Metaverse

Today we look at the internet as an outsider. Tomorrow, we will be in it. This is the simplest possible way to explain the complex concept of metaverse. Metaverse is going to be the successor to mobile internet. It is going to be a new way to experience internet.

People cannot be with each other physically all the time. You could be digitally present.

The immersive experiences could use VR headsets or AR glasses. Even otherwise people could access the immersive experience across devices such as phones and computers. The core ideas of content, continuity and co-presence will prevail irrespective of whether you use a plain device or a VR hardware.

Maybe, this metaverse journey will continue for a decade or more. It is taking baby steps now.

In future, people will hangout with family and friends more and more through co-presence. They can see sports together or enjoy a conversation together without being together physically.

The idea of continuity makes you move from space to space or take things with you. This requires building of interoperable standards.

Metaverse cannot be created by one company. It is going to be a colaborative effort. There are individual universes, and the idea is to connect them.

The early signs of a metaverse being made are the Horizon Workrooms or Horizon Worlds. Such VR-centric experiences could be built over the next couple of years.

Roads Recharge EVs

Indiana Department of Transportation and Purdue University propose to develop the world’s first contactless wireless-charging concrete pavement highway segment.

Here the cement is magnetised. For this small particles of ferrite are added to a concrete mixture, which is magnetised by passing an electric current. Ferrite is a ceramic made by mixing iron oxide with silvers of metallic elements, such as nickel and zinc. Magnetised cement creates a magnetic field that transmits power wirelessly to the vehicle.

A plate or box (12’x4′) is buried inside the roadway at a depth of a few inches. It has wire coils which connect to the power grid through a transmitter. The transmitter is surrounded by normal roadway material. A series of such transmitters are embedded in the roadway to transfer power continuously. This power is accepted by the receiver in a smaller box with coils attached to the underneath of a car.

This technology is to be validated. This is the early stage. The cars will have to be redesigned. This charging on the roads may not work for all EVs but can play an important role for some applications.

Electrifying roads can solve the problem of long-haul tracking. The trucks would not have to carry large battery packs. Of course, it would mean huge investment in infrastructure.

A ground-breaking one-mile stretch of road that can charge EVs as they move or sit stationary is to be built in Detroit, USA as a part of an inductive vehicle charging pilot programme.

Web-tracking Cookies

Cookies are small files that websites send to the user’s device, say a mobile or computer, to monitor the user and remember certain information about him/her, e.g. login information or shopping cart information.

These first party cookies are useful since these software snippets lets a website recognise individuals allowing them to do automatic login subsequently while they are on line. Otherwise, an individual would be treated as if he/she were visiting the website first time.

HTTP cookies or web-cookies are small block of data created by a webserver in the course of browsing by a user. These are placed on the user’s device by the user’s web browser. It is possible to place more than one cookie on a user’s device.

Originally, they were meant to shield people rather than do cyber snooping.

A California-based engineer-webbrowser programmer, working in Netscape coined the term cookies. For the first time the cookies were used in June, 1994 and a patent was applied for in 1995 which was granted in the US in 1998. Cookies were integrated with IE in 1995. They came by default. The public learnt about them in 1996. Privacy issues were then highlighted. Even FTC discussed them.

There were efforts to formulate specifications. Montoulli decided to use Netscape specification as the starting point. The efforts commenced in 1996, and the specifications were published in 1997. There is specification that no third party cookies will be used, and even when used, they will not be enabled by default.

Third party cookies, or tracking cookies compile long term records of individuals browsing history. They violate the privacy of individuals.

Advertising agencies were already using third party cookies. Netscape and IE did not comply with specifications. New specifications were laid down in 2000.

A third party cookie comes from a domain name different from the domain name used in the web browser’s address bar. Web browsers have privacy settings that can block third party cookies.

Session cookies or in-memory cookies exist only in temporary memory while web is being browsed. Persistent cookies continue for a specific length of time. Secure cookies are transmitted over encrypted connection. An Http-only cookie cannot be accessed by client-side APIs such as Java Script. Authentication cookies authenticate a logged-in user.

Google Chrome and later MS Edge introduced Same-site cookies (2016). Super cookies originate from top-level domain or public suffix. They are often blocked by browsers, as they are a security threat. A zombie cookie does not reside in dedicated cookie storage location. Its data and code are placed on a hidden location of a visitor’s device.

Google and Facebook have been fined by the French authorities over the use of cookies. The cookies could be stopped if targeted ads are stopped and online services are funded through subscriptions. But all this could drive advertisers to use stealthy tactics. They will find away. Even small websites will be starved of funds, and Big Tech will flourish. The middle way is to make it possible for the users to opt in or out of sharing data. Though web without cookies is not possible, we can learn to use them in a nuanced manner.

