José Luis Núñez Díaz

Last week I shared with the 101Blockchains community of professionals and digital innovators the Blockchain vision we have at Telefónica and how companies can create value by adopting this technology. If you are curious you can check the full presentation at this link. But in addition, in the debate with the attendees the common challenges faced by companies when adopting Blockchain were raised again. I had the opportunity to confirm them with the audience by launching two questions. The results, without claiming to have any statistical validity, do point to certain trends that we can analyse. But above all, they suggest the first of the priorities that we must address in our Blockchain project. The technology On the type of blockchain preferred for business applications, the majority options were private and licensed networks. Bearing in mind that the options were not exclusive, we could even conclude that the majority of participants prefer this type of network. The third option chosen by a third of the audience was the public Ethereum network. Preferred types of blockchain networks for business applications With the second question we tried to find out the main concerns of the attendees when adopting blockchain in their operations. Again the answer left no doubt. In this case we were presented with the business version of the blockchain trilemma, that is to choose: the traceability and transparency of public or licensed networks to the detriment of scalability and performance the scalability and performance of private networks while renouncing a certain transparency. Challenges in bringing a blockchain solution into production We can easily relate the two answers. A minimum transparency of the operations that are recorded on the network is guaranteed by the technology itself. The more participants, the more transparency and guarantees about the immutability of the recorded information. In those use cases that are intrinsically connected to the business or with exigent performance requirements, the preferred technologies are those that offer the possibility of having more control and trust between the network participants. Especially Hyperledger Fabric is the de facto standard in these cases. We are talking about environments with few known participants, for example supply chains or data reconciliation platforms. However, for those cases where transparency is the key, companies find in the public Ethereum network, with thousands of independent participants, the perfect ecosystem to trace their operations and allow third party verification. The importance of a PoC and Minimum Viable Ecosystem We have already chosen the technology that best suits the requirements of our use case. Now we must ensure that once the solution is deployed it will help solve the challenges of the case. To do this, the best option is to design a proof of concept and validate as soon as possible which minimum functionalities will allow us to create value for the business. Their scope is limited, and they are usually limited also to quickly demonstrate that this minimum functionality can be implemented. We place ourselves in the field of technology and technology always works. However, although it is very important, a proof of concept is not sufficient in most cases. We need to relativise the functional level and analyse which attributes or components of the project will actually determine its feasibility. This is what we call not the minimum viable product, but the minimum viable ecosystem. The value of a blockchain project is in the value captured by all the participants. We have to identify the right participants to create sufficient value and understand the relationships between them, the governance, the operating model and how new participants can easily join, the systems with which they must interact and the integration interfaces with them. In short, it is a question of mapping out the interactions and the chain of creation and transmission of value: where, how and when it is created and who, how and when it is captured. Elements to take into account when scaling a proof of concept However, identifying all these components and relationships does not mean implementing them. For example, let's think of systems that record, process and make decisions based on information collected by IoT devices. That input information can be simulated. Exactly the same with the information that can be received from information systems. The important thing about the minimum viable ecosystem is to understand what information our solution is going to deliver, to whom, how and when. And furthermore, to assess whether this scenario is sufficient to approve the project. A minimum viable ecosystem is never functional. It offers a complete vision of the impact that the solution will have on the processes on which it acts. We are not simulating the solution, we are presenting in the greatest possible detail all the potential scenarios and opportunities for the participants to capture part of the value created. We can think of that minimum viable ecosystem as the intermediate step between a proof of concept and a pilot. The first is a conceptual approach and the second is already a functional exercise. A pilot can be made productive and scaled up to a productive system. The ecosystem must be implemented. Return on investment As a result of the minimum viable ecosystem we talked about the value captured by the participants. In any evaluation committee where the continuity of a project is to be decided upon, this value must be estimated. In blockchain projects we talk about a network and decisions are more complicated. The viability of the project may depend on the decisions on continuity taken by another of the participants. If one does not go ahead, the rest may not be able to generate enough value to make the necessary investments viable. Therefore, the parameters of profitability and return on investment have more than one dimension in these projects. As part of the exercise of building the minimum viable ecosystem, it is necessary to understand the motivations of each participant and to value the benefits that each one of them will obtain from the project. In addition, it is frequent that in the same project, the different participants play a different role. It is typical for example a supply chain where distributors and suppliers are involved. Each one can obtain benefits of different nature and even in different exercises. BLOCKCHAIN The 3 posts about Blockchain that you have to read August 2, 2022 The benefit generated can be translated directly or indirectly into book value for the different participants. For example, let's think about a food traceability project designed to convey greater confidence to the final consumer. In the medium term, this confidence may both retain the customer and justify a price premium. However, imagine a small producer. Perhaps the project allows them to demonstrate their excellence by meeting delivery deadlines or quality parameters. Thanks to this evidence, he could renegotiate his contracts and obtain direct benefits in the short term. This variability and asymmetry in the benefits obtained determines that each project, depending on the specific use case and the participants involved, combines different returns and even different levels of investment to achieve the expected results. Characterising this benefits map in as much detail as possible should be a priority before entering on costly integration projects or migrating from legacy systems and applications to a new blockchain-based solution. Interoperability between networks The development of business projects based on blockchain is accelerating in parallel with cryptoeconomics. Use cases such as bitcoin or crypto currencies have developed a centralized