the politics to the big corporates, to the big data dump. It's important, but I really counsel everybody. Who's going to put money into it. This is highly crucial, but it will be a mass market commodity business, exactly because of its scope. So this is not something that is a business model in itself.
What identity, what's the business model and identity, and I'm going to sell it. Myself sounds like slavery, right? Obviously not going to work. So there's, nobody's going to make money directly out of identity. You make money because you have a smart business model for which you need to be sure that your counter parties are verified. And the money you make is the money of your business model. The money is not the money that you make from your identity, just like you don't bank. You don't make money because you happen to have a notary that needs to get you the contract signature. The note would be make some form of money, but it's very well controlled amounts. It's government regulated. And it definitely does not warrant the incredible amount of attention that seems to be getting, which has gone overboard. I appreciate it because we built everything based on that standard. But I counsel those corporations that now throw the rest of their remaining innovation budget, almost exclusively on digital identity. I counsel them think through what your business is, ask yourself is my business identity. And if your business is not identity, then ask yourself, what am I doing here?
Right. Uh, and when it comes to platforms, one has almost always addressed the chicken and egg problem, as you might know, uh, particularly in network effects, um, should the focus be more on getting partners into the ecosystem or should organizations go more towards acquiring users at the start? What's your take on this? Well, historically
B, which means over the last let's make it 10 years since Marc Andreessen announced and brought us into the platform era. So since then our platform economies, all platform games have exclusively been on the aggregation of user side. So that is what we have seen historically. And it worked beautiful. But if you look at it now, and this becomes almost a social or political question, if you look at the effects of it, the result of this is purely from the administrative point of view in order for somebody like one of the possible big platform operators that we all know to do it as a business, in a so-called neutral manner, they basically have to just tell to their suppliers that are offering their services on this platform, which is only the middleman. Oh yes. But in order to do the smoothie, we need to take over the customer relationship.
So this is my customer now. Oh. And we also have to do the billing because otherwise it's not going to work for you automatically. Boom, billing relationship is mine as well. Oh. And the customer doesn't even know you anymore, but that doesn't matter because every now and then we will be nice enough to send a customer your way. So it will still get some revenue, but don't forget, right. We get 25% of revenue, right? Because otherwise I'm sorry. But our terms and agreements are just like that, which means that this has now gone to a level where it's becoming concerned. It's becoming difficult to swallow, especially if you think about industrial areas like Europe. And especially if you think about the industrial service industries that we have here, because if any German, French European company would fall into a situation where we would have to give 25% of revenue to whoever operates the platform.
Well, either we are bankrupt or our social system breaks because we would have to take, we would have to work at much more brutal and cost efficient labor conditions. That there's no way out of this, which means if you now want to create platforms, but on the other hand, you want this to be acceptable from a policy political and social way of doing, and you want to keep the money and the value add with those who actually deliver it. Then you should probably think about platform economics with the aggregation happens on the supplier side. So let suppliers get together because one thing is so beautiful about platforms. You just need critical mass and critical mass is always relative, which means if you have in a big market, if you get 200 million users in Europe, you have one. If you have acquired 40 million users, you are very strong contender already to be, to be winning.
Now, if you look at any industry in the mobility industry, you have less than 500 operators at this point in time who are majorly relevant. So we, these 500, you covered 80% of the supply side when 500, if you are somebody that has industrial networks that has been behaving sustainable and fair to his partners and his suppliers, and even your competitors acquiring critical mass out of a number of 500 is something that is very, very, very doable, especially because there's two things here. None of the operators in this ecosystem is going to agree to a platform that is operated by another one of those operators, right? But all of them do not want that this whole platform game ends up with them losing their customer relationship because let's not forget this. The customer relationship is where the money flows into the ecosystem. It's the source of the money.
It's the source of the wealth. It's the source of survival for the companies. The moment you give this out of your hand, you lose very simple. It might be tomorrow or the day after, but you lose. And people have understood. This companies have understood this, the European antitrust organizations I've understood this politicians have understood this. People have understood this. So the whole social fabric has understood this. And you can, if you talk to people about what these big platforms that suck your data out on the user side, and basically suck your value, add away from the, uh, supplier side and aggregate all of that incredible wealth to the tune of billions, into the hands of very, very, very few people. And one company that is not sustainable. It is not fair and it's not an equilibrium. So the approach here is think of the very approved model of what used to be called the cooperatives, where companies get together, farmers get together, saving into loans, organizations, get together where they share resources.
