Irving Wladawsky-Berger

Driving Value with the Metaverse in the Enterprise

A killer app is an IT application whose value to individuals and companies is relatively simple to explain, its use is fairly intuitive, and the application turns out to be so useful that it can singlehandedly propel the success of a new product or service. Word processing and spreadsheets, for example, were major factors in the widespread adoption of personal computers in the 1980s.

I got interested in 3D immersive environments in the mid-2000s when IBM launched an exploratory initiative on the topic. As part of these efforts, we conducted a number of experiments on Second Life, a platform that allowed its users to develop a variety of virtual world applications. We built a number of workplace applications, including virtual meetings, and online events, and even built a virtual replica of Beijing’s Forbidden City in partnership with the Palace Museum that was opened to the public. But, despite our high expectations, we couldn’t find any compelling enterprise killer apps, and after about three years, the project was dissolved. In the ensuing years, 3D immersive technologies and applications continued to advance, but mostly focused on video-games and related industries.

The past few years have seen a surge of interest in the metaverse and extended reality. “After desktop computing, the consumer internet and the smartphone boom, the consumer-computing industry is past due its Next Big Thing,” wrote The Economist in  “A reality check for the metaverse is coming,” an article in its 2022 year-end issue. “[A]n internet which is still largely flat — based on two-dimensional text, images and video — is ripe for replacement with one that is three-dimensional and immersive.”

Is AI (Finally) Coming of Age?

Artificial intelligence first came to light in the mid-1950s as a promising new academic discipline. AI became one of the most exciting areas in computer sciences over the next two decades. But, after years of unfulfilled promises and hype, a couple of so called AI winters of reduced interest and funding set in that nearly killed the field. AI was successfully reborn in the 1990s with a new statistical paradigm based on analyzing large amounts of data with powerful computers and sophisticated algorithms. Now, six decades after the field was founded, AI seems to be finally coming of age.

“2021 saw the globalization and industrialization of AI intensify, while the ethical and regulatory issues of these technologies multiplied,” said the 2022 AI Index report on the progress of AI, which was released in March of 2022 by Stanford’s Institute for Human-Centered Artificial Intelligence (HAI). “2021 was the year that AI went from an emerging technology to a mature technology - we’re no longer dealing with a speculative part of scientific research, but instead something that has real-world impact, both positive and negative,” wrote Jack Clark, co-chair of the AI Index. Multiple factors led to his conclusion, in particular the advent of foundation models like OpenAI’s GPT-3 and Google’s BERT.

In the past decade, increasingly powerful AI systems have matched or surpassed human levels of performance in a number of specific tasks like image and speech recognition. These task-specific deep learning (DL) systems have generally relied on supervised learning, a training method where the data must be carefully labelled, - e.g., cat, not-cat, - thus requiring a big investment in time and money to produce a model that’s narrowly focused on one task and can’t be easily repurposed.

Foundation models have gotten around these DL limitations based on two recent advances, transfer learning and huge scale. Transfer learning takes the knowledge learned from training a specific task and applies it to different but related tasks, - such as using the training in recognizing cars in images and applying it to recognizing trucks and buses. As a result, foundation models can be adapted to many different tasks with relatively small amounts of fine-tuning.

Why Digital Wallets Are Critical to the Evolving Digital Landscape

A few months ago, the Linux Foundation (LF) announced its intent to launch the Open Wallet Foundation (OWF) in early 2023. The OWF aims to develop open source software, key building blocks, and best practices that anyone can use to build multi-platform, interoperable, secure, and privacy-protecting digital wallets that will support a wide variety of applications from identity credential to payments.

I’ve been really intrigued by digital wallets, a fairly complex and poorly understood subject. To learn more, I read “The Current and Future State of Digital Wallets,” a comprehensive report on digital wallets published in April of 2019 by technologist and entrepreneur Darrell O’Donnell. The report was sponsored by a consortium of Canadian companies that recognized that digital wallets were a major requirement to be able to properly manage our digital identities, — arguably the toughest challenge in the continuing evolution of the internet and the digital economy.

“Technologies are converging and provide immense potential for shifting how we can improve every aspect of our lives,” wrote O’Donnell in the report’s Executive Summary. “Underneath all of that technology lies the internet, which has a flaw that could have been fatal – until recently it has lacked a built-in digital identity. Hacks to get around this missing piece have resulted in huge security gaps and abusive digital relationships.”

Why Are Enterprises Struggling with Blockchain?

“Blockchain, the technology underpinning bitcoin and other cryptocurrencies, for years has been viewed by some companies as a way to drive industry-transforming projects, among them the tracking of assets through complex supply chains,” according to a recent article in the Wall Street Journal, “Blockchain Fails to Gain Traction in the Enterprise.”

“So far that hasn’t happened.”