ecosystem in a few public networks. However, when a company decides to launch a blockchain project it thinks about creating its own private network. The result is a multitude of networks deployed independently as silos, although many of them can share technology. There is an ongoing debate about the interoperability of blockchain networks. How is interoperability ensured between different blockchain networks? Before answering this question, it is necessary to ask what we mean by interoperability and whether it is necessary for our specific case of use. A priori, two blockchain networks can interoperate at different levels. They could share data or allow a smart contract deployed on one network to write or interact with another. They could also validate transactions and reach consensus between them. However, what use cases need these levels of interoperability? Let's think of two business applications, one for payroll management and one for expense management. Both probably need to be aware of employee data. These could be replicated in each application or available in a common repository. However, they do not talk to each other. They do not interoperate. Each application simply uses the information it obtains from available sources. The same happens with Blockchain. The information stored in a network or the tasks (smart contracts) are self-contained. They do not need to interact with another network. In any case, it will be the application that integrates with two networks simultaneously. From each of them it will retrieve or register information of different nature that allows the implementation of the use case. BLOCKCHAIN Hyperledger Besu: blockchain technology on the rise in the business environment September 8, 2022 Reuse of components or ad-hoc developments? Many of the business applications based on blockchain make use of the same basic functionality of the technology. At least two out of three use cases are based on the immutability of the information stored or exchanged. The rest are split between asset tokenisation (rights of use, intangible assets, digital twins, etc.) and information source reconciliation. Let's analyse the most common case of blockchain projects, traceability and certification. Thanks to immutability, we can create irrefutable digital evidence that we can also date and attribute accurately. With this evidence we can leave a trace of an information or an event so that it can be verified by a third party. Now let's think about a specific case of document certification. If we atomize the necessary operations we can create a catalogue of actions that we could reuse in another case. These actions would include creating the digital asset that the document represents, associating the intrinsic data of the document with it, signing it digitally to attribute it to the holder, creating a unique fingerprint that allows subsequent verifications, etc. These same operations could be applied in an industrial traceability project to monitor the condition of a specific piece. In this case we would create the asset, assign it to an operator responsible for the part and we can assign intrinsic data to identify it. We have therefore managed to reuse components in projects of a different nature. If we think about the implementation, surely each operation can be translated into a generic smart contract that can be parameterized according to the specific process that we monitor and trace. These generic smart contracts are the reusable components that make it possible to significantly minimise the development times of blockchain solutions. In some cases we will need to develop specific components (i.e. new smart contracts). However, the majority of use cases can be made with these reusable components. Need for decentralisation Another recurrent debate among blockchain advocates raises the extent to which it is necessary to decentralise the operation of a network. In fact, many experts claim that a private network does not respect the underlying value of having a decentralised platform. From this position only public networks with thousands of independent nodes would be true blockchain networks. Mass replication in thousands of nodes without any one node being able to influence the rest guarantees immutability and integrity. In cases of consortia where several partners operate the network, a minimum of decentralisation is guaranteed. However, we were saying that each company is deploying its own private network. How do we guarantee immutability and integrity in these cases? As long as there is cryptographically recorded evidences that can be verified by unrelated third parties, both attributes can be guaranteed. T he basic cryptography that links the blocks of stored information makes it unfeasible for historical information to be altered without invalidating the distributed verification evidence. In any case, the use of public networks to record snapshots or images of the system at a time as evidence is a common procedure to guarantee the integrity and verifiability required by blockchain defenders. Veracity of the IIOT Finally, we can reflect on what the immutability of information means. In essence, the information we record on a network cannot be altered and we can guarantee its integrity. What happens if that information is false? We are effectively "building" a lie that people will be able to verify. Therefore, we have to be careful with the information we store in blockchain. We must never believe something recorded in the blockchain without having a guarantee of how that information is being recorded. The easiest way to guarantee not only the integrity but the veracity of that information is to record it as close to the source as possible. In many of the business processes that we can consider, that place is a reliable IoT device as an interface to automatically load the information in the blockchain. But still the parties must ensure that the devices have not been tampered with and trust them. Blockchain TrustOS, the Swiss Army Knife of Blockchain Networks May 26, 2022 TrustOS: Quick and easy Blockchain From Telefónica we have been working for several years so that our customers can implement Blockhain without worrying about all these challenges. Our proposal is TrustOS, a simple network service that allows to invoke in a simple way the most demanded functionality of blockchain. Following the thesis we explained before, TrustOS would be those reusable components of any Blockchain project, which we have packaged and made available to our clients. Thanks to TrustOS, a company can: Add blockchain to its systems, services and applications at a low cost in time and resources. It can divest itself of the underlying blockchain technology and use the TrustOS APIs to combine the best of the public and private blockchain networks. Simulate your minimum viable ecosystem without paying attention to the network topology or develop complex integrations of your systems with Blockchain. Present the managers with positive business cases from the very beginning, since the investment in network deployment is minimized and the service starts to be used immediately. Develop applications that can simultaneously interact with several blockchain networks even when they are based on different technologies. Reuse the basic components of TrustOS to implement traceability or certification use cases with very few lines of code. To trust in the real decentralisation of the solution thanks to the federation of networks, a novel concept that allows the creation of meshes of different networks that act as verifiers of the integrity of the information exchanged in the other networks of the mesh. Guarantee the data exchanged and its integrity, thanks to the IoT modules that natively register information and evidence in blockchain through TrustOS.

