Edge Markets: The Promise & Potential for Data Usage
This blogpost is a summary of an academic paper to be presented by Dataswyft CEO Professor Irene Ng at the International Conference on AI and the Digital Economy (CADE 2024) on 24-26 June in Venice, Italy, with conference proceedings published by IET. Download the full paper.
The Promise and Potential of Edge Markets for Data Usage
Introduction
Edge computing, a distributed computing model, brings computation closer to the data source, enhancing application speed and reducing latency. This shift empowers users with more control over their data, paving the way for a new market structure—edge markets. These markets involve the exchange of rights for data usage at the edge, distinct from traditional centralized systems. This blog post explores the concept, challenges, and transformative potential of edge markets, emphasizing the role of data wallets in enabling these markets.
The Problem with Centralized Systems
Centralized systems often fail to unlock data value effectively due to ambiguous intellectual property rights (IPR) and high transaction costs. Data's origins, especially from sources like screen scraping, often lack clear ownership, leading to higher costs and inefficiencies. This ambiguity fuels black markets and illicit activities as centralized systems struggle with privacy and data governance issues. Even when legitimate exchanges occur, they often bypass explicit customer permissions, compounding the problem.
Why Edge Markets Are the Solution
Edge markets offer a promising solution by allowing data to be utilized where it is generated—at the edge. Zero party data, directly shared by users, can be more portable, accurate, and easily permissioned for various applications. However, the IPR of this data often remains with the collecting entity, limiting its portability. A dual storage system—centralized for truth and decentralized for user control—can address this issue.
The Role of Data Wallets
The Dataswyft data wallet exemplifies an intermediary service facilitating edge markets. It matches firms with self-sovereign data (data controlled by the user) with those needing it, sets up contracts, and ensures data security. This approach decentralizes data storage while maintaining control and ownership with the user, fostering a safer and more efficient data usage environment.
Market Model and Case Studies
Edge markets can address three major failures of centralized systems: discoverability, validation, and data transfer. Implementations in Brazil, the US, and Malaysia have demonstrated the potential of edge markets:
Data Transfer Market: Users signed up for a micro-lending service in Brazil, using their Facebook data to generate alternative risk scores.
Data Validation Market: A city app in the US allowed users to validate residency for local discounts.
Data Discoverability Market: A health app in Malaysia enabled users to share health-related preferences and receive targeted offers.
These case studies showed that data value at the edge stems from reducing information asymmetry rather than sheer data volume, leading to high-value, low-mobility outcomes.
Findings and Analyses
Key insights from the edge market implementations include:
Value Creation: Edge data's value lies in context-specific usage rather than bulk insights.
High-Value Data Entities: Attributes like age and preferences are valuable across multiple markets.
Low Data Mobility: Firms prefer outcomes over raw data transfer, enhancing data security and utility.
Identity Layering: Different layers of identity (access, assurance, audience) improve transaction safety.
Unique Market Structures: Edge markets form around specific data assets, not services.
Revenue Potential: Edge markets offer significant revenue opportunities, especially when embedded in applications.
Transformational Potential
Edge markets can revolutionize how firms use data, unlocking value without centralizing control. Benefits include:
Enhanced data governance and efficiency.
Improved engagement and targeting through privacy-preserving methods.
New revenue streams for traditional and digital firms.
A safer, more functional Internet through distributed data ecosystems.
Conclusion
Edge markets, facilitated by data wallets like Dataswyft’s, represent a transformative approach to data usage. By decentralizing control and enabling efficient, secure data exchanges, edge markets can overcome the limitations of centralized systems. This new market structure promises enhanced digital services, improved data governance, and significant economic impact, heralding a new era of data utilization.
Dataswyft is releasing CheckD, the world’s first self-sovereign data wallet for identity and communities. Find out more about CheckD, or visit the HATLAB Studio at Dataswyft for Data Wallet Solutions and Innovation.