Circular, 4.0 & Bitcoin (English Version)
In a recent interview, the renowned entrepreneur and investor Peter Thiel, pointed out that 2020 will be remembered as the first year of the 21st century; the year the new economy replaced the old economy.
But what will the “new economy” look like after covid-19?
It will be circular, leaving behind the linear model based on “make, use, discard”, and particularly the idea that Earth has free and infinite natural resources; It will be efficient, sustainable and traceable, incorporating the physical and thermodynamic limits of our planet, and it will be leveraged on the technologies of Industry 4.0, creating sustainable economic growth, generating quality jobs and combating climate change.
“One should think of Covid and this year’s crisis as this giant watershed moment, where this is the first year of the 21st century. This is the year the new economy is replacing the old economy “ — Peter Thiel
Moving towards the circular economy can reduce 45% of global emissions and unlock an economic opportunity of up to US $ 4.5 trillion by 2030. At the same time, the fourth industrial revolution has the potential to generate up to US $ 3.7 trillion in value. by 2025 globally; technologies such as the Internet of Things (IoT), Robotics, Artificial Intelligence (AI), 5G, Edge Computing, Big Data, Machine Learning and 3D printing are already helping to generate increased net productivity and new jobs that did not exist makes a few years.
Atoms and Bits
The circular economy not only seeks to maintain the value of resources and materials for as long as possible through physical processes such as reuse, repair and remanufacturing, it also seeks to do so through digital transformation.
The fourth industrial revolution removes the boundaries between the physical, digital and biological world. This is why we say that the circular economy is not only about atoms but also about bits . Therefore, 90% of CEOs believe that digitization will impact their industry; however, less than 15% are executing a digital strategy.
“The circular economy is not only about atoms, it is also about bits”
To develop a circular economy, all stages of a process must be defined and controlled: design, production, distribution, material flow, reprocessing, repair, recycling, remanufacturing, among others. Digitalization is the next optimization step, being the maximum expression of synthesis of a process, allowing the control, traceability and continuous improvement of a circular business model.
However, many wonder how to start? No one knows a process or business model better than the entrepreneur himself/herself, and the best recipe to start the path to digital transformation is to stop thinking about it and start doing it.
This is precisely what we have developed at NDX Technology , with the creation of the Neptuno Analytics software and app , for the complete traceability of the pioneering and recognized Neptuno Pumps circular economy process ; This digital tool is the first of its kind in the global industrial centrifugal pump industry, allowing the traceability, visualization and complete documentation of the life cycle of Neptuno Pumps equipment, from its manufacture to its subsequent return for evaluation and remanufacturing, with all the work documentation in one place (evaluation reports, quotation, purchase order, remanufacturing report and images), being able to see the percentage of progress in real time during the entire remanufacturing process, as well as the percentage of reuse of components and percentage of use of recycled material, closing the complete cycle of the product.
Although atoms and bits generate information through the digital transformation of processes, this does not guarantee its quality . If we want to certify that the information we share is real, reliable and secure, quickly and efficiently, without the need for third-party validation, we must go one step further, and that step is called: blockchain.
Blockchain
There is no doubt that we are experiencing a techno-economic paradigm shift, and no technology synthesizes this turning point in a better way than blockchain. In the words of Marc Andreessen, inventor of the web browser, “blockchain technology is the first thing like the internet since the internet”; others go further and point out that “blockchain is the internet as it should be”.
In simple words, blockchain is a distributed ledger technology that records all transactions and processes carried out by users in a system, allowing complete traceability in chronological order . The registry is basically a witness to the past and current state of the system that is replicated and kept in sync across multiple nodes. The linear sequence of information cannot be modified and new data can only be added as a continuation of the original, since the integrity and sequence of the records is protected by encrypted algorithms. Furthermore, all records must be approved by consensus between the nodes through the use of a Byzantine Faul Tolerance (BFT) mechanism as a guarantee of agreement.
As I described a few years ago in my article “Blockchain and the Circular Economy”, historically the certification and traceability of materials, resources, products, processes and information has had to be carried out through intermediaries -generally organizations of international prestige such as private and/or public organizations, governments or banks — that certify and validate this data. However, this does not guarantee 100% transparency and veracity of the information, at the same time that it makes these processes more expensive and slower.
“Blockchain technology is the first thing like the internet from the internet” — Marc Andreessen
Much is said about the importance of moving from an economy based on profit for shareholders , towards one that also considers stakeholders ; It is precisely here where the ability to “tokenize” or create cryptocurrencies of the blockchain is key. In simple words, it is about the representation of the property of goods, products, processes or materials using tokens or cryptocurrencies that allow us to offer some type of direct benefit or that, in the best of cases, even be valued over time. This simplifies their commercialization and security, making them more convenient and accessible since the goods and products registered in the blockchain can be divided into smaller units, increasing their liquidity.