They share infrastructure, they compete against each other, but jointly, they build things that they jointly need in order to operate and scale their markets bigger because all of them wants a big market. None of them individually has a market big enough. And in order to address and build conserve the market, they need shared infrastructure, shared buying power, whatever it may be. And this approach of thinking that co-operative way of platform building by building a neutral platform, which is governed by the major operators that use that platform in order to deliver their business is a much more sustainable form of doing business. And I truly believe in that from the financial aspect, from the business aspect, from the social aspect and actually from the personal aspect, right.
Um, it appears that co-opetition is a strong underlying theme of the mobility blockchain platform. Um, I have a thesis about coopertition as a strategy to increase the adoption of novel products and just wanted to run it by you to see what you think. Um, I used to kind of believe in this adage of too many cooks, spoil the broth, particularly when it comes to bringing new technologies to market. And then I did a bunch of research about this for my thesis and came to the conclusion that co-opetition, as a strategy is a great way to bring new technologies to market, particularly emerging technologies, where the know-how is quite limited. Um, at early stages, the key element here is the reputation of the partners dope. So I came to the conclusion that the more rapid the party is in the ecosystem or the parties are in the ecosystem, the more likely a customer is to adopt a product or service primarily due to this cognitive bias of sorts. Uh, what do you think about
That? That's true. And actually you've mentioned two or three very pertinent points. So yes, unfortunately that's the weakness or the challenge. I wouldn't call it a weakness, but the challenge of operating a platform in the collaborative way, call a petition. Yes. Too many cooks, spoil the broth, too many discussions and opinions and political infighting will stop you from getting anything done while a Silicon valley powered speed boat, just rush rushes by you while you are discussing whether this is interoperable or not, or not, whether you need even more interoperability. Is it also fair and equilibrium and has, have, has every single possible social concern been addressed before you even start coding? So that is a very real and I speak from experience. That's a very real issue. So this needs to be addressed. And this is case by case. There is no magic Rand to it now with regards to the brand recognition and that ultimately customers flock to where they feel safe because still in the human mind, trust is not necessarily on the blockchain trust is in the name and the brand and the person.
So this is how we are wired and this is how we should be wired. And it's a good thing. So yes, indeed of course, trust is ultimately one of the two factors that brings customers. The other one of course is one stop gets me everything, which also is a very strong element. So that is very important, but one thing, and that is a mistake brands used to make in the past. I think most big corporates are waking up for this, taking that thought and falling into the fallacy, the very self congratulating fallacy. Ah, yes, but we are the very trusted brand of whatever it may be big. And therefore we have a chance to be that one trusted brand to which the customer goes misses the point because there is not a single industrial brand out there that holds the market value market. Sorry, the market penetration, the market share that would qualify it in a platform game.
So the biggest car manufacturer in Germany has about 15% market share. You are not a contender in the platform game with that. So even if you fully penetrate your own market and you are exclusively, nobody else is operating in that market. You have 15% of the share. You become a contender once a competitor, once you have 20, 30%, then you got two or three of these 20, 30% battling it out. And then ultimately one is left standing. So you have to realize that you need the others on board as well, and then comes to the back, the weak part of the challenge with brands. If you have a strong brand and you are that manufacturer, and I also have a strong brand at that manufacturer, I'm not going to go a plat on a platform. That's branded with you, even if it's under the hood, what not, if I know this has got your brand, you're stable on it, I am not putting my business on it.
And that's also I speak from experience. So the only way you can address that is that trusted brands agree to collaborate through an external, fully neutral entity that is not in any way controlled or enabled or in this case contaminated by their brand. Because the moment it gets this brand connotation, it gets that brand and it loses all others. And this is something that, especially traditional companies who are very proud of their heritage and who are very proud and rightfully so of the incredible trust that their customers has. We're very proud of what they historically have done. And we in Germany have many, many, many of those. They also need to understand, yes, you have done incredible things in the past and your brand value is what you live by. That is all nice and well, but do not take that as an excuse to believe you should operate the platform yourself because that will fail no matter what your brand. Right.