Blockchain technologies first came to light in 2008 as the architecture underpinning bitcoin, the best known, most valuable, and most widely held cryptocurrency. Over the years, blockchain has evolved in two major directions. One continues to focus on blockchain as the underlying platform for bitcoin, as well as for the large number of cryptocurrencies, digital tokens, and other crypto assets that have since been created. The other focuses on blockchain as a distributed data platform for collaborative applications involving multiple institutions, such as supply chains, financial services and healthcare systems. 

Blockchain made its first appearance in Gartner’s yearly hype cycles in 2016. Despite its being at an early and immature stage, many of its proponents believed that enterprise blockchain platforms were just around the corner, and so it quickly rose to the peak of inflated expectations. But as reality set in, expectations started sliding down in 2021, and by 2022 blockchain platforms had reached the bottom of the trough of disillusionment.

As years go, 2022 was a very tough one for blockchains in general. In the crypto space, bitcoin and most other crypto assets have lost a very large chunk of their value, and numerous crypto companies have collapsed, most prominently FTX. In the enterprise, a number of ventures went belly up. we.trade, a blockchain-based trade finance, shut its operations in June after running out of cash. A few months later, the Australian Securities Exchange canceled its much-delayed blockchain-based clearing system. Most prominently, in late November TradeLens announced that it was discontinuing its blockchain-based global trade platform. Other enterprise blockchain projects, like Walmart’s food traceability application, still carry on but their uptake and progress have been slower than anticipated.

The Importance of Open Source Digital Wallets to the Future of the Internet

On September 13, the Linux Foundation (LF) announced its intent to form the Open Wallet Foundation (OWF) at its Open Source Summit Europe in Dublin. The OWF aims to develop open source software, key building blocks, and best practices that anyone can use as a starting point to build multi-platform, highly secure, privacy-protecting digital wallets. In addition, the OWF will advocate for the wide adoption of open source wallets that can be used to support a wide variety of applications, from payments to digital identities.

The LF was originally founded in 2000 as the Open Source Development Labs to help set the standards for the Linux operating system and support its continued development and commercial adoption. It grew over the years and assumed its current name, Linux Foundation, in 2007. Over the past decade, the LF has undergone a major expansion beyond its original Linux mission. It now has over 1,260 company members and supports hundreds of open source projects. Some of the projects are focused on technology horizontals, - e.g., AI, blockchain, security, cloud, - and others on industry verticals, including energy, automative, government, and health care.

Let me attempt to explain the importance of this announcement by addressing three key questions: what is a digital wallet?; what are digital identities?; and why do we need standard-based, open source digital wallets?

Web3: The Promise of a Blockchain-Based Internet of Value

On June 30, MIT hosted the Imagination in Action Web3 Summit, an event jointly organized by MIT Connection Science, Forbes, and Link Ventures. The Summit brought together almost 600 developers, entrepreneurs, investors, and academics to discuss the present state and potential evolution of Web3. The agenda featured a number of panels and talks. Speakers included Alex (Sandy) Pentland, - MIT professor and Connection Science Director, Michael Federle, - CEO of Forbes, John Werner, - Managing Director at Link Ventures, and Esther Dyson, - investor, journalist, and philanthropist.

The MIT Summit is the first in a series of Imagination in Action conferences. The next one will take place on October 6 in San Francisco, followed by one on January 17 at Davos, and back to MIT in June of 2023. The summits aim “to take us from reflections on the last major social and economic transformation precipitated by the arrival of the Internet era, to the economics to build and the governance to sustain Web3,” as well as to envision the possibilities of a Web3 future and to try to discern hype from reality in these early days of a potential new internet era.

I wasn’t able to attend the Summit in person, but I watched the recordings of a number of the sessions, where I heard a variety of opinions on what Web3 is about. This is not surprising. In their early years, major new technologies are generally accompanied by a mixture of excitement, speculation and confusion, as people sort out what the technology might be about and how it’s likely to evolve. Something important is going on out there, but it takes time and marketplace experience to sort things out.

I’ve seen this play out a few times throughout my long career in the IT industry, especially in the early 1990s as the internet was transitioning from a DARPA-sponsored project in the research community to an initiative that was starting to take the broader marketplace by storm. A lot was happening around the internet, but it wasn’t at all clear where things were heading, and in particular what the implications would be to the world of business. Let me share some of the lessons learned in the 1990s while formulating IBM’s internet strategy in our newly formed Internet Division.

Web3 - Safeguarding Our Identity and Personal Data in the Digital World

Transformative technologies are generally accompanied by a mixture of excitement and confusion in their early years. Something important is going on out there, although there’s no consensus on what it is yet. A major reason for the lack of consensus is that there’s no single dimension around which to define an emerging technology or business model. It’s like the fable of the blind men and the elephant. Each one touches a different part of the elephant. They then compare notes on what they felt, and learn that they are in complete disagreement.

