Horizons newsletter – Week 25 // 2017
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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The Return of the City-State
Recently, California’s governor Jerry Brown visited China where he met President Xi Jinping to discuss climate change. Seperately, the U.S. Energy Secretary was hosted by the Chinese vice premier. California is one of more than 10 U.S. states that seek to uphold the Paris climate accord against the new stance of Washington. Ever since the Peace of Westphalia (1648), we think of nation-states as the actors in international policy. This system however, is under pressure because in a networked world, distributed connections and hubs gain strength against centralized national governments. U.S. states are indeed now making climate policy, but the most notable layer of growing power is municipal. In the field of climate change for instance, the C40 is a network of 90 cities that account for one twelfth of the global population and a quarter of global GDP. The C40 platform helps cities cooperate and share best practices. As the world urbanizes and megacities arise, the city is becoming a more independent international actor. Interestingly, globalization and digital networks are leading to the reemergence of pre-Westphalian city-states.
The promise of decentralized network applications
Bitcoin hit an all-time high of almost $3000 (as discussed in the last Horizon) but another cryptocurrency may be outpacing it: Ethereum’s Ether token. What is perhaps more interesting than the upward course of the Ether, is the promise that lies in the applications of the open-source platform Ethereum. The most important issue is the ability to build new tokens and even host ICO’s (Initial Coin Offerings). Parties such as J.P. Morgan’s Quorum and Monax’ Eris have already built private ledgers on top of Ethereum. Also, Ethereum facilitates the development of decentralized applications and decentralized autonomous organizations (DAO’s). Ethereum enables smart contracts, a way of transporting anything of value – money, shares, and data – without an intermediary. Think of applications such as distributed workforces (e.g. Colony). More indirectly, Ethereum’s value is further driven by established parties’ endorsement of the platform. Russia, China, and Singapore, as well as Microsoft, Samsung, and Toyota are experimenting with Ethereum. While we are gazing at the soaring value of cryptocurrencies, Ethereum points to a revolution of decentralized network applications that has only just begun.
Digital Oxygen
The June update of Cisco’s Visual Networking Index (VNI) forecast grabbed attention with its projection of global video traffic making up 82% of internet traffic in 2021 (2016: 73%). Though impressive, more interesting are the changes in the way this video traffic will be organized: in 2021 content delivery networks or CDNs will carry 71% of global internet traffic (2016: 52%). CDNs are owned by internet companies such as Amazon and Facebook or by commercial providers like Akamai. Their CDN networks consist of geographically dispersed servers, each one storing a cache of static web content (including large video files). When users visit a website they are redirected to the server closest to their geographic location: the shorter distance results in faster page loads. Subsequently less traffic will be carried on long-haul networks, but is instead deposited on regional (2021: 23%) and metro networks (35%). Cisco’s report ties in with our theme Digital Oxygen where we describe how the increased demand for bandwidth will turn regional and metro networks into strategic assets.