Data Management

Organisations make use of data for their day-to-day working and operations. Data facilitate the decision making process. Data too helps in identifying patterns for enhancing the services and analysing the weak links.

Organisations deal with data either by establishing data centres or by adopting clouds. Some organisations combine these two methods to use a hybrid model.

Data Centres

A data centre is a physical facility or space of networked computers and its associated components, say telecom and data storage to organise large amount of data. It then processes, stores and disseminates the data.

Small and Mini Data Centres

These data centres are set up on-premises or close to the users in business districts. The advantage is reduced response time, often measured in milliseconds. There is the lowest level of latency to meet real-time data computing demands. These are micro and mobile data centres which are suitable for use in applications, e.g. instant data centres, remote office and branch office, and edge computing. They are high performing and energy efficient.

A small data centre can be as small as a few racks of servers or about the size of a small room. These are flexible, and can be scaled up. They are suited for densely populated markets. Improved connectivity will enable small data centres to serve local business needs at competitive rates.

Large Data Centres

These are gigantic facilities with thousands of servers processing so many terrabytes of global data.

The biggest data centres are in China. Their size could be as large as 7-10 million square feet. They consume humongous amount of electric power. The size of the data centres in Europe and the US too could be 3-7 million square feet. Most such data centres are located in remote areas away from the urban areas.

These big centres offer economies of scale. The data is expanding exponentially. This requires large data centres. But all regions and countries cannot afford such a set up.

Demand for Data Centres

The highest demand for data centres is in the Asia Pacific region. China and India are the leading players here. Corporates such as Oracle, IBM, MS, Google and AWS are investing in data centres in India.

In India, the roll-out of 5G imninent. The atmosphere is conducive for data centres. RailTel proposes to set up 100 mini data centres across the country, mostly in 2-tier/3 tier towns.

RailTel is expanding its optical fibre network laid along the railway lines. The edge computing data centres will be linked to the optic fibre network. Big, small and medium size data centres will facilitate the growth of digital India.

Types of Data Centres

Telecom data centres are operated by telecoms. Enterprise data centres are built and owned by a company, either onsite or offsite. Co-location data-centres provides cooling to multiple enterprises within one data centre to hyperscale the customers. Hyperscale data centres are owned and operated by the company itself.

Cloud

Either individual or collective, a group of services is provided by a network of services which possess a unique function. A could is not a physical entity. It is a group or network of remote servers arched together to operate as a single entity for an assigned task.

A cloud is built with a lot of computer systems. A cloud is accessed through internet. Cloud providers offer cloud as a service. It lets the user rent the computer systems.

Cloud compute is on-demand delivery of IT resources over the internet with pay-as-you-go pricing.

Cloud also helps the storage of data. In cloud services, a company need not own or maintain physical data centres and servers. Still, the organisation can access technology services — computing power, storage and data bases on as-needed basis from a cloud provider.

Amazon Web Services (AWS) is a cloud provider.

Types of clouds

Public cloud is open to all on pay-as-you-use basis. Private cloud can be accessed with the permission of the organisation. Hybrid cloud methodology is a combination of public and private clouds, and serves different needs. Community cloud is a methodology to offer services to a group of people in an organisation or a single community.

Difference between Cloud and Data Centre

  • Cloud is a virtual resource. Data Centre is a physical resource.
  • With less investment, a cloud is scalable. A data centre requires more investment for scaling up.
  • A cloud attracts less maintenance costs, as the service provider maintains it. A data centre has high maintenance costs.
  • In cloud the service is provided by a third party. In data centres, we have our own developers.
  • Cloud is high performance entity as compared to investment. A data centre is low performance entity as compared to investment.
  • One must develop a plan to customize a cloud. A data centre is easily customizable, without any hard plan.
  • An internet connection is a must for cloud. A data centre may or may not have internet connection.
  • A cloud is easy to operate and viable. A data centre requires experienced developers and may not be viable.

Additional Comments

Modern data centres have software defined networking (SDN) to manage traffic flows via software. Historically, organisations used on premises data centres. The necessary infrastructure is maintained on-site. There are services, support web, email, networking hardware and uninterruptive power supply (UPS).

Organisation are moving away from onpremises data centres to cloud data centres. These are virtual data centres which can be scaled up or downed by a few mouse clicks. They offer Infrastructure-as-a-service (IaaS) and Platform-as-a-service (PaaS). Clouds too have issues of cost, lack of viability, accountability and transparency. Cloud provider is responsible for maintenance, updates and meeting service level agreements (SLAs).