Could blockchain really impact on the business of communications providers? As an industry, have telcos already embraced this technology? Do they see any opportunity behind blockchain? Do blockchain and decentralized technologies make sense for telco industry? If you search for telco blockchain in Google, you have a lot of results, but most of them are posts listing uses cases in the telco businesses identified by consultancy firms and analyst as relevant for applying blockchain. Repeatedly we find use cases for roaming and intercarrier settlements, fraud detection, IoT identity and security, 5G provisioning and so on. However, they are not identified by the telco companies themselves. In fact, if we exclude the banks and the financial industry in general or some big players in the world of logistics and distribution (such as Maersk or Walmart), telcos and industry consortium like GSMA or GLF have been one of the most active companies and institutions in exploring the possibilities of this technology. However, very few, if any, projects have gone beyond proofs of concept or narrowly scoped implementations. Relevance of telcos in adopting blockchian One way to measure the relevance of telco industry in adopting blockchain can be to look at the Blockchain50 list published by the renowned Forbes magazine. Each year, this list recognises the 50 biggest companies in the world that are using blockchain tech. Last list, published early this year only includes two telcos: Swisscom and Telefónica. So, why being so active telcos don’t have more presence here? Despite the fact that financial institutions and companies holding or handling cryptocurrencies are over-represented, we can explain that because projects pushed by telcos have no significant impact on their core operations yet. In fact, Swisscom merits for entering the list are related with crypto projects and digital assets. In our case, Telefónica is part of the list because of the massive adoption of blockchain in supply chain management and TrustOS, the sw suite for easily building consortiumless but decentralized enterprise blockchain applications. Revisiting the Blockchain Magic Quadrant Can we measure or advance in anyway the impact of blockchain projects in the telco businesses? Almost 3 years ago we presented a tool which allowed us to analyse in a very simple way how and when the different blockchain projects and initiatives we were considering at the time would impact the organisation. We call this framework The Blockchain Magic Quadrant. The quadrant was just a conceptual exercise but simplified how we can compare completely different projects to allocate resources and manage the expectations about the technology. The Blockchain Magic Quadrant We reviewed any project from different perspectives, but at the end each one had a main business driver: it activated savings, generated incomes or created new markets. There is also a lot of projects using Blockchain just as a technological enabler. They don’t have any special impact in the business. They creates value because of the solution itself, not for using blockchain. For the rest of projects, the Quadrant allows us to group initiatives in three big families depending on the nature of their impact in the business. So, we divide the quadrant in 3 sectors: IMPROVE, TRANSFORM and DISRUPT. The IMPROVE sector in the quadrant It is the base of the quadrant and we find a first group of projects that take advantage of the adoption of decentralized ledgers in pre-existing business processes. These initiatives IMPROVE the companies current businesses, creating efficiencies and savings for the existing products and services that justify the migration of traditional approaches to new solutions based on decentralized architectures and blockchain technologies. They make the same things they had been doing and in the same way, but better because of adopting blockchain. These efficiencies come mainly from reducing the operating time of control processes and operational costs due to non-conformities or disputes resolution in complex and multiparty information exchange processes. Besides, cumbersome verification and auditing processes are also simplified, even making the requirement of a trusted neutral third party unnecessary, as the technology itself notarises the information and turns it into immutable and irrefutable by the parties. Blockchain becomes in many cases the excuse for the digitalization of the process. The complexity of these projects lies in their integration with legacy systems. The paradigmatic example of this family of projects is the application of Blockchain in the supply chains. These projects are not telco specific. If we focus on the telco industry, the IMPROVE projects deals with settlement betweens carriers and operators. The Magic Blockchain Quadrant: IMPROVE sector Supply chain management There are a lot of productive projects acting on this field and improving the way in which commercial relationships between companies are faced. Telcos usually are very big companies with global supply chains and intercontinental logistics that involves a very complex network of participants. So, blockchain is a powerful tool for telcos to optimize their operations by applying it to face the supply chain challenges. Will the supply chain impact enough in the telco business? Well, obviously it can help in reducing costs and so, increasing profit but the business remain the same. Remember the statement for this sector. We do the same things, in the same way but a little better. Intercarrier settlement The other big case to apply blockchain in existing processes is the settlement of data and payments between different companies. These means for telcos the roaming and wholesale business. While supply chain projects are a reality, in this case, we find a lot of multilateral proof-of-concepts sponsored by existing consortia like GSMA or GLF. They are even trying to standardize how the networks should evolve to a decentralized paradigm. In some successful cases, the projects have even been deployed between some operators to improve their bilateral relationships. In any case, impact in business is still not very significant. The TRANSFORM sector The second sector groups those initiatives that TRANSFORM businesses. In contrast with supply chain or settlement cases, they