HomeBlockchainRegulationAre user data the new oil?

Are user data the new oil?

Data, whether of users or not, are the new oil. But are they objective? No, and for this reason, it is important not to confuse the transparency of public data with the truth, for example on the blockchain

The confusion also arises from the fact that in physical phenomena, a piece of data, for example, the speed of light, is scientifically proven. It cannot be decided by a majority. It is the truth.

In contrast, when we move into the domain of social phenomena, data do not correspond to the truth because their quality depends on how they have been collected, filtered and processed. Data do not tell anything at all, it is up to the people to interpret and make sense of them.

User data are fundamental

The power of data is often mentioned when comparing it to the wealth of those who own oil, however, the latter has been generated by the centuries-old stagnation of fossils and is in finite quantities; while data are unlimited and are created exponentially thanks to machines and users.

On the quality side, one drop of oil is the same as the other, while data have a history and are not fungible: each piece of data is different from the other. 

Data are immaterial and therefore impalpable: to obtain value from their personalisation it is necessary to process them to extract information and obtain the desired knowledge.

Oil is a material good, user data are digital, so it is an “unrivalled” asset and has marginal costs close to zero. The extracted oil always has its own owner and is located in large quantities in a few places, with high storage and transport costs. While data, by their very nature, are born everywhere and can spread anywhere.

Black gold, as it runs out, increases in cost; with data, the opposite happens. When the cost of obtaining and processing data falls so steeply, there are two well-established economic implications. 

First, we will begin to use forecasting to perform tasks where we once couldn’t because of the high economic cost. Secondly, the human value of those who will be able to exploit these results will increase.

This completely changes the economic scenario. A scenario that offers new opportunities to create new companies that will consolidate if they know how to innovate.

So, is there a desire to create a company? In that case, it is necessary to ask if:

  • Is there an asset or service that is not yet traded in the market?
  • Does it still have a cost/performance ratio that is too high and not adequate to the demand?

In the past, it was the price and the quality of the service provided that differentiated one competitor from another, but if a competitor has already all the customer data, how can a new player enter the market and compete on equal terms?

To assist entrepreneurs, the time has now come for token-based and artificial intelligence (AI) services.

Until now, every company approached the issue with small and inefficient methods and tools that resided only on the knowledge of its staff. Whereas now these services can be bought in the market.

Thanks to the data fed to the AI in the business processes and all the liquidity that the tokens can bring, it is possible to foresee an acceleration of the economic growth, more than that obtained with oil.

Data are also much more revolutionary than electricity: in fact, who would have thought at the beginning of the century about the consequences of oil and electricity?

We only have to be careful when producing data but not when using it, as it is hardly considered sufficiently that this case is a source of very large costs, which are difficult to estimate in economic terms. 

Data must be used mainly by those who produce them. This creates a virtuous cycle, a win-win solution. Given the availability, efficiency and low costs, we will see new use cases that are beyond imagination. 

In fact, with AI and the new economic exchange values, i.e. data and algorithms, there is no longer a passive and ever deterministic result.

Last difference: oil is an inert material at our disposal, while technology changes so quickly that it also changes the behaviour of people. This means that it is not possible to understand society, nor to govern it. Let alone predict its behaviour.

Massimo Chiriatti
Massimo Chiriatti
Technologist, he collaborates with universities and research centres by organising training events on the digital economy. He actively participates in congresses and forums on topics mainly related to ICT innovation. He is also a member of Assob.it, a non-profit association focused on studying cryptocurrencies and promoting Blockchain technology.