Taking back control over data is now possible in a decentralized world

Carlos Kuchkovsky, Head of Research & Development of New Digital Businesses (NDB) at BBVA and keynote speaker at the event, gave the opening presentation starting from the premise that blockchain is not just a technological concept. Instead, it’s an idea that involves society, economics and technology.

“The use of blockchain solutions makes it possible to go from a centralized model in which data are on a single server, to a decentralized model where everyone in the network can have an updated copy of all the information,” explained Kuchkovsky. Thanks to this new way of operating, these technologies have the ability to transform the way multiple sectors function — for example, the finance industry, which is already leading to the creation of new business models.

Regarding the new opportunities and challenges posed by this technology, BBVA’s approach includes a strategy based on three pillars known as the three E’s: Execution, Ecosystem and Experience. Also, as Kuchkovsky explained, the different teams in the Group working with this technology are focusing their efforts this year on exploring and experimenting with blockchain “always within a very controlled and measured framework” in order to anticipate the disruptive changes this technology will generate in the coming years.

The different stages of the Internet

In order to discuss how blockchain is leading to new decentralized business models, Kuchkovsky reviewed the three different stages of how the Internet has evolved. In the first stage, this technology was highly fragmented and the intermediation of services was not controlled. It was an “open” Internet with largely open-source protocols, without a clearly dominant actor.

The year 2000 marked the start of the second stage, with Google gradually consolidating its position and the arrival of platforms like Amazon or the social networks. In this stage users could turn to a specific supplier — for example, to download an app. However, these suppliers focused on intermediation, leading to what many call “centralized Internet” and “data silos” were concentrated in these digital giants.

“We are now experiencing a war over data between companies, who offer free services to create more data. They then use the data to generate business. At BBVA, we always make it clear that we want to use data in an open and transparent manner - unlike some of these digital giants,” he indicated.

However, a third stage of the Internet is starting to emerge. This stage is marked by decentralization, with blockchain and distributed ledger technologies playing a decisive role. In this context, Kuchkovsky stressed the arrival of DApps, or decentralized apps, which have become one of the characteristic elements of this web 3.0. These apps allow members to interact without a central company managing the service.

For example, e-chat is a DApp that offers a service like WhatsApp, but using a decentralized model in which there are no central actors managing the platform. Instead, it works via user consensus in an automated manner through smart contracts.

DApps are a clear example of how blockchain technology is leading to the disappearance of intermediaries that do not add value to Internet interactions. They let users take back control over the value of their data online, without it being tied to use in advertising. “In these new models, the value of the platform is not in the hands of a central agent or company. Instead it’s distributed among all users — whether they are developers, investors, or early users, who can exchange value through ‘tokens’ for their use of the service or contribution,” affirms Kuchkovsky.

Beyond blockchain

Blockchain is just one component of this decentralized future. According to Kuchkovsky, there is great potential for this exponential technology to merge with others, like artificial intelligence and the Internet of Things, to give real meaning to these new decentralized ecosystems and multiply their ability to change how companies, people, data and money interrelate in the future.

“In these new models, the value of the platform is not in the hands of a central agent or company. Instead it’s distributed among all users"

For example, thanks to the convergence of these technologies, in the future, data could be gathered by Internet of Things sensors, managed in a decentralized manner by blockchain, and analyzed by artificial intelligence to automate decisions. Furthermore, this data ecosystem could be incentivized by the exchange of tokens among users. “Smart contracts could serve to define actions and put limits on artificial intelligence,” he added.

But in order for these new models to be operational in the future, Kuchkovsky noted, there is one crucial element that must be integrated “by default” in the design of any digital ecosystem: “Ethics are fundamental so that these autonomous data systems can work in the future, always protecting users’ interests.”

Influence on the financial system

At the end of the conference, BBVA’s Planning and Operations Chief of Staff in NDB, Javier Fernández Cordera, took the floor. He noted that there are several reasons why decentralization is significant from a financial perspective.

“The first is the fact that for the first time, bitcoin has made it possible to create and use digital money without the need for a banking infrastructure. This could have a major impact on the development of financial services outside of the traditional infrastructure. On the other hand, it is also especially relevant that we live in a programmable world in which all of a bank’s products, services and processes can be programmed. This makes it possible to create a decentralized version of a significant portion of what we know as a bank today,” explained Fernández Cordera.

The final presentation was given by Escolástico Sánchez, a member of the NDB Research & Development team. He discussed the significance of stable coins as “cryptocurrencies that come with a mechanism that stabilizes them.”