take advantage of Blockchain to propose new ways of doing the same things. They are projects enabling trusted ecosystems where new entrants can play a role that contributes with extra value to the products and services: they are transforming the value chain to provide them, both enabling new business models or creating new sources of revenues in the existing markets. Examples of these TRANSFORM projects are the Self Sovereign Identity concept or those projects that we call platform uberisation initiatives. The Blockchain Magic Quadrant: TRANSFORM sector Decentralized management of Digital Identity This concepts implies that the user is the key player and central entities that verify identities become unnecessary. Companies can issue verifiable credentials that proof some attributes of your identity that anyone can verify without asking the issuer to validate them. This new scheme for authentication and authorization services completely transform the digital identity field. The new players in this game will be those companies having a deep knowledge about their customers that will develop a new source of revenues. And usually telcos know a lot about their subscribers. They know who they are, how and when they move or their history of payments for their subscription. All of them are attributes easily issuable as verifiable credentials that can add value to third parties business models. Besides, telcos can easily and trustworthily deploy a wallet in subscriber’s handsets to make easier to them managing their credentials. So, if self sovereign identity ecosystems exploit in the near future, telcos are in a very good position to capture part of the value. Digital Identity services already exists, they are the same things, but thanks to blockchain and decentralization, new players will enter the ecosystems to do them in new ways. Platforms uberisation Another trend enabled by decentralization and blockchain technologies that could seriously impact in telcos and digital services providers is what we can call the uberisation of networks using the cryptoeconomy. Platform economy isn’t new, however, blockchain adds to platforms the power of decentralization and total transparency to the economical incentives that engage users to contribute to the ecosystems. There are a lot of projects where users rent out their assets in exchange for crypto-based tokens. They works when new participants become computing providers, storage providers or connectivity providers. Beyond peer to peer networks for storage or computing, especially disruptive is the proposal of startups like Helium, called itself the people’s network. Its aim is to build a wireless network deployed by normal people connecting a simple device to the Internet in their home or office. This device acts as a hotspot providing low-power network coverage (LoRa) for billions of IoT devices. Users become connectivity providers and can quickly recover the investment in the device by earning cryptocurrency because of the coverage it is providing. Today, Helium network has almost three hundred thousand hotspots, adding seventy thousands new ones the last month. Thanks to blockchain-based incentive model they are deploying the largest decentralized wireless network in the world. Decentralization ensures network robustness, although availability and network service can’t be committed in the same terms that traditionally deployed and operated telco networks do. Today, the LoRa coverage can't compete with operators' 5G network. However, Helium plans including also the deployment of 5G hotspots in the near future. This will change completely the way in which telco operators traditionally deploy and operate radio networks. Anyway, these models show us that again, things can be done in new ways and new entrants can transform the existing markets. The DISRUPT sector: tokenising everything We have the more aspirational projects in the DISRUPT sector. Disruption comes for its ability to create and open NEW MARKETS, either generating new assets that did not exist before or creating secondary markets from the inefficiencies or inelasticities of the previous scenarios. We have no idea about what new markets enabled by blockchain disruptors are imagining right now, but in my opinion, many of them will be related with tokenization. Currently, the king of the trends based on tokenization is the NFTmania. We can spend very long time reviewing what things are people monetizing by creating Non Fungible Tokens. I’m not going to question what can be or can not be a token. They are everywhere right now. Brands are issuing NFT collections for raising funds from their fans. Other guys are creating Kitties, Zombies or even Digital Art that can be commercialized in the NFT markets. And the most nerd trend enabled by blockchain is the metaverse. Even Mark Zuckenberg announced some weeks ago his plans. He thinks that the future of Facebook is in the metaverses, those virtual worlds populated by avatars. They can be implemented without blockchain, but blockchain enables the possibility to close economical transactions in a trustworthy way. If banks were the first companies to explore cryptocurrencies, gaming companies are the first making business not exactly in the metaverse, but with the metaverse. They are actively selling wearables for the avatars in the same way the placed them in the videogames. And the best way they found to ensure the buyers that they are buying an authentical complement for their avatars is blockchain, or more precisely, issuing NFTs. The role for telcos Can play telcos any role in the metaverse? Will the communication between avatars in the metaverse a service that the telcos can provide? We don’t know, but new digital services like metaverses only can exists in a hyperconnected world, with ubiquitous low-latency networks that allows to interact with the avatars in real time from everywhere. In addition to this, the network becomes relevant as the only “centralized” element that can anchor the decentralized world. The communication network can notarize everything travelling through it, becoming the only trustworthy and shared element that connects people and companies. This notarization, in terms of collecting evidences of executed transactions could be also one of the roles that telcos could play in the next years. The