Um, so if my supervisor is listening to this, you heard it straight from the practitioners not, wow. This actually is quite the moment of redemption for me. Um, a follow up question from my supervisor would be, is it possible to deliver frictionless price effective services with many parties and a new technology involved? Well,
Again, I come back to the software. Software is human thoughts put into action and almost friction. So this is the main thing that software brought to the world. It blew away friction. So if you think straight, and if you think clear and if your architects are doing their job right, you can take almost anything that a human can possibly imagine. As long as it's done in a, in a thought that can be reproduced. So, you know, a burst of vision that you cannot even repeat yourself, doesn't qualify. But a thought that you can explain in a reproducible manner can be put into software. There is nothing that you can formulate that a good software engineer cannot code and a very good software engineer will make it frictionless. So you have the initial outlays of the software, but again, here source software has become so powerful.
There is no corporate software out there that can compete with the competing products and open source. Guys here they're saved some license costs, save some license costs. Listen to me, don't pay license for crucial software. Go open source because the open source software is constantly peer reviewed. It is, it is constantly being increased in value. It is constantly if they'd have continuous updates. So building software, if you know what you're doing has become a very cost effective thing to do. And running software 21st century running software is essentially infinitely scalable, because it is so much faster than you can think that for all practical purposes, it's infinitely fast. You just need to do it right. And that is again, the part about making it right, is you need to avoid the friction in the software and the friction and the software, the hallways, when you have media breaks or possible arrows.
And that takes us straight back to identity identities. If everything can be identified and everything can be verified, and every, all of these verifications can be done. Security, cryptographically secure in cryptography, we trust secure. Then you have actually the chance to really build seamless systems that do what human thought tells them to do. You could think of this difference between software and poetry is not very big because each one takes a human thoughts and puts it into something. The one makes it creates words that instill emotions in you. The other one does more. He takes thoughts and makes things work according to that thought. And this is what software does. It's a very powerful tool.
Um, now that you're focused on the what and why I think it's time to bring the attention to the how so currently there is a deep misunderstanding of sorts among executives' of what blockchain or decentralized identity offers to their business environment. How can corporates perhaps find that killer use case for decentralized identity
Here? I would say don't make the mistake, which in German, we call to put the cart before the horse, don't ask executives to find the killer use case for digital identity. Their business is not digital identity. Find a killer use case, analyze it. And you will find a lot of places, know your supplier, know your customer, know your device. The data transactions are insecure. I have master data problems. You will find a lot of problems that identity can solve for you, but it's, don't do like a lot of also blockchain evangelists do that. They try and say, basically, blockchain, tell me your problem. I can solve it with blockchain. Okay. You tell me a problem. I can solve it with blockchain that cannot possibly be true. And also let's not go into businesses and say, let's find a use case for blockchain. Why would you want to do that?
Just to keep your blockchain guy happy, or what's the purpose of going and find a use case that can be solved with digital identities? What's your interest in this? I mean, yes. If your interest is to keep your digital identity guy happy and well paid for, be my guest, but then be aware that your business has just become to employ your digital identity people. So digital identity is powerful, but most companies, except for companies that in the ID ID business, in the know your customer business, possibly in the financial and regulatory business, most companies do not have business cases that rely on digital identity per se indefinitely, do not find business cases, which they can solve with digital identity. It's the other way around. That's the point I was trying to make earlier. You have many business cases, for instance, um, vendor management in the vendor management, the qualifications of vendors, which vendor is allowed to deliver me, which good who's allowed to handle explosives, who's allowed to deliver this.
Who's environmentally certified, who has been certified not to, uh, to not to employ child labor outside. So all of this is becoming more and more relevant, but that's a business or a regulatory demand and requirement. And if you think about, okay, now, how do I solve this? You will find if you use it with traditional ways, it's very expensive, very difficult to do. And then however, if your it, people are smart, they will then say not everything, but this one here, it is actually a good application of decentralized technologies. So first for any decentralized transactions, you need decentralized verification. That's where you pretty much in the area of digital identities and credentials. And then if you actually want to book this thing and basically make sure that afterwards you can build it automatically, then probably a good guess is look at something like a distributed ledger or similar, because that also provides that kind of functionality in a very secure and trustable manner, but also with the seamlessness and ease of use like decentralization does, but always approach it pragmatically don't, it's not the art for art's sake. It's not the software for the software sake, and it's not decentralized for decentralized sake. If it fits the purpose, use it. If it doesn't fit the purpose, you something else,
Right? And what's the playbook to bring decentralized technologies to market. Should corporates go at it on their own? Or should they partner or be part of a consortia? What's the, what's the game plan. Yeah.