Now, it is necessary to point out that if we talk about blockchain and its ability to create cryptocurrencies, we necessarily have to talk about Bitcoin… Actually, it is completely the other way around.
Bitcoin
Blockchain technology has generated great economic wealth in record time, and to the shock of many, it has apparently achieved it “out of nothing”. But this is precisely where the great teaching of this technology resides: for us, human beings, value is not created only from the tangible (physical world) but often -perhaps most of the time- from the intangible (metaphysical world); The value is created from the subjectivity of our collective conscience, our culture, our belief system and the stories that we have been telling ourselves throughout history, where we have found consensus as a society; and in each moment we have reached the same conclusion: something has value because we all hsvr agreed that it does.
Bitcoin is the best example of how blockchain allows us to represent this belief system in finite and scarce digital units, making it easily tradable, transferable and secure; creating a new economy based on the creation, reserve and transfer of value; becoming the greatest revolution in the monetary system since the creation of paper money in the 7th century in China and the 17th century in Europe .
“Because all value will go digital, the entire economy will eventually transform into a crypto economy” — Balaji Srinivasan
In 2009, Satoshi Nakamoto (fictitious name adopted by one or more people) published Bitcoin: A Peer-to-Peer Electronic Cash System , a document that in just 9 pages managed to solve one of the challenges that until that date had not been able to be solved: reaching consensus in a decentralized system. This, for the first time, guaranteed that all the network participants could be 100% sure that the information shared is real, correct and has not been corrupted or altered, creating for the first time in the history of humanity a decentralized consensus, thus replacing trust with mathematics.
Bitcoin, being a digital asset (according to the US Commodity Futures Trading Commission (CFTC) it is a commodity ), allow us to know for sure what is its level of supply and demand practically in real time. At the time of writing this article, there are around 18.4 million bitcoins in circulation, but we also know how many are being “created” (mined) in real time (it is important to note that the minimum division of 1 bitcoin is called satoshi and is equal to 0.00000001 Bitcoins; that is, 1 bitcoin = 100,000,000 satoshis); Due to code conditions -which we will not go into detail in this article- before May 2020, 12.5 bitcoins were mined every 10 minutes or so, that is, 1,800 every day. In May 2020, the Halving (automated programmed process that reduces the production of bitcoins by half every 4 years) took place, reducing its production by 50%. This means that from that date on, only 6.25 bitcoins (900 per day) will be produced every 10 minutes until 2024.
Another key feature of bitcoin is that it is scarce by design, as its offering is fixed unalterably (by code) at just 21 million bitcoins. As of the date of this article, it is estimated that only about 18.5 million bitcoins have been mined, with the last one expected to be mined around the year 2140. However, it is estimated that 3 to 4 million bitcoins have been lost forever, an amount that will surely increase, making it even more scarce.
Therefore, if we consider the basic principles of classical economics, when the supply of an asset is reduced and the demand increases, it appreciates, and this is precisely what has happened in recent years, allowing Bitcoin to appreciate in time, continuously exceeding its all time value, and that will definitely continue to rise in the future, or as the “Hodlers” say: “To the Moon”.
“Bitcoin is the greatest revolution in the monetary system since the creation of paper money in the 7th century in China and the 17th century in Europe”
Crypto Circular Economy
As we have seen, the circular economy and the technologies of the Fourth Industrial Revolution allow us to develop more sustainable practices in different industries according to the new market demands, while satisfying social and environmental challenges. However, the growing concern and interest on the part of citizens to consume goods produced in an ethical and sustainable way, to know the origin of materials from their extraction (or recycling) to the end of their life cycle, and the potential to extract value of the information generated, are necessarily pushing us towards a 100% traceable, transparent and secure circular economy.
Blockchain will allow us to move towards a crypto circular economy , where each component, product and material (atoms) will have a “digital twin” or “digital passport” ( bits ) that will allow complete traceability during all their life cycles through the encryption of this information in blockchains that will allow the permanent identification of these goods and materials, optimizing their use and preventing them from being recycled or reused for uses of lower value, generating the greatest value through reuse and remanufacturing.
This allows a traceable, transparent and chronological digital supply chain, whose benefits will be amplified through collaboration and shared use of the blockchain between different companies or industries -even in different geographical locations- with interests or flows of similar and complementary materials and information.
We can say that we finally have the economic model and the technology to make our planet a better place. The internet generated an explosion of creativity, democratizing access to information, content creation and the possibility of massive self-education as had not been seen in the history of humanity. Now, blockchain gives us the tools to be able to create, safeguard, extract and exchange the greatest amount of value from this information, in a direct, transparent and secure way, allowing the transition towards a new highly efficient, technological and completely distributed circular economy model.
The crypto circular economy will bring the security and trust necessary for information to flow freely through society, in order to optimize its processing, extract the greatest possible value and allow collective intelligence to grow and flourish, in advance of the new “Golden Age” that is presented in front of us.
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