All this does not mean moving everything to cloud. There are hybrid cloud data centres — a mix of on premises data centre components and virtual data centre components. These are shared responsibility models.

Data management is done across cloud, core and edge. A lot of infra remains on-prem(on-premises). However, there is storage complexity. Banks no longer have tiered storage, and data is to be available in real time. Previously, data used daily was put on faster discs, and data at rest on slower discs. These days even historical records are needed for analytics. We require a unified data operations approach.

We make use of descriptive analytics, diagnostic analytics, predictive and prescriptive analytics.

Crypto Buying

Cryptos are bought at exchanges. A buyer has an account with a crypto exchange. A buyer orders cryptos through an exchange. The exchange finds a match from the market and takes the delivery of the cryptos on behalf of the buyer. A crypto account with an exchange is KYC verified. The platform’s bank account is loaded with fiat currency to trade for the cryptos. As the process is not regulated, there could be variations in the process.

The cryptos thus purchased are kept in an insured wallet. Some exchanges give the custody of the assets to the buyer. Many exchanges maintain a wallet. The user funds are moved through the wallet on authorisation.

In crypto transactions, the saying is, ‘ Not your keys, not your crypto.’ It refers to the custody of the tokens. Typically, a private key, which is alphanumeric, gives one ownership of a crypto asset.

In India, however, most exchanges are centralised. It means they hold the keys. It enables faster transactions. It violates the concept in crypto buying and selling — the presence of an intermediary. However, this is for the sake of convenience. The custodial wallet facilittates faster transactions. Some investors, too, are averse to holding keys, as there is possibility of misplacement which means the loss of the assets.

Centralised exchanges are vulnerable to theft and hacking. Once the exchanges are licensed. Crypto trading will be less risky.

Lesser-known Cryptos

Most popular cryptocurrencies are Bitcoin and Ether. However, over a period of time, many cryptocurrencies have emerged in the market — say more than 11000 currencies do exist. Practically, anyone can create a crypto with a bit of coding. Some are complex decentralised currencies, whereas some get used in videogames. Dogecoin is an example of meme currency.

Some other currencies which are booming are:

Polygon’s Matic: Polygon is founded by three Indians for the Ethereum blockchain. It intends to build a cross-chain platform to enable different blockchains to communicate with each other.

Solana: It has been launched in 2020, as an alternative to Ethereum, and supports smart contracts. Its founder is Anatdy Yakovenko. Solana has DApps. It consumes less energy than Bitcoin.

Cardano: It also supports smart contracts like Ethereum.

Luna: It has been created by Terraform Labs in 2018. The Terra blockchain creates algorithmic stablecoins. These are tied to some physical currencies such as US dollar.

Polygon : Blockchain Startup

Polygon, an Indian blockchain startup, has built a layer-2 scaling network on the top of the Ethereum blockchain. One can compare this to a flyover built on an Ethereum highway. The flyover is more efficient. The developers could build and scale blockchain-based applications. Such projects could relate to decentralised finance, Web3.0 and metaverse among others. Polygon says that there are 7000 plus decentralised apps built on its platform. There are more than two million active users.

Polygon is funded by Sequoia, SoftBank and Tiger Global at a valuation of $10 billion. Founders and VCs call it a Flipkart moment for India’s blockchain ecosystem. Polygon’s success encourages talented founders to build in Web 3.0 space, that too from India. Many more blockchain startups could be set up in India, say a startup like EPNS. (Ethereum Push Notifications Service).

Polygon got a valuation of $10 billion with no revenue to show. The valuation is based on the price of Matic, a crypto token of Polygon. Consider Polygon as a listed company, with Matic as its equity. Matic is sold on most crypto exchanges. It has a market capitalisation of around $13 billion on the day of funding.

The VC investors will receive benefits in the form of tokens over a period of three years. This structure is common in the Web3.0 world to protect retail investors.

As crypto prices move up very fast, institutional investors might dump their tokens. The aim of the VCs is to make a specific multiple of returns on investment. VCs are also never allowed a big enough equity stake to call the shots. Web3.0 world is without IPOs, and VCs will have to rethink their perspective.

It is true token-based communities are still a work in progress. The future is still not certain.

Polygon has shifted majority of its operations from Bangalore’s posh residential and startup-friendly locality Indiranagar where it had begun to Dubai, the US and other crypto-friendly destinations.

