Internet and Online

Data Management

Shabbir Chunawalla

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

Shabbir Chunawalla

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

Shabbir Chunawalla

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.

Crypto Regulation

Shabbir Chunawalla

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

Shabbir Chunawalla

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

Shabbir Chunawalla

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.

Baby and Bathwater

Shabbir Chunawalla

Big Tech, it is alleged, have used hate speech, and is running all sorts of fake stories. It becomes defensive then. Policy makers rush in to restrain Big Tech. Big Tech needs better regulation and management simply because they have enormous sway over people’s attention and make money from advertisers by monetising this attention. Some are extremely elated when Big Tech is brought to its knees. However, Big Tech is not all that bad. Big Tech is baby which is to be thrown out with bathwater. Is that right?

Big Tech is an inalienable part of our lives. Digital technologies are central to the way we work, play, learn, socialise and entertain ourselves. These Big Tech firms provide vital information round the clock. They help people fight authoritarian tendencies and injustice. They democratise communication. They have taken away monopoly over the audiences by a select few.

Small business in millions are encouraged by the social media. They are connected to their customers. In fact, many start their online journey here. They make available any customer anywhere in the world. Amazon helps digitisation of small business.

Tata’s Proposed Semiconductor Plant

Shabbir Chunawalla

Tata is expected to invest $300 million to set up a semi-conductor assembly and test unit. They are likely to set up the plant in South India. It will make outsourced semiconductor assembly and test (OSAT). Such a plant packages, assembles and tests foundry-made silicon wafers. These are turned into finished semiconductor chips.

As we know, Tatas are very strong on the software side. They would like to add hardware to their product portfolio. It is very critical for long-term growth.

The potential clients for OSATs are Intel, Advanced Micro Devices (AMD) and STMicroelectronics. Separately, Tata is already building a high-tech electronics manufacturing facility in Tamil Nadu.

AI and Uncertainty

Shabbir Chunawalla

A car is being driven by AI-assisted engine. In a particular situation, it predicts that killing the occupants of the car would save many more lives in the event of an upcoming crash. This decision must be made in seconds. Should the occupant be killed or saved?

Consider an AI-monitored weapon system. In a war, it decides to kill a thousand persons to save a million lives. AI has to make the choice.

It is not easy to figure out its preference ordering. Even those who program it cannot do it. It is not known what goes into the black-box of decision making.

A chess game AlphaZero purely trained on ML was simply fed the rules of the game, and to maximise the wins. It was not trained by humans. It did the rest. It breached the limits of the game. It sacrificed unusual pieces including the Queen to win.

Halicin, MIT-designed AI programme identified a drug molecule out of many that worked against target bacteria. It worked like a chess game. It found a new antibiotic.

It is uncertain how these programmes achieved their goals.