Blockchain ditches the middleman, reduces scams, lets small businesses compete with big ones, and promotes a creator economy. Find out how in our podcast!
Carl Lewis: Welcome to The Connected Enterprise podcast. I’m Carl Lewis, your host from Vision33, and my guest is Raghu Bala. Mr. Bala is the CEO of netObjex and is quite credentialed, including teaching a course about blockchain at MIT. Raghu, welcome to the podcast. Tell us about yourself and your work at netObjex.
Raghu Bala: Thank you, Carl. I'm the CEO of netObjex. We’re based in Southern California, but we have operations in Vietnam and India and customers in North America, Europe, Asia, and Australia. We’re a ‘digital asset as a service’ platform. Digital assets are assets maintained in a digital format, usually involving the internet of things (IoT), artificial intelligence (AI), and blockchain.
Raghu Bala: Digital assets as a service covers innately digital things, like music, movies, and other media; physical assets like a fleet of cars, shipping containers, buildings, etc.; and dynamic assets, which are things we need to measure, like water and carbon credits. We combine those three asset classes into our digital asset as a service. We also tokenize them, so they become either fungible or non-fungible tokens (NFTs). You’ve probably heard about these when you read about cryptocurrencies in the news.
Carl Lewis: That’s fascinating. Blockchain has been a topic for several years, and the large enterprise space is mostly up to speed, but small and midsized businesses (SMBs) don't really know what it is. They wonder if it's benefiting them already. Can you give us a primer on blockchain and why SMBs should care?
Raghu Bala: Blockchain is what we call a distributed database. Without blockchain, all your information is stored within databases controlled by a central entity, like the government or an enterprise. For example, we all use Facebook, Google, Apple, etc. They hold a lot of our personal data and track us from A to Z. There's a joke in the industry that when something is free, you’re the product. Those companies let you use their services for free, but they take your data and sell it to advertisers.
Raghu Bala: But then comes blockchain. Blockchain's philosophy, if it were political, is more democratic and socialist than capitalist. In blockchain, we’re saying, “The data belongs to you, not these big entities.” And it’s in a database that’s not stored with a central authority. It’s distributed among the public. Different people can operate nodes that hold copies of this data so it can be gleaned from open sources, which aren’t controlled by a particular entity. That's the overarching principle of blockchain.
Raghu Bala: SMBs should become part of the blockchain ecosystem because it gives them an equal playing field. If you thought you couldn't compete with Google, Facebook, Amazon, Apple, Netflix, etc., you were right. But with blockchain, you can. I’m consulting with a startup in Los Angeles, one of the media capitals of the world. Google, Apple, Spotify, etc. control the media you consume and how much the artists get paid. The startup’s founder is trying to decentralize that market. I went to an event at the lawyer’s conference for the music artists, where I discovered music artists are supposed to make 30 cents every time one of those platforms plays a song.
Raghu Bala: But they only get eight cents because that's how Spotify, Google, etc. have negotiated their deals with the labels. The labels represent the artists, and the artists are at the behest of the labels, with no say in determining the revenues. The artist gets a check for $1,000, but he doesn’t know how often his music was played or where. There's no traceability or accountability.
Raghu Bala: In the media industry, blockchain is trying to allow artists to control their revenues. The company I'm consulting with allows artists to release their music directly to the public, skipping all the labels and disintermediating the market. Blockchain is a significant enabler in that because it allows music to be distributed and funds to be collected. You have a different ecosystem. Will it take off? I don't know. But currently, content creators have no say in it, but in the new ecosystem, they would.
Raghu Bala: Another example is NFTs. In the NFT market, artists, painters, sculptors, etc. are putting their works on platforms like OpenSea, Rarible, and Nifty. This is creating a boom that’s being called the creator economy. The creators can bring their works directly to the public without a middleman. It's the same disintermediation we’ve seen in travel agencies and stockbroking. You can book flights through Expedia without a travel agent, and you can buy stocks with a flat $8.99 fee versus a 2% commission. Why? Because technology makes it a level playing field. That's what's happening in the creator economy.
Carl Lewis: Interesting. Most customers I work with are distributors and manufacturers who import goods from overseas and distribute them throughout North America. Some also do business internationally. How does blockchain benefit those businesses?