Polygon’s founding fathers are Sandeep Naliwal, Jayanti Kanani, Anurag Arjun and Mihalio Bejlic. They are the rockstars of crypto world. These founders are not in India

Polygon is building a Web3.0 power house. It is set up in the British Virgin Islands (BVI), has an entity in Switzerland, and large teams operating out of Belgrade (Serbia) and the US.

Crypto Regulation

There are three broad uses of the crypto blockchain technology — currency, business services such as decentralised finance and asset.

The currency is of two types — general currency and asset-backed stable coins.

Cryptography and blockchain environment consists of decentralised autonomous organisations. There is no identifiable owner of these businesses, though some of these may have created the technology, e.g. Bitcoin. It makes it difficult for the authorities to tax or regulate or to get them registered. It is to be deliberated how to go about this.

Then there are smart contracts which are self-executing without any intervention. The existing laws of contract do not have provisions to deal with such contracts.

Currencies are issued by a sovereign. Private entities are barred from doing so except for the inner use of a platform. To illustrate, suppose there is a transaction on Ethereum blockchain which is an open-source blockchain. It could be allowed in Ether, which is the cryptocurrency of the Ethereum platform. It is akin to clubs or malls allowing transactions in tokens offered by them. It is so because it is difficult to do transactions in fiat currency in the crypto environment.

Stablecoins are favoured till the Federal comes up with a digital dollar. Digital dollar perhaps could be as easily transactable as stablecoins.

Crypto’s currency aspects could be regulated by the RBI. However, it is not suitable for other uses of the crypto as a regulator, say for crypto business and assets.

Effects of Cryptos on Fiat Currency

If cryptos are supported, it undermines the fiat currency and the ability of the authorities to influence money supply.

Cryptos ultimately replace the fiat currency to some extent. It is like allowing a parallel currency system in the country. If India allows crypto transactions, these could lead to dollarization of Indian economy. In other words, we are allowing legal tender as well as dollar as currency for transactions. It affects the monetary policy. The ability of the authorities to control the money supply or interest rate gets affected. These policies cannot be applied to cryptos. The country thus loses its policy control of the economy.

The banking system too gets affected if cryptos are permitted. They loose the power to create bank money or cash credit. Even the ability to mobilise deposits is affected. Credit creation of convertible currencies is not amenable to monetary policy. If major chunk of deposits and credit shift to cryptos, the banking system suffers seriously. It impairs the financial stability of the country.

Cryptos are used for cross-border funds transfer. Cryptos are non-reserve currencies. They could seriously affect India’s foreign exchange reserves. These transactions could occur outside capital account regulations.

Of course, stable coins could be more effective than the volatile cryptos.

India has to be circumspect. Advanced economies are on different footing. They would not ban cryptos for strategic reasons. It could give advanced economies global control. Another country could control Indian’s economic policy if there is large scale substitution of fiat currency with cryptos.

Cryptos could be treated as a store of value. However, it should be understood that the demand as a store of value is more for a currency than the transaction demand. It is similar to a competition between fixed deposits and transaction deposits. As a store of value, fiat currency is anchored by monetary policy. Cryptos are just a matter of belief. They are not anchored.

Cryptos are difficult to regulate as they are difficult to define.

According to T. Rabi Sankar, Dy. Govenor, RBI, considering all the above arguments, it is necessary to ban cryptos. There are lot of conflicting signals. The investors feel the RBI officials are creating FUD, crypto slang for fear, uncertainty and doubt.

Crypto Firms to Standardise Regulations

India’s cryptocurrency industry intends to streamline its operations to gain legitimacy among the finance ecosystem. The trigger was provided by the recent RBI reminder that its 2018 circular is no longer applicable as the SC has struck it down in 2020.

There are crypto currency exchanges in India — WazirX, CoinDCX, and CoinSwitch Kuber. These have tied up with the Internet and Mobile Association of India (IAMAI) and have collectively set up an advisory board to implement a code of conduct for the industry. This board will be set up under the Blockchain and Crypto Assets Council (BACC), which is part of IAMAI. It will act as a self -regulatory organisation for this sector.

The code is being worked out. It will be applicable to all member cryptocurrency exchanges. It will include standardised annual audits, routine disclosure of company information and funding, KYC checks, improved data storage standards. There will be reassessment of customer risk profile.

In this industry, what is required is balancing between regulations and supervision. There should be steps to improve due diligence.

The board will interact with the authorities to flag the suspicious transactions. The board will certify exchanges. It will have some external members. In this industry, what is required is balancing between regulations and supervision. There should be steps to improve due diligence.

All this is being deliberated. There is an effort to bring the informal nascent industry under one standard authority.