Blockchain Magic Quadrant; The DISRUPT sector FORECASTING Summarizing, we introduced the Magic Quadrant framework to asses the eventual impact of blockchain in organizations, positioning the projects we mentioned in three waves depending on the timeframe we think they will be in production. But I have intentionally not tried to give estimates of market size, opportunities or revenues. According to IBM, the impact of lack of supply chain visibility are around $300 billion globally. Just by improving efficiency by a few percentage points we have a billion dollar business. The disputes in global roaming market reach several billion dollars yearly. Juniper Research found that the SSI (self-sovereign identity) movement will reach annual revenue of $1.1 billion by 2024. Market cap of Filecoin and Helium reach $12 billion. Decentraland, one of the popular metaverse, values $5 billion and all-time sales of NFTs will reach $10 billions next week. All these flourishing businesses needs reliable blockchain networks to operate and telcos know how to do that. So, just capturing some of the value we are facing a market worth billions. Value for telcos So, is blockchain a game changer for telcos? It may not be as disruptive and transformative as promised, but it will be an endless source of opportunities. Some reports suggest that Blockchain Market worth $67.4 billion by 2026. We can look forward to a few months from now to see if telcos are indeed playing a role in the new markets that have been created around metaverses and NFT containers and tokenisation projects. But in the meantime, we cannot ignore the opportunity to provide reliable blockchain infrastructures that allow all these opportunities to develop. By capturing just two percent of this market, we are already looking at a billion dollar opportunity and beyond the big cloud providers, what other companies can provide this infrastructure? I believe telcos can and should develop it. We are in the best position to help companies in adopting blockchain and provide them with reliable infrastructures and easy-to-use services to develop their disruptive business models. Footprint This content was part of my keynote at Telecoms World Asia conference run virtually in November 2021. You can find the presentation I used at https://www.slideshare.net/jota.ele.ene/growing-impact-and-future-potential-of-blockchain-for-telcos-a-game-changer This article has been published by José Luis Núñez Díaz on 18 November 2021 in Think Big blog has been registered in blockchain via TrustOS with the following identifier: did:vtn:c1:certid:ebb6ad47f2d4b70c6ef62a8b32c2c43def9abdb16e7fd9c82bbefbbdb7bb6da3. You can verify it by clicking on this link.

On the June 1st, the Annual Assembly of Alastria, the Spanish Blockchain consortium, was held. Today we are already more than 500 members: companies of all sizes, profiles and industries, public administration or university representatives. As in all assemblies, the new Board of Directors was elected, which will steer the course of the association over the coming years. Beyond names and positions, the newly elected Board reflects the renewal that we want to face in order to adapt the association to the new times. Times in which the economic situation may not be very favourable. Nevertheless, we firmly believe that Alastria has a role to play. When we founded the association in 2017, we were crystal clear about its purpose. It was not just about setting up another Blockchain consortium. We all believed in the transformative power of technology and its ability to have an impact on society. That is why the aim of the partnership has not only been to carry out projects with distributed and/or decentralised registry technologies (i.e., Blockchain). We have been trying for almost four years to use Blockchain to promote the digital economy and improve Spain's competitiveness through technology. Alastria 2.0 Much has been achieved in recent years. Perhaps the most relevant one has been the publication by UNE of the first global standard on decentralised digital identity. This standard is not only inspired by Alastria's work, but several of our partners have been involved in its development and approval. But there has also been a strong commitment towards international initiatives. In Europe, Alastria collaborates in the definition and design of both EBSI (European Blockchain Services Infrastructure) and ESSIF (European Self-Sovereing Identity Framework). We have also been a major contributor in laying the foundations of INATBA or LACCHAIN, which adopts all of Alastria's learnings in terms of decentralised governance. But the usefulness of an association like Alastria is not in the past, but in the future. So, I would like to take this opportunity to share the priorities we are going to work on from now on: Encourage the adoption of decentralised identity models, placing value on the Alastria ID model. Make reliable decentralised networks accessible to partners. Approach to the public sector. Reinforce the role of the association as a forum for SMEs and large companies. Explore alternative financing models that guarantee the sustainability of the association and the collaboration of its members. Identity We have already spoken in this blog about Self Sovereign Identity (SSI). As we said, Spain can be proud to be the first country in the world with a standard on this concept. Recently, the European Commission announced the creation of a European digital identity. In short, Digital Identity is in fashion and Alastria is in an unbeatable position to help its partners to benefit from it. Over the next few years, we will work hard to make it possible for anyone to use their Digital Identity for all kinds of online transactions. We are not just thinking about authenticating you to a third party while keeping your privacy easy, secure and in control of your data. We want to enable the use of that identity on a massive scale in the economy. It should enable you to rent a bike, pay taxes or open a bank account. As a consequence, the identity model itself is not an end, but a mean and a very powerful enabler of new use cases. We are going to work on this identity model along three lines of action: Dissemination and adoption: facilitating the knowledge of the Alastria_ID model among partners and encouraging them to use it in