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Intelligent Assets: Unlocking the Circular Economy Potential

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fascinating read if you have the time... it's hefty!

so, some excerpts i enjoyed or found interesting:

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Changing The Way Value is Created

McKinsey states that “the ability to monitor and manage objects in the physical world electronically makes it possible to bring data-driven decision-making to new realms of human activity – to optimize the performance of systems and processes, save time for people and businesses and improve quality of life”.17 As pointed out by Daniel Keely at Cisco, as assets become more intelligent, they learn to communicate and collaborate among themselves, eliminating the need for human intervention. These advances in autonomous “machine learning” technologies enable the automatic optimization of a digitized process, which goes beyond providing decision support for asset owners or managers. Where physical interaction is still required, machine-to-machine (M2M) collaborative networks are able to deploy autonomous devices to attend to a problem (e.g. drones). These advances in IoT technology are likely to represent the next major step change in asset productivity.

As illustrated by the following examples, intelligent assets profoundly change the way value is created in a business environment as the information generated by a connected machine, device or product becomes a critical component of value creation. Firstly, with the rise of IoT solutions, variations can not only be minimized but also responded to. For instance, through real-time transmission of data regarding external factors (e.g. humidity or temperature) that impact the quality of a product in the manufacturing process, the product can be routed to a different stage of the process that is not adversely affected.18 Secondly, recent IoT technologies enable products or machines to continuously create value even after they have left the supply chain. Through intelligent assets delivering information concerning their location, condition or availability, companies and end users can capture value in new ways throughout an asset’s use cycle.19 In addition, the manufacturer could use the information generated by the asset to further improve the product design. Finally, thanks to the ease of connecting people and things via mobile devices, the idea of sharing or leasing assets has become a signi cant economic opportunity for businesses and individuals across multiple sectors. A well-known example is Zipcar, which increases the utilization of cars.

 

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Models creating transparency about usage have also begun to appear in the residential space. For example, Nest Labs’ smart thermostats build a heating schedule around their users’ routines and can be controlled remotely to maximize comfort, while minimizing energy consumption. A similar company is the start-up Tado°, which uses sensors that react to the presence of people in order to calibrate heating.

Another important area for optimization is the large number of SMEs operating complex, distributed energy systems such as industry plants. The German company ENIT Systems offers a connected clip-on device, the ENIT AGENT, that helps its user to understand, manage and maintain these decentralized systems by overcoming the typical interpretation challenges posed by the different technologies. The ENIT AGENT creates full transparency of energy usage and saves companies 5–20% of energy costs. In addition, it eliminates compatibility problems between the old and new components in the system, thereby allowing for better maintenance and longer use of the different machines. Furthermore, the open software invites users to add applications to the system, and the ambition is to include M2M communication and further improve the energy distribution. Connecting both energy-generating and consuming devices could also help businesses to increasingly provide their own energy.

 

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Let’s step into the future a little. Imagine a world in which a Berber guide in the Saharan desert can instantly send a payment, to anyone in the world, at near zero cost. Imagine a world where your intelligent refrigerator detects you are running low on eggs and automatically orders them from Amazon with expedited drone shipping. Your fridge escrows the funds with a geolocational trigger, and when the drone arrives the payment is instantly done. Or better yet, imagine a world where you are running late for a  ight and the Heathrow Express is severely delayed. Well, good news, you can order your self-driving, self-repairing and materially refurbished car, and pay it a surcharge fee to negotiate with all the other self-driving cars on the road to get out the way, automatically.

Unfortunately, before this can happen we have to completely reinvent the way payments work, and leverage a recent, critical innovation in computer science known as the bitcoin blockchain. Credit cards and other payment systems are Jurassic and in exible channels for the age of the Internet. For example, online fraud is widely reported to be outpacing growth in e-commerce. This should not be a surprise to anyone who has studied the security model. Centralized data storage, combined with a 90-day settlement period for credit card payments, creates honey pots that attract hackers. Last year, hundreds of  nancial institutions were compromised in increasingly large breaches of personal and  nancial data. Traditional centralized security models no longer work. In addition, credit cards take a base fee and 2–3% of every transaction. Sadly, over 4 billion people can’t even get credit cards and legacy-banking systems simply cannot scale to support an intelligent asset development where micro transactions will dominate the vast majority of volume.

The future  nancial system will be designed differently, leveraging decentralization as a core principle in risk mitigation. In this world, anyone on earth will be able to participate in creating economic value on the Internet, using a  nancial protocol that allows individuals and machines to manage their own funds. The blockchain isa game-changing innovation because now, for the  rst time in history, a bitcoin wallet holder can transact with any other bitcoin wallet holder on earth, without having to rely on an intermediary. A few thousand lines of computer code can now do what banks have done for thousands of years, not to mention forex markets, clearing houses and merchant processors (all of which drive friction and cost in transactions today).

The technology behind the blockchain has the potential to reshape not just the  ow of capital but also the ef ciencies of supply chains. As a shared, secure record of exchange, the blockchain can track not only the transaction but what went into a product and who handled it along the way. With blockchain, all bitcoin transactions can include a small referenceable amount of data, which means that, in a world of Internet-enabled devices, container ships, trains and trucks can record and capture any relevant details like location and elemental conditions and ensure that supplies are properly managed along their journeys. This data can then get captured and broadcasted to the bitcoin blockchain – the world’s largest and most secure distributed computing database. A system that can create true transparency, helping everyone study the provenance of goods and raw materials – a spreadsheet in the sky.

For intelligent assets to create value in a circular economy, we need frictionless payments as well as billions of Internet devices negotiating with each other, unleashing market forces to bring down the costs of goods and services for all. Supply chains will be transparent and the quality of our food, healthcare and products will be improved. As an industry, we have a lot of technical work to accomplish, speci cally focused on scaling transaction capacity. We also need to build better software and experiences that allow people to more easily get used to interfacing with digital currency. On public awareness, we need to do a much better job of educating policy-makers, in uencers and general consumers about this groundbreaking technology.

 

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