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Banking Bits: Is Data the New Currency?

October 15, 2014

The proposition that data is the new currency has been bandied about for several years. Does that stem from an appreciation of the vast amounts of knowledge that potentially can be extracted from data? Or, is it literally imbuing data with a shared value that is widely recognized between many people and can be exchanged or “cashed out” for goods or services? No doubt, others will have different interpretations of what data as currency might mean.

This begs another question. Does data itself have any intrinsic value? Oil underground or stones on the ground contribute little to the human condition until pumped and refined into useful forms or assembled into a structure that provides shelter. As an abstract concept, data can be viewed as the lowest level of abstraction from which information and then knowledge are derived, thereby producing value.

The answers to these questions are not to be found here, but they are worth considering as they relate to who uses data for what purposes, at whose expense and to what end. An analogy might be nuclear materials: magnetic resonance imaging, good; nuclear warhead, bad or not nearly as good as an MRI, depending on your politics.

One thing is certain. Torrential amounts of data are created, stored and analyzed continuously. A great deal of data results from the course of human activities. Our hyper-connected world produces data at an ever-increasing rate. One commonly quoted statistic is that 90 percent of all data has been created in the past two years. In 2013, the global production of digital data reached four zettabytes, or four trillion gigabytes, more than double the amount generated in 2011.

Contributing to this proliferation are purpose-optimized embedded systems and their sophisticated cousins: intelligent systems that produce real-time data streams.  As far back as three years ago, before the Internet of Things (IoT) was popularized by Cisco, the U.S. President’s Council of Advisors on Science and Technology said such “cyber-physical systems” will eventually constitute 50 percent of all electronics worldwide, making them a U.S. strategic asset. Cisco asserts that there will be 20 billion IoT-connected devices by 2020.

Accompanying the computing transformation is advancements in networking. Consider how peoples’ interaction with their devices, how and why they use them, have transformed the way they live, work and play. Enterprises are wrestling with piecing together exactly how to monetize all this data, which is prompting visionaries to make huge investments in the analytics software and services that will couple to intelligent hardware.

Data volumes are so large, so diverse and moving with such velocity that traditional modes of data capture and analysis struggle to keep up. So does having the right mix of structured, unstructured and semi-structured data storage to analyze their data. Where such disconnects exists, so do business opportunities. According to a report produced by McKinsey in 2013, improving use of open data – primarily readily accessible government data – in transportation, consumer products, electricity, oil and gas, healthcare and consumer finance would produce $3 trillion in economic value. Does that, then, make data currency or the stuff of value-creation?

It’s easy to understand, for example, how smart routing can help a public safety authority identify the first responders best positioned to reach a destination quickly and to help avoid traffic delays by signal control, optimized routing or intelligent guidance devices in the vehicle itself. Placing a dollar value on that seems petty.

Perhaps data characterization does not matter as much as how it’s applied. When Netflix brought “House of Cards” to the air, intellectual debate around the nature of data was not a factor. Only its customer preferences were. Having been in business for years with an umbilical connection to its customers, Netflix knew which producers, actors, and shows viewers liked most. Netflix used the analysis results to choose its first production, the most popular show Netflix had ever offered and, no doubt, a moneymaker.

At a more substantive level, combining historical public health data with a current disease outbreak such as Ebola can help emergency services plan their response and contain the disease more effectively. With more analysis from more data sources, outbreaks may someday be forecasted, thereby limiting their scale or preventing them altogether.

There would be little disagreement that data – the collection, storage and analysis of data – will have an intractable role in most every aspect our collective futures, regardless of your point of view about its intrinsic nature. Reaching public consensus on the balance between privacy, security, and the flow of personal data will be critical to realizing the positive promise the new world of data represents.

What’s your opinion about data being the new currency? We’d enjoy learning your point of view.

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