their services, especially among public administrations in order to make it the reference model for digital authentication of citizens before the administration. Technology: Alastria_ID is a work in progress. We will evolve and strengthen it by improving the consumption tools and facilitating its accessibility. We will also work on its interoperability with other solutions such as ESSIF and LACChain. Ecosystem and partnership: we will promote the internationalisation of the UNE standard based on the Alastria_ID model, proposing its adoption in organisations such as CEN/CENELEC, ETSI, ITU, ISO, etc. We will also promote the inclusion among the Hyperledger projects, the de facto standard for Blockchain in the business environment. Networks and Platforms We want the founding aspiration of the Association to become a reality. We must build a permissioned public ecosystem with guarantees available to any company that wants to deploy decentralised applications. Alastria is technology agnostic and guarantees the quality standards and regulatory compliance of the networks promoted by its members. The Association does not operate networks, but it does ensure that partners can choose between different alternatives to deploy their use cases. Each use case has different functional and operational requirements related to their business. This is why we will create the "Alastria Compliant" network decalogue. This decalogue will include basic criteria for operation, onboarding, documentation, evolution, interoperability and services (e.g., Alastria ID). The last point, interoperability and services, is absolutely crucial. Not only do Alastria's networks need to connect in a so-called native way with the services of the European infrastructure under development, EBSI, but also with the growing number of Blockchain National Networks (BNNs) that are constantly appearing, promoted by or with the participation of governments. All networks with this status will comply with the governance, best practice and interoperability policies established by Alastria and its partners through the working groups. The Alastria Compliant status should ensure that, for example, the evidence recorded in that network has full legal validity. It has no influence on the technology implemented, the specific operating model or the number of members. On the other hand, it will be key for partners to have access at all times to a network with the most relevant technologies in the industry. Consequently, the development of new networks with new technologies will be promoted, including, if possible, a public network in collaboration with public authorities. Public Sector More than 50 public administrations (local, regional or state) are represented in Alastria. However, blockchain is still far from being a commonly adopted technology in the public sector. Therefore, it is necessary for the Association to continue to act as an evangelist of blockchain technology among the different administrations. Alastria must become the meeting point for Public Administrations that need the technology developed in Alastria. To this end, we will put special focus on providing visibility to the Public Administrations of all the projects that the partners carry out and how they can be of interest to them. As a first example and spearhead, we will encourage public-private cooperation in the development of identity projects. We will promote those partners who are already involved in these projects can incorporate the public sector as a stakeholder. As a result, we will ensure that the partners' technology helps to improve the way citizens and businesses interact with the Administration. In short, we have a brilliant opportunity to take advantage of the work we have done and strengthen Spain's position in Blockchain technology. Ecosystem And Collaboration Between SMEs And Large Companies There is no company profile required to be an Alastria partner. You don't even have to be a Blockchain company to be a partner of Alastria. We encourage any public or private company to join and to collaborate with academic institutions and professional entities. It doesn't matter the size, the economic sector where it develops its activity, the technological profile or its geographical location. All Alastria members have the same status, the same responsibilities and the same benefit. But the real value of Alastria's ecosystem develops when partners collaborate. That is why we will continue to encourage collaboration between companies with different profiles. We will launch a new Open Call with the support of large companies, administrations, incubators/accelerators and investors as the backbone of this objective. This time, the challenges posed will be aligned with the lines defined for Spanish and European funds. We hope that this measure will allow the partners to benefit from new financing channels. Financing Alastria is a non-profit association and we commit all our resources to transferring value to our members. With this objective, numerous initiatives have been launched in recent years to link and make visible the value propositions of our members with open innovation ecosystems, accelerators and public institutions. Many opportunities have been created for Alastria's SMEs to present their use cases and have visibility in national and international forums and conferences. But perhaps the most relevant initiative has been the Project Table. Its purpose is to gather, bring together and evaluate the projects of the partners with a view to the Next Generation funds of the European Union. In short, the aim is to dynamise the ecosystem and promote collaborative models that maximise the return for the partners while optimising the association's resources to the maximum. From another perspective, Alastria should encourage the use of available networks by exposing use cases among partners. During the coming months, we will try to analyse the 47 use cases deployed in Alastria networks and published in order to proactively approach them. Additionally, we will analyse the implementation in Alastria networks of a monetisation/licensing mechanism by partners of the use cases deployed in Alastria networks. This mechanism will enhance the sustainability of the networks and provide an additional incentive for partners to deploy and share their use cases.

