Blockchain is speeding up in the financial industry. Deutsche Telekom itself is also active in this area and participates in the blockchain network Celo. Oliver Nyderle explains why blockchain is an important technology of the future for many industries and how Celo differs from Bitcoin in an interview. He is responsible for the Business Unit “Digital Integrity Solutions“ at Deutsche Telekom subsidiary T-Systems MMS, which is also where the Blockchain Solutions Center is based.
Why are Blockchains so important?
Oliver Nyderle: Blockchain technology enables the Internet of Values and is undoubtedly one of the most important technologies of the future. Much has already developed in this area and is continuing to gain momentum. Companies in the food and automotive industries are testing blockchain applications, for example to track their supply chains. In this way, counterfeits can be detected and tackled more quickly.
Why are Blockchains so important for the Deutsche Telekom Group?
Oliver Nyderle: Deutsche Telekom and its subsidiary T-Systems MMS have steadily expanded their blockchain activities in recent years. Among other things, the focus is on infrastructure, for example operating and securing nodes (validators) in public blockchain networks. The development of decentralized identity systems (Self-Sovereign Identities, SSI) is also part of this. We act as an end-to-end provider for our customers and partners, i.e., from conception to implementation to operation.
In which industries are blockchains particularly relevant?
Oliver Nyderle: In addition to logistics, Catena X in the automotive sector and the German government's “Digital Identities project” in the public sector, blockchain is currently becoming a trendy topic, especially in the financial sector. Blockchain, after all, started with the approach of giving people non-discriminatory access to a wide variety of services. Decentralized finance (DeFi) enables exactly that, for example for transactions without a bank account. This is where the worlds of finance and IT are growing together.
Blockchain enables people to access different services without discrimination
What exactly does DeFi mean?
Oliver Nyderle: DeFi is a collective term for financial services that run via public blockchains. The advantages are faster and cheaper processing compared to traditional, centralized finance - especially due to the absence of middlemen. As a participant, I have full control over who I want to conduct which transactions with. In case of doubt, I also bear the responsibility for this.
With the purchase of Celo tokens, Deutsch Telekom is investing in the decentralized financial economy. What are the advantages of this?
Oliver Nyderle: More than 1.5 billion people worldwide have limited or no access to a bank. Celo is a network that enables secure and inexpensive money transfers worldwide. I can send money easily and quickly by smartphone from Germany to Brazil, for example, without contacting a bank. The mobile application is the main focus here and fits perfectly with Telekom. Celo also relies on an attractive consensus mechanism called proof-of-stake. This differs from the proof-of-work mechanism used by Bitcoin, for example.
Can you explain the technical terms more precisely?
Oliver Nyderle: The proof-of-stake mechanism decides which participant from a network is authorized to generate the respective block. The participant is determined by means of weighted random selection. This mechanism is faster and more energy efficient. Money transfers on the Celo blockchain require 700,000 times less data than other cryptocurrencies. Celo even requires every service for the network to be CO2-neutral.
The proof of work mechanism, on the other hand, which is used for Bitcoin, for example, requires a relatively large amount of computing power. Many mathematical tasks have to be solved throughout the network to create a new crypto value (mining). This consumes a lot of power.
Blockchain technology enables the Internet of Values and is one of the most important technologies of the future
What is the role of Deutsch Telekom in this?
Deutsche Telekom participates in the validation of all transactions on Celo, thereby ensuring their secure processing. In return, we receive a financial reward that comes from the transaction fees. In addition, a large part of the transaction fees flows back to the network participants through so-called staking. Thus, we contribute to the attractiveness of the ecosystem with the help of ongoing investments in the development of applications on Celo.
Besides staking, what other role does Deutsche Telekom play in Blockchain?
Oliver Nyderle: The Open Telekom Cloud is an important cornerstone of our infrastructure. By far the majority of all blockchain nodes run on cloud platforms from Amazon, Microsoft and Google. Errors on these platforms do not correlate with the Open Telekom Cloud. We thus ensure more decentralization and fail-safety. In addition, the establishment of decentralized identity systems (Self-Sovereign Identities, SSI) as a service and provision via the Internet is one example. Verifiable digital proofs are a central prerequisite for many digital services. But a lack of digital proofs is one of the biggest digitalization obstacles of our time. Decentralized identity management enables interoperable and secure digital identities and verifiable proofs for people, organizations and machines.
Why is the Cloud so important?
Oliver Nyderle: A reliable infrastructure is a basic requirement for a blockchain network. The Open Telekom Cloud, for example, meets the strictest security and compliance requirements. This makes the blockchain more secure and better.
How does the future of Blockchain look like?
Oliver Nyderle: Blockchains will continue to gain in importance. Our everyday lives and our courses of action are becoming increasingly digitized. Central values that currently exist in the analog world will be transferred to the digital world. We see public decentralized blockchain networks as the basis for these value transfers. Public blockchains have the advantage over private ones, for example for corporate applications, that they are accessible to everyone. Thus, especially this global setup and barrier-free access enable real network effects to build a functioning Internet of Values. Reliable infrastructure providers are crucial for this, and this is precisely where we want to be a pioneer. The topics covered so far merely mark the beginning. Many new topics are just now unfolding their full potential.