Raghu Bala: Those businesses can also compete with the Amazon-type businesses on a level playing field. They can go after customers because they have the same pricing power and reach because the blockchain economy is global. Many people believe in disintermediation. There’s an interesting phenomenon where you can become a storefront and provide goods and services directly to consumers without paying high fees or being beholden to a larger enterprise trying to market your products. This opportunity will become a reality where SMB vendors can be found through blockchain and sell their goods and services to consumers without giving up a lot of margin to the larger enterprises.
Carl Lewis: Is “disintermediation” the same as “cutting out the middleman”?
Raghu Bala: Yes. It's cutting out the middleman and the big middleman. Big film distributors, big eCommerce companies like Amazon and eBay, etc. It'll take time to unfold, but that’s the opportunity.
Carl Lewis: What’s your timeframe estimate? I first heard about blockchain five-ish years ago. Do you think it will take several more years for blockchain and its capabilities to mature enough for businesses to use it?
Raghu Bala: Moore's Law says that every 18 months, technology doubles in capability and capacity. Things that took five, 10 years to get to market now take six months, one year, two years. Some of these blockchain capabilities will come to market much sooner than we expect: two to three years. I encourage SMBs not to miss the boat, because these opportunities don't come around every day. You can make a brand of yourself and get known by your consumers. The two-to-three-year time estimate is plenty good, but the legwork these small and midsized enterprises need to do begins now.
Carl Lewis: Yes. Pay attention, do your reading, and watch the research so that when you need to decide, you're prepared.
Raghu Bala: Absolutely.
Carl Lewis: We talked about the benefits for businesses. Does blockchain benefit consumers? If so, how?
Raghu Bala: Blockchain has several consumer benefits. There’s less chance of fraud, phishing, and other scams when using blockchain. I use the analogy of a bank robber. Imagine there’s a bank. It's wide open at 9:00 pm. You can walk into the vault and take all the money. But there are spotlights, and every internet connection in the world is looking at the bank. Everyone knows you robbed it. That's what blockchain is.
Raghu Bala: Blockchain is extremely transparent, which is a deterrent for scams and what I call players who aren’t up to the mark providing goods and services. Consider Amazon and Yelp. There are good and bad reviews—but are they real? Did someone plant them? Are they reliable? You don't know. But if you use blockchain, many of these things get ferreted out.
Raghu Bala: There are companies that say, "For X amount of money, I can remove your negative reviews." That’s corruption. Blockchain isn’t like that. Blockchain prevents manipulations of the consumer. Consumers get the truth, whether it’s truth in pricing, data, reviews, etc.
Raghu Bala: Most people know that some reviews are fake. I had a session where Amazon had to remove fake reviews when companies gave their products good reviews and their competitors’ products bad reviews. That’s hard to do when blockchain is involved because it's so transparent. You're not hidden behind a database no one can see. Like in my example—no one wants to rob a bank when everyone can see. That’s why blockchain is good for consumers.
Carl Lewis: Your company has been doing things with blockchain during the pandemic, right? Tell me about that and how the pandemic and blockchain have been collaborating to make things better.
Raghu Bala: We created a product called COVID PreAuth. Thousands of people across North America use it. It has three functions: the self-attestation for workers to make sure they're not sick, testing, and contact tracing. We introduced that product because there's a market need, and it's a humanitarian function where we’re trying to reduce the spread of this infection. We used IoT, AI, and blockchain.
Raghu Bala: Blockchain allows us to help enterprises ensure a safe and healthy workplace for their workers. It also helps consumers. For example, hotel guests. They want to make sure they won’t get COVID from the hotel employees. Our protocol is built into our platform, which enables users to ensure that safety measures, which are CDC guideline-oriented, are being met. That's what we’ve done in the COVID area during the pandemic.
Carl Lewis: Very interesting. Well, Raghu, thanks for joining me. This has been helpful. I’m sure our listeners are happy to learn about blockchain and its potential benefits for their businesses and customers.
Raghu Bala: Thank you for having me, Carl. And listeners can contact me through LinkedIn if they want. I teach AI and blockchain for MIT, and there's a lot of potential for this technology for SMBs. I’d love to help people discover the possibilities.
Carl Lewis: Thank you. And for everyone out there, until we meet again, stay connected.