Blockchainfirst is developing promising IoT products whose use can be managed with smart contracts and paid for with cryptocurrencies like Bitcoin. Jürgen Schaar decided to set up in Singapore – where companies can be founded using blockchain technologies – because Asia plays a key role in hardware and software development. He likes to share his experiences and makes recommendations for companies and startups in Germany.
Strube: Mr. Schaar, please tell us something about your background? What have you done so far?
Schaar: I’m a computer scientist and electronics technician. I started my career 30 years ago at Texas Instruments. When I was promoted to manager at TI after four years, I realized that the job is very bureaucratic and I would like to realize my own ideas. In 1990, I quit my well-paid job and set up my first company.
My idea at the time was to develop so-called suitcase solutions. That means I’ve integrated laptops and a mobile printer into a specially designed case. It was initially a hardware business. In the year 2000 I founded the company intrix AG. The aim of intrix AG was to develop software for mobile computers, so-called MDEs (mobile data collection devices).
In 2009, I sold my shares to the AG for health reasons and took a break. After a year, it was tingling again and I realized that I wanted to do something again. In 2010, I founded the company mobilefirst UG, which to this day develops mobile solutions for enterprise customers.
Strube: Actually, you already wanted to stop, but then you changed your mind. What are you doing now?
Schaar: Since I’ve been working a lot in the last 25 years and I’m on a solid footing on mobilefirst, I originally planned to take a little shorter and cultivate my hobbies. Exactly a year ago I read by chance something about Blockchain and Ethereum. I have to admit that it took some time to understand the different technologies in the context of Blockchain and the different platforms like Ethereum. But then it suddenly clicked and I realized the potential in this technology.
In the last 40 years I have seen some new technologies coming. The internet and mobile have changed and made many things possible in the last 20 years. But blockchain technologies certainly have the potential to change things like we have never experienced before. And I really mean that in a positive way. I have to admit that I was suddenly infected and realized that I can not retire while the world changes due to Blockchain (s).
As I’ve been involved with IoT for some time now , I quickly realized the huge opportunities that arise, and what products you can develop when you bring IoT and Blockchain together.
It has always been my passion for hardware and software to create a new product, so I knew that I would try to develop new solutions from IoT and blockchain technology.
Now, all I had to do was create a new company and after naming my third company mobilefirst, it was natural to call the new company Blockchainfirst. I immediately started testing small so-called system on chip (SOC) modules and writing software. After finding a suitable chip and running the Ethereum Blockchain software (Light Client) on the system, we were able to send that chip money in the form of a crypto-currency (Ether). Upon receipt of a defined amount, the chip has then triggered an action. This was the beginning of a series of solutions based on this combination of hardware and blockchain software.
Asia and the blockchain
Strube: You decided to start a business in Singapore. Why?
Schaar: For several years now I have been trying to be in Asia as often as possible and to work there as well. Singapore is the gateway to Asia and one of the most modern cities in the world. Singapore mainly speaks English and it is very international. Singapore offers companies and startups the best conditions imaginable. The young people living in Singapore are as highly motivated as they are qualified. The knowledge of blockchain technologies has so far been much higher in Asia – especially China – than, for example, in Europe.
If you want to succeed in the long term as a company in the field of highly innovative technologies in the market, it is imperative to have a foot in Asia. And I see Singapore as the gateway to Asia as the best possible place. In addition, there is a start-up in Singapore whose business model is to start a business in blockchain through smart contracts. Within 24 hours, the company is in business and everything is handled through the block chain. If you want to sell shares of your company, you can do it without bureaucratic and expensive effort virtually at the touch of a button from anywhere. This is one of the examples of how Blockchain technologies will change many business areas in the future.
Strube: What special features do you see in the software development process for blockchain applications as opposed to Germany?
Schaar: Software and hardware are developed in Asia in the same way as with us. The difference, in my view, is primarily the motivation of people to develop new products. I want to be honest and open. While in Germany many people believe that the knowledge that one has learned during the training, is sufficient for the future, many Asians are always inquisitive and curious.
