The 4th Internet Phase: AI, IOT, Blockchain

The technology world has experienced tremendous growth the last 70 years with various technological revolutions like: Semiconductors, PC, Internet, Mobile, Search, Cloud, 3D Printing, Biotechnology to name a few. In most cases the fundamental research has been funded from governments. After the research stage, companies used the research outcomes and developed products to test the market.

Especially for the case of the Internet, it has undergone 3 phases so far and it is entering the 4th. The 1st phase was about research in DARPA (Defense research agency in USA) with the creation of a limited but safe network with few participants for almost 2 decades (1960s to 1980s). The 2nd phase mainly in the 90s has been characterized from development of open protocols superimposed on the solid communication layer of the internet enabling basic services and especially browsers that created exponential growth of various applications and platforms in the 3rd phase. Browsers created the Interface enabling billions of people to access easily the internet information and numerous applications. The 2nd phase is about decentralization and all companies that built applications using the original open protocols assumed that the rules of the game based on the open protocols would not change. Indeed this happened and the rules of the game changed only in the 3rd phase. The 2nd phase has been characterized from many companies participating and innovating in a level playing field.

The 3rd phase after 2000 till today is about tremendous growth of the internet, characterized from the creation of new and more powerful applications (e.g. mobile applications, cloud computing, video applications, multi-side platforms to name a few) that gave rise to new not open protocols created from huge nowadays companies like Google, Apple, Amazon and Facebook. The main difference in the 3rd phase is that these companies have created centralized and partly closed ecosystems reflecting the new era of powerful centralized platforms creating almost monopolies or oligopolies in their focused areas dominating the market and collecting the majority of the profits. The centralization of power has disabled partly innovation as the dominant players with deep pockets not only acquire innovative start-ups in early stages but also disable in general start-ups to compete in the internet space. This is applicable especially in USA as well as in China with Alibaba, Tencent and Baidu.

In the 3rd phase of the internet the dominant technologies were: Mobile, Social and Cloud Computing. Using the Gartner emerging technologies hype cycle, lets evaluate the evolution of Cloud computing from 2010 to 2017. In 2010 Cloud Computing just topped the Peak of Inflated Expectations and private cloud computing was still rising. Cloud/Web platforms were also shown, along with mobile application stores, to acknowledge the growing interest in platforms for application development and delivery.

In 2017/2018, Cloud computing is almost mainstream being in the late stages of the plateau of productivity and has moved out of the Gartner hype cycle of emerging technologies. Moving to 2018 we can see that the new hot technologies at the Peak of Inflated Expectations (See Gartner hype cycle 2017) are: Blockchain, AI/Virtual Assistants and IoT.

While simpler nowadays and specific area applications of AI (BOTS, Voice recognition, Image recognition, Automated voice response, Digital marketing) and IoT are growing and will be widespread the coming 2-5 years, Blockchain applications will take more than 5 years to become widespread and general AI will take more than 10 years to mature. Before we talk about the 4th internet phase which has just started, lets devote a few words on the importance of AI/Machine learning, Blockchain and IoT. AI and machine learning has the potential to benefit almost all industries from supply chain to drug research. It will be a must use technology as it will be soon become impossible for conventional engineering solutions to handle the increasing amounts of available data.

With IoT and 5G digital businesses will move away from siloed business ventures and toward interconnected ecosystems. Businesses must think about how to create platform-based business models and what technology is needed to support that move.

Finally Blockchain applications might seem like they are just around the corner. While there are siloed pilot projects using blockchain even in China where crypto-currencies are banned (e.g. agricultural productivity applications), most initiatives are still in the foundational stages. Ethereum is finalizing the foundational layer of the platform and according to their founders it will take more than 5 years till the higher layers that enable interoperability with other platforms creating meaningful applications for users will be available. Enterprises are still deciding how to navigate this technology and the lack of proven use cases as well as the volatility of bitcoin have created concerns about the viability of the technology while they have pilot projects to find out the potential of the technology. Long-term, Gartner believes this technology will lead to a reformation of whole industries.

As the transition from the 2nd phase of the internet to the 3rd has been characterized from decentralization to centralization what will happen or is happening in the transition from the 3rd to the 4th stage?

As we described above the centralization of power to only a few players (Apple, Google, Amazon, Facebook, Microsoft, Alibaba, Tencent, Uber, Didi, Baidu) as well as the 2008/2009 financial recession inspired entrepreneurs to start using new technologies like Blockchain and create crypto-networks. These networks allow decentralization based on open source code, data privacy/security, competition for better results, as well as fair economic incentives to developers and other network participants in the form of tokens. This trend has started in 2009 with the Bitcoin network and has been intensified since 2015 with Ethereum and many other crypto-networks and crypto-currencies.

While AI has been adopted and will be dominated from the existing players like IBM, Google, Amazon, FB, Apple and others, new start-ups are focusing on IoT platforms and Blockchain based crypto-networks that support not only decentralization but ensure that all network participants are rewarded even if they exit the network after contribution. While AI will support the existing centralization, IoT and Blockchain will be the cornerstones of the 4th phase of the internet with powerful decentralized platforms and much better economic incentives for all participants. At the same time AI will also support the creation of the powerful decentralized platforms by solving challenging problems like:

-       Scalable blockchain databases

-       Decentralized cloud computing

-       Decentralized data protocols

-       Decentralized privacy and security technologies

Conclusion: The coming 10-15 years of the Internet will be a mix of centralized and decentralized networks where the existing dominant players are focusing on centralized networks while new players are emerging with decentralized networks & platforms challenging the status quo and creating a level playing field for many more market participants similar to the 2nd phase of the internet.

Any other thoughts?

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