Putting together Quantum Technology, Blockchain and the Internet of Things in one title seems like a formula for generating clicks. However, this is what we have done at Telefónica: demonstrate the viability and value of interconnecting the three technologies. To do this, we participated in the Q-Secure Net project funded by EIT Digital. Its overall objective is to provide quantum communications with QKD (Quantum Key Distribution). As a demonstrator of the solution, we integrated a QKD use case in TrustOS, our Blockchain managed service. We use QKD to secure the traffic between an IoT device and TrustOS by registerig telemetry in Blockchain. But before we get our hands dirty, let's go over the challenges we faced. Let's start reviewing the concept of QKD. What is Quantum Key Distribution (QKD) Basically, QKD uses quantum properties to exchange secret cryptographic keys between two points. We can make the same sequence of random numbers appear simultaneously in two separate places. Processing that sequence results in a completely random key. Then those keys are used to encrypt the messages that communicate through an insecure channel. We therefore make that channel inviolable. Security is based on a fundamental characteristic of quantum mechanics: it is impossible to observe a quantum system without disturbing it. Therefore, both ends of the communication are guaranteed that no one has disturbed the information they receive. If someone did, they would leave a trace and the recipients would dismiss the "contaminated" information until they reconstructed the information with "clean" information. In this way, QKD allows two users to exchange a secure key even in the presence of an observer. The exchange takes place through an optical channel that connects both points. Precisely the fiber optic coverage is one of the assets of the Telefonica network. Security in IOT devices To build a secure and reliable IoT solution, we must start by ensuring the integrity and identity of the device. That is, on one hand, we must verify that nobody has manipulated the HW or SW (integrity). On the other hand, I must be sure of the device I am communicating with (identity) and authenticate it without any doubt. Another feature to take into account is the confidentiality of communications. That is, no malicious observer who receives or accesses the communications should decipher their content. For each of these problems there are more or less sophisticated solutions in the industry. Most of them involve combinations of secure HW elements and cryptographic techniques. However, most devices present restrictions in terms of processing capacity or cost. These restrictions make some of the solutions technically or economically unfeasible. Especially if they involve computationally expensive cryptographic operations, such as encryption or temporary key generation, which require a lot of time. The challenge of managing cryptographic keys in devices But even with powerful enough devices, there is the problem of creating, distributing and managing the secret keys on the device. Manufacturers must ensure that no one unauthorized can access the keys throughout the manufacturing and distribution chain. It is important to keep in mind that different and unique keys need to be provisioned in a particular device. Once stored on the device, they cannot be accessed either. The most common scenario involves installing certificates on the device and having a public key infrastructure. Integrity in the devices is guaranteed by secure boot sectors verifying the validity of the SW signature. The device uses its certificate to sign communications and prove its identity. The confidentiality and integrity of communication is usually guaranteed end-to-end using TLS-type network protocols. These protocols depend in part on combining multiple symmetric and asymmetric key algorithms. Therefore, it seems reasonable to use symmetric keys to ensure information security at the application level. It would be simpler and more efficient than managing public key infrastructure. However, managing symmetric keys is more problematic, as they must be distributed and stored at both ends. Using QKD to obtain these symmetric keys improves their integrity by eliminating the need to distribute them previously. Blockchain and Internet of Things We really think that these two technologies are fed back when we use them together in a business process. Data registered in blockchain is immutable. The closer to the source that generates the data, the more reliable the information will be. So, IoT devices recording the information from the sensors they manage directly in blockchain seems to be a good match. But for this data to be actually reliable we must guarantee that it was not altered before it was recorded in the blockchain. That is, like any other server with which the device connects, we need a secure communications channel. The classic way to do this is with TLS protocols, which means that the device must have a certificate installed. Instead, we can use an insecure channel and encrypt the information with a sufficiently secure symmetric key. But in either case, the challenges associated with managing secret keys are already there. How does QKD improve communications from the device? Fundamentally, QKD allows to eliminate the risk of exposure of private keys in the manufacturing process. There is also no need to report the keys to the other end with which we are going to communicate. In this case the blockchain nodes. The symmetric key generated by QKD is completely random. In addition, it is generated simultaneously at both ends of the communication. The fundamentals of quantum mechanics and the distribution through the optical channel guarantee a "spy" resistant communication (evedroper). In addition, the key is the same size as the message and is used only once to encrypt that message. This encryption technique is known as one-time-pad (OTP). If the key is completely random (as with QKD), it has been mathematically proven that OTP encryption is unbreakable. Therefore, the symmetric key obtained from QKD is more secure, since: it is resistant to brute-force attacks, as it is not based on difficult to solve mathematical functions (such as RSA or EC) is resistant to possible key tests as it would take an exponential time with respect to the size of the key are not exchanged between the ends of the communication, eliminating the risk of leakage is not stored in the device permanently, preventing unwanted exposure Can we use QKD today? Today, quantum devices in general are expensive and inaccessible for mass use cases. However, QKD technology is evolving at a fast and steady pace. For example, CV-QKD (Continuously Variable Digital Quantum) makes use of commercial optical communication technologies and components. It also allows quantum channels to coexist with classics on the same optical fiber. In 2018, we already announced a pilot experience using CV-QKD and SDN (Software Defined Networking) in commercial optical networks. Beyond the pilot, today it is being integrated at a pan-European level through the openQKD project. As the technology advances, the prices of the devices will decrease and they will be miniaturized more and more. In fact, in projects such as CIVIQ, work is being done to embed them as accessories connected to the ports of generic equipment. Meanwhile, work continues extending the distances that devices connected with an optical fiber can be separated. Not only directly, but also by adding relays or trusted nodes (a Chinese network reaches 2000 km via satellite QKD). This type of experience will allow us to apply the technology in increasingly complex network topologies. For example, we also use QKD to guarantee consensus in a blockchain network instead of using costly and inefficient protocols such as Proof Of Work. All of them are real cases where quantum technology solves problems more efficiently than other technologies. Our case In the Q-Secure Net demonstrator, both an IoT device and TrustOS are connected to a QKD device. When the device wants to start a communication, it contacts TrustOS through a classic channel. Both simultaneously retrieve the symmetric key generated by the QKD devices. They then use it to encrypt the telemetry information of the connected sensors they send through the channel. TrustOS receives the encrypted information which it decrypts with the same key. If the decrypted message is correct, it allows TrustOS to verify the identity of the device. As part of the information sent, the device also includes some kind of verification code. This code is an attribute chosen by the device to verify its integrity. For example, a boot sector digest or a firmware signature. In successive messages, TrustOS stores this code in Blockchain, making it immutable. If it does not change between calls we can assume that the device is reliable. Finally, TrustOS initiates a transaction to record the information sent in blockchain. But, is it feasible to add QKD equipment to the devices? As we said above, in most cases, IOT devices are very simple. So, simplifying the key management makes sense but not so much to include complex and large equipment as QKD equipment. Even when they could be connected to a PC port. However, many IoT solution architectures include hubs or equipment with a similar function. These are common in factories, warehouses or hospitals deployed at the edge of the network with Edge Computing architectures. They work as aggregators of the connectivity of the simplest devices and also run some logic. As part of that logic, this concentrator aggregates the connections with the IoT platform or third party servers. These devices can execute advanced algorithms (think big data, AI, etc.) that the device would be unable to execute. Thanks to them it is possible to process information in real time and send orders to the device to act accordingly. It is not unreasonable to think about adding a QKD device to these hubs. Its mission would be to manage the keys for all the devices connected to it. In this way, we would make the use of QKD in this type of solution viable. Conclusions We should not be obsessed with achieving completely secure communication channels. Nor are we going to use QKD at all costs. What we are demonstrating is that QKD is already a viable alternative to guarantee the security and integrity of communications. In cases like Blockchain, where we already use technology to add guarantees to a process, the fit is natural. Any technology that adds additional confidence in the end-to-end solution provides value. And QKD, in this case, does. Reality tells us that this type of architecture fits perfectly in critical infrastructures. We think of hospitals, power or communication plants, military equipment, etc. These infrastructures require optimum security to protect the integrity, confidentiality and authenticity of the information. This data is already being collected with IoT devices. Nowadays they allow to make operations more efficient or to increase the control of processes. In these cases, the extra reliability of QKD is a plus to be taken into account. And that plus we can already enjoy with the technology available today. Carlos Alcaide Pastrana, Fernando de la Iglesia Medina, Antonio Pastor Perales and José Luis Núñez Díaz have contributed to this post. To keep up to date with Telefónica’s Internet of Things area, visit our web site or follow us on Twitter, LinkedIn and YouTube