I have the feeling that some startups are founded in Germany because the founders want to get rich quickly. I miss the passion for a product or service at many startups. Without a passion for a product, Blockchain will only be enough for mediocrity or flop. Many Asians want to first develop a good product that will benefit. The monetary success comes second. Copying is an honor for the one who is copied. This is how new products develop much faster because the creator wants to be faster and faster.
What’s up with Blockchain, Bitcoin and Co.?
Another cryptocurrency based on the blockchain principle. Provides a platform for programmable smart contracts. The “ethers” are regarded by fans as a legitimate successor to the Bitcoins (see also above picture).
Microsoft Azure cloud-built service that allows users to put external data into a blockchain without destroying their security and integrity. As an individualized middleware, cryptlets can also be developed by Azure users themselves – in any programming language – and build the bridge from the blockchain to new business services in the cloud.
Digital money, without coins and bills. Cryptography builds a distributed, secure and decentralized payment system. Does not require banks, but computing power and technical aids such as the blockchain.
A blockchain is a distributed database that maintains an ever-growing list of transaction records. The database is extended chronologically linearly, similar to a chain, at the lower end constantly new elements are added (hence the term “block chain” = “block chain”). If one block is complete, the next one is created. Each block contains a checksum of the previous block.
The blockchain technical model was developed as part of the cryptocurrency Bitcoin – a web-based, decentralized, public accounting system for all Bitcoin transactions ever made.
A globally available decentralized payment system and the name of a digital monetary unit. You do not need a bank to handle Bitcoin payments – everything is done through a peer-to-peer network of computers and the blockchain as the central database.
The open source software validates the entire blockchain and was released in early 2009 by a certain “Satoshi Nakamoto” under the name “Bitcoin”. Bitcoin Core was in C ++ soon to be programmed especially for Windows systems. A little later the porting to GNU / Linux followed. Because the developers are divided, there are now some derivatives of Bitcoin software, including Bitcoin XT, Bitcoin Unlimited or Bitcoin Classic.
The “scalable blockchain database” can manage up to one million writes per second, store petabytes of data, and still have a latency of less than a second – all managed in a decentralized manner and with the highest data integrity. The technical basis is blockchain technology.
Financial term for “distributed account management”. Bitcoin is a completely new technical approach to distributing information about specific assignments. There is no longer a classic account managed centrally at a bank, but “account management” is based on a network of communicating systems.
A computer log that can depict or review contracts or provide technical support for negotiating a contract. Could in future replace the written contract.
The startup R3 CEV builds the blockchain-based “Global Fabric for Finance”. With around 50 financial partners, the largest block chain in the world to be developed – a first test run with eleven banks, including Barclays, Credit Suisse, HSBC, UBS and UniCredit has already been successfully completed. R3CEV has entered into a strategic partnership with Microsoft to develop blockchain infrastructure and technology in the Azure Cloud.
A free software with which every user can develop their own blockchain application.
An open source protocol for a payment network – currently under development. P2P payment method and foreign exchange market in one, based on the cryptocurrency “XRP”. However, ripple users are not set to this one currency, but can use any currency – including euros, dollars or yen, for example.
Strube: What are your differences in the Asian hardware development process for IoT devices compared to the German approach?
Schaar: The framework conditions for startups in the area of hardware and product development are unique in Asia. A great example is the incubator HAX in Shenzhen. It pays to have a look at a video . Here, new ideas and products are developed at a speed that we can not imagine in Germany. This is because there are concentrated young highly motivated people with very different disciplines working in one building and supporting each other.
When we build a prototype today, we need a 3D printer, CNC machines, board manufacturers, a lot of measuring devices, electronic components and components. At Hax you can find everything together in one building. Only through such incubators can young companies there quickly and inexpensively convert new ideas into real products. When you get there, you automatically become creative and have the certainty that you can implement your idea as quickly as possible. I miss something like that in Germany.
Strube: What experiences did you personally have in Asia?
Schaar: The experiences are very different in the individual countries and yet there is a common denominator. The people of Asia are happier and happier in my experience, no matter how poor or rich they are. This is a crucial basis for a life together and a good cooperation. The people of Asia understand how to offer services. “Serving is an honor” and no disgrace. In Asia I get a service immediately and not only after an appointment.