More whether it's consortium or collaborations or cooperatives or alliances. It depends a little bit on the exact framework, but as much as possible, I agree that most of what you do is not differentiating you from your business. 80% of what you do in your transaction processing is done in exactly an equivalent manner by your competitors. There's no differentiation. And those, if I would go radical, do it open source guys, fund and sponsor, open source, bring open source developers into your companies, provide market to open source applications, to open source. That would be the fastest way to do it. That's a little bit too radical to be practical, but use at least consortium go into, and then you would come into these consortia. If you're interested in identity, go into the ID union, go into Lizzie, go into whichever one you like. If you're very interested in morbidity, I don't know, go into mobi, go whatnot.
But these are only good for development. So they are good to see what's the standard. They don't solve the operational problem for the operator to actually operate operationally in production mode with others, it becomes a governance issue. There was a whole chapter in business development for people like us. The last chapter actually, before you fully go live is governance. How do you set up the governance for a cooperatively structured, decentralized collaborative effort where many come together to operate business and where let's just say, because it makes it easier. Each one of them is a competitor of deal or they're not friendly to each other. Yeah. So, but you still need to make it work. That income, the market mechanism designers, the incentive designers, it's a big, it becomes behavioral scientists meets game theory, meets incentive. Design meets a couple of lawyers who get lawyers who get very, very rich here, but it becomes a governance design issue to solve it. When once you go into production.
So in short blockchain is a weak technology and not a MI technology.
It is very much a we and us technology. And it does not make sense in a media environment. Nobody has a useful use case to use blockchain. Right.
Okay. And adding to that, there is no real clarity when it comes to success metrics to determine the outcome of Sasha project. So is there a KPI that organizations should measure, uh, while bringing decentralized initiatives to market?
Yeah. Keep the best people. Okay. Simple. Keep it simple. Keep the best, right. It's not, it's not mature enough that you can put it into the KP KPI machinery. You will need to rely on people that understand it for the time being, but that is by far your fastest and most, uh, most effective way to approach
It. In this podcast, we do things differently. Um, Frontier Talk is an attempt to explore the intersection of identity technology and people. So the people element becomes an important ingredient in this podcast. Our next segment is called frontier file, where I pose a series of rapid fire questions to our guests on the show. So Harry you'll get roughly around 30 seconds to say, elaborate on each answer that you give, but we want quick answers. So
I already read his writing can be perfect.
Let's get started. What's the one important truth that you believe in that very few people around you agree with.
Most risks are worth taking,
Right? And what's your mantra in life.
Stay happy, stay humble.
You have seen the AI and blockchain was, uh, very closely for some time. Now, do you see a potential marriage between the two technologies on the cards? And if so, when can we receive the,
I would expect this. Yes. There's a very clear way of how they would meet. This will take another few years. And the basic, the meeting point is blockchain provides you golden data, absolutely beautiful transaction, pristinely, clean and trustworthy. Now, if you do AI based on this kind of data, compare it with going to some work in data lake where there's a lot of rubbish and what month in there, and you're still doing your AI learning on that versus you go to this pristine source of drop by drop truth coming out of your data lake. So this is where the tool would meet.
Okay. And, um, a person who inspires you and why? Well,
I used to be doubtful, but simply because he's beyond all we can measure, I think eat on Musk is the most hilarious semi God I have ever seen.
Right? I genuinely find it difficult to understand how people could actually criticize the person who is going out there to change the world in ways you should not measure
Him as a human. He is different. He should be measured like an Olympian, God, which is what he's doing. I do not feel myself inferior to him, but I watched this being and I am in awe and admiration. And I love the guy because he's got a wicked sense of humor.
Finally. Uh, what's your advice to anyone listening to this podcast,
Take it with a grain of salt. I'm obviously very enthusiastic about it. Don't believe everything I say. I'm probably too happy about being in this field. So take two thirds of it and those with a grain of salt,
Howdy, it's been such a pleasure talking to you today. You inspire me and I'm so glad I got you to be my first guest on this inaugural episode of Frontier Talk. I appreciate it. Cheers. Bye bye. That was Dr. Howdy barons. How are you good with delivering a keynote at the European identity and cloud conference EIC and linked to the event can be found in the description box below. So that concludes this inaugural episode of Frontier Talk. I hope you enjoyed this conversation. And if you did show us some love by, by liking commenting and sharing this video with anyone who might find this information useful. I hope you join me next time on this journey to redefine the I get it. Thank you.