This was the case with the advent of the commercial internet in the early 1990s. A lot was starting to happen around the internet, but we weren’t sure where things were heading. It was pretty clear that a communications revolution was underway: after all, the internet was fundamentally a network of networks, and email was one of its earliest and most popular applications. It was also an information revolution: anyone with a browser, a PC, and an internet connection could now access all kinds of content in the new World Wide Web. And, above all, it promised to be an economic revolution: the internet ushered a historical transition to a new kind of digital economy, including many innovative e-business applications.

Over the past few decades, the term internet has come to encompass a number of related technologies including broadband networks, mobile devices, social media, cloud computing, e-commerce platforms, big data, AI, and more. More recently, we’ve seen the emergence of a new set of technologies and business models that are once more generating excitement, confusion, and multiple opinions on what they’re all about: Web3.

Last week I wrote about web3, referencing two recent books: the just-published Digital Asset Revolution by Alex Tapscott, and the soon-to-be-published Think Blockchain by Jerry Cuomo.

I wrote that web3 aims to usher a more open, entrepreneurial internet and digital economy by replacing today’s corporate mega-platforms with blockchain-based decentralized networks. Web3 would thus give creators, developers and users a way to monetize their contributions, involve them in the governance and decision-making of the platforms supporting their work, and give individuals more privacy and control over their data.

I now want to discuss another perspective on web3 based on The Emerging New Economy: Causes and Consequences of Web 3.0, a recent Stanford seminar by Alex (Sandy) Pentland, MIT professor and faculty director of the MIT Connection Science Research initiative, - with which I’ve long been affiliated as a Connection Science Fellow.

The Potential Impact of Web3 on the Internet and the Digital Economy

A few weeks ago, the Blockchain Research Institute (BRI) announced that its annual global conference would be renamed Web3 Blockchain World, and that the Enterprise Blockchain Awards would now be called the Web3 & Blockchain Transformation Awards.

I’ve been affiliated with BRI for a number of years as a research contributor and as chair of its blockchain awards committee. I was somewhat concerned with the name change, because, as is generally true of new technologies in their early stages, there are multiple views of what web3 is all about. Critics view web3 as little more than hype, a rebranding effort to shed some of the cultural and political baggage of crypto, while supporters believe that web3 represents the future of the internet, upending traditional gatekeepers and ushering a middleman-free digital economy.

Over the following weeks I learned from BRI founder Don Tapscott his reasoning behind the decision that BRI should embrace web3 in its research and events. I read Think Blockchain, a book by IBM Fellow and VP of Blockchain Technologies Jerry Cuomo that will be published later this month. I read the section on Web3 and the New Internet of Value in Digital Asset Revolution, a book by BRI co-founder Alex Tapscott that was just published earlier this week. And I looked at a number of articles from both supporters and critics of web3.

In the end, I became convinced that web3 is now where the commercial internet was in the early 1990s, cloud computing in the late 2000s, and blockchain in the mid 2010s: a very promising set of technologies and applications in their early years. While, at this stage it’s not yet clear how it will evolve, it’s time to start paying serious attention to web3 and try to influence its directions. Let me briefly share my views of web3.

What Is Web3, and Could It Usher a New Economic System?

Bitcoin was introduced in 2008 with the release of Bitcoin: A Peer-to-Peer Electronic Cash System, which explained how to design a decentralized cryptocurrency and digital payment system without the need for central banks or trusted intermediaries. Blockchain, the digital ledger for managing and certifying the validity of bitcoin transactions, was introduced in the same paper.

Over the years blockchain has transcended its original objectives, and has evolved in two major directions. One continues to focus on blockchain as the underlying platform for bitcoin, but it’s also become the platform for the large number of cryptocurrencies, digital tokens, and other cryptoassets that have since been created. The other is focused on the use of blockchain as a trusted distributed data base for private and public sector applications involving multiple institutions, such as supply chains, financial services and healthcare. The cryptocurrency camp is based on public permissionless blockchains, which anyone can join and require some kind of proof-of-work or proof-of-stake systems. The multi-institution camp is based primarily on private permissioned blockchains where participation is restricted to the institutions transacting with each other.

Given my professional interests, I’m particularly interested in the use of blockchains in business and public sector applications for two major reasons. First, I consider blockchain as a major next step in the continuing evolution of the Internet, helping us enhance the security of Internet transactions and data by developing a layer with the standard encrypted services for secure communication, storage and data access. And, longer term, blockchain technologies can significantly improve the efficiency, resilience, and management of complex global applications involving multiple institutions.

But, while I’ve been somewhat skeptical of the crypto camp, a number of intriguing crypto-related topics have recently captured my attention, including Non-Fungible Tokens (NFTs), Decentralized Finance (DeFi), and especially Web3. These various topics were nicely explained by technology columnist Kevin Roose in The Latecomer’s Guide to Crypto, an article in the March 20 SundayBusiness section of the NY Times.