I live partly in Chiang Mai in the north of Thailand. Chiang Mai is a modern university city and has been # 1 for Digital Nomads for years. There are hundreds of modern coworking spaces . The rent for a desk costs about 5 euros per day including Wi-Fi and coffee. If you need a break to switch off, drive into the jungle in 30 minutes and sit at a waterfall for lunch or caressing elephants. This creates creativity and unleashes unbelievable powers. If you have an appointment in Singapore, you fly there for 100 euros. The foreigners or expats that I meet in Asia are all the more motivated and contented, taken in, and there is a reason for that.
Strube: What do you advise German startups and companies planning the development of IoT hardware?
Schaar: At first, I would advise anyone to fly to Asia and see what I am describing here. Shenzhen is an absolute must in hardware development. In my opinion there is no other place where hardware prototyping can be done better and faster than there. Anyone who has visited Singapore, Chiang Mai and Shenzhen will know what I am talking about. The whole thing is not expensive and opens up completely new horizons. An investment that will always pay off in the long term or even be decisive for further success.
Cryptocurrency and micropayments
Strube: What do you advise German startups and companies planning the development of blockchain applications?
Schaar: Blockchain is still a very young technology, even though the first blockchain “Bitcoin” is more than seven years old. That is, if you want to do something in the area of Blockchain, you need a lot of breath. Until we see real applications and products based on Blockchain technologies, it will certainly take another year or two or even longer.
At the moment a lot of money is being invested in startups that deal with blockchain or have a blockchain idea. Still, I would advise against making seed funding too fast and too early. The technology is still too young and nobody knows exactly where the journey is going and what comes out in the end.
Right now, it’s critical to engage with the technology, to try it on and read what’s going on every day. There are hackathons in every country where you can join to get some feedback on whether the idea has any chance of success.
Nevertheless, so much money is pumped into “blockchain” startups, as we already experienced in the internet bubble. Some have heard or read about the DAO disaster in the last year. From this it is easy to see that FOMO (Fear of Missing Out) blinds investors as well as startups. As a conclusion, I advise, therefore, to keep a cool head and not to risk hasty quick shots. The hyped startups of that time are no longer there today.
Strube: Which blockchains or cryptocurrencies are interesting for you?
Schaar: Bitcoin is still the crypto currency par excellence. Those who bought Bitcoin at the beginning of last year have been able to achieve an extremely good return to date. But other currencies like Dash Coin or Monero have performed exceptionally well. Earlier this year, the Monero was at 50 cents and today it is at just under 13 US dollars. Not bad, if you compare it with today’s interest rates or other investment options.
In the area of blockchain technology Ethereum clearly has the edge . It is the concept of a currency and the possibility to develop solutions with so-called Smart Contracts, as it was previously not possible. I met Vitalik Buterin, the creator of Ethereum, last year at an event in Shanghai. It was amazing to hear what this breakthrough technology will do in the future.
Of course, Hyperledger is also a blockchain platform that will conquer in the future, especially in the enterprise sector its place. Other blockchain platforms like Lisk also have interesting approaches. I strongly believe that we will see more blockchain platforms in the near future. It would be too early to talk about the advantages and disadvantages of these platforms.
In any case, I would recommend startups to deal with ethereum and to develop prototypes of so-called decentralized applications (DAPPs) on this platform. Ethereum is technologically most advanced in my view and experience. In addition, it is still important to deal with blockchain technologies such as IPFS (Inter Planetary File System) and IPDB (Inter Planetary Data Base). The combination of these technologies will create future killer applications.
Strube: Are micropayments really possible against the background of the current blockchains?
Schaar: At the moment, the charges of blockchain transactions are still quite high when I send small amounts in the cent area. The transaction speed and scalability of blockchain transactions are still far from sufficient for the use of a broad mass. The technology is just beginning and so it was at the beginning of the Internet. It started with baud rates of 9600 baud and the cost of going online was calculated by telephone minutes, among other things. Video streaming in real time was out of the question.
Technologies such as ” lightning at Bitcoin” or ” Raiden ” at Ethereum will dissolve these factors and make the technology mass-marketable. The only difference is that this time everything will be much faster than the internet. I expect 2017 to be the year when we will see that transaction speeds in near real-time and scalability will no longer be an issue.
Strube: How does the market, especially industrial customers, react to your offer?
Schaar: First of all, I have to say that the response to what we have developed so far is overwhelming worldwide. Anyone can imagine that in the near future such solutions will be incorporated into real products and will be available on the market.
But there is also a difference in the reactions in Germany and, for example, Asia. I would like to tell you about a true experience. A few weeks ago I was invited to a large German industrial group. I have introduced our mini chip with integrated Blockchain Light Client. With this solution, it will be possible in the future to install these small modules, which cost around US $ 1, in a washing machine. A “blockchain enabled washing machine”, so to speak.
A landlord of residential blocks would thus have the opportunity to offer such washing machines to its tenants. The tenant buys an NFC card, for example, with the address of a Bitcoin or Ethereum wallet. The balance is stored in the blockchain on this wallet address. The user simply goes to the washing machine, holds the NFC card to the washing machine and can do his laundry. The amount for washing is transferred to the Bitcoin account in real time, without the intermediary, such as a bank or payment provider, who usually charges very high fees. The fee can also be transferred directly to the provider’s wallet via a smart contract. Simply enter the PIN code on the washing machine and the amount will be deducted from the wallet of the utility.
A real win-win situation. When I presented this idea, the reaction was very restrained and I got an answer quote: “But there is already something like that. There are washing machines in which I can insert a coin. ” “Ouch,” I thought, “Welcome to the good old world. Never touch a running system “.
I’ve never experienced anything like that in other countries. There the feedback is consistently positive and nobody has any doubt that such solutions and products will find your market. We may soon see a “Blockchain enabled washing machine” from an Asian manufacturer starting with “S” instead of a washing machine from a German manufacturer starting with “S.” I hope for the location Germany that I will never hear such a thing again.
Strube: What are you planning next?
Schaar: Our goal for this year is to show what is possible using real use cases with IoT and Blockchain. We will therefore develop further prototypes in the coming months, with which people will be able to offer services to one another in the future, and will be rewarded simply and unbureaucratically. P2P and a sharing economy will become reality.
Our “Blockchain enabled charging station” for electric cars and electric motorcycles is a first example. This week we present a solution with anyone who owns an electric car, who can rent it to others. We have equipped the electric car of a well-known German manufacturer with a wallet. So by sending money in the form of a cryptocurrency, the door lock opens and I can start driving. The whole thing works exclusively with intelligent blockchain software. Additional hardware is not required.
We developed it in a single day. Not because we can do magic, but because we simply use existing technology and have acquired the necessary knowledge in recent months. It’s not rocket science at all and any other programmer could do it. More information will be available in the next few days. There are other use cases that we are currently developing. But it would be too early to talk about it. Our motto for these solutions will be “How to make cities smart and smart cities even smarter”.
Strube: Is there anything else you want to tell readers?
Schaar: First of all, I would like to say that I have never been so enthusiastic about technology in my life, but also convinced. Blockchain technology is not a new marketing hype but a technology that is a step into a new age. Blockchain is not a threat, but creates freedom for all the people of the world, as it was previously not possible. People on this planet who would never get a bank account can now conduct financial transactions, insure themselves, and do business with one another, without a third party deciding how and whether to make or determine the price.
Blockchain technology allows startups to develop ideas that would not be possible with today’s means. Even if many job descriptions are completely changed and some professions will also disappear. The freedom and possibilities that arise for each of us are enormous.
I would like to say to readers in Germany: From my point of view, Blockchain is a precious gift to all of us. Whether we accept this gift and seize the opportunity is up to ourselves. If we do not want to lose touch with the digital age and preserve and even improve our prosperity, there is only a way to better deal with Blockchain today than tomorrow , I recommend to all companies and professions to get together with blockchain startups and to develop prototypes and to try them out and learn. 10,000 kilometers from here already happens and the coin-operated washing machine has only one place in the historical museum there.