The USA and China are known to dominate the internet economy and the associated financial sector. With Microsoft, Apple, Amazon, Alphabet, Facebook and Visa on the US side and Alibaba and Tencent on the Chinese side, eight technology and digital platform companies alone are among the ten largest companies in the world. What's more, in its evaluation of the 100 most expensive companies in the world from July 2019, the consulting firm Ernst&Young came to the conclusion that the IT sector is currently the most strongly represented among the top 100 companies. It accounts for almost one in four companies and thus represents a market capitalization of an incredible 7.7 trillion dollars. By comparison, the industrial sector is only represented by six companies in the top 100 and, at 771 billion dollars, only accounts for a tenth of the IT sector. Consequently, only two companies from the country of world export champion and industry champion Germany make it into the top 100 - SAP and Allianz - and neither of them even belong to the industrial sector.

In a nutshell: we are in the midst of a tidal shift from the industrial to the information and service economy. However, in the spirit of James Bond's "The world is not enough", Facebook boss Mark Zuckerberg is now preparing to create a new digital financial ecosystem with his cryptocurrency Libra, which could dominate the global financial sector according to the BIS Bank in Basel (the central bank of central banks), which is known for its excellent analyses.

Libra - deposit-backed cryptocurrency

A lot has been written about Libra recently. The fact is that Facebook is using its monopoly position as the world's leading social media company with over 2.4 billion customer relationships to create a new, highly liquid and high-volume artificial currency from scratch that has the potential to unhinge the traditional financial system. According to the Libra organization's white paper, the ambition for Libra is high: using a simple global currency combined with a proprietary financial infrastructure, it aims to empower billions of people - especially in less developed countries - to live a better life. This is similar to the mission statement of Libra's parent company Facebook "to bring the world closer together". Zuckerberg himself sums up the vision pragmatically: "I believe that sending money to someone should be as easy as sending a photo".

However, there is much more to Libra than just a cryptocurrency, as it appears on the surface in the media. David Marcus, the overall responsible and strategic head at Facebook for the crypto and blockchain project, made this clear via his Twitter account at the launch on June 18, 2019 with his announcement that Libra consists of a total of three components:

1. A scalable 'permissioned' blockchain (LibraBFT) based on the Byzantine Fault Tolarance (BFT) algorithm;
2. A cryptocurrency backed by real currencies and suitable for payment transactions;
3. A new programming language called 'Move'.

The new crypto programming language 'Move'

With 'Move', Facebook has developed a brand new and highly interesting programming language for Libra specifically to support blockchain transactions. The idea behind this is that apps can transfer so-called 'Libra Coins' from one account to another without the risk of abuse. As a powerful and expressive programming language that is explicitly designed for the specifics of the fintech and crypto world, Move can describe both simple transactions, such as sending money, as well as much more complex transactions - such as how money can be created or destroyed. The programming language is designed as an open source project.

The Libra Consortium

As of October 2019, the Libra organization consists of 21 members from the payment systems, technology and marketplaces, telecommunications, blockchain and venture capital segments as well as multilateral companies. Each member of the organization has equal voting rights. Facebook itself is a simple member with simple voting rights and thus emphasizes that it cannot exercise a dominant role in the events at Libra. The plan is to expand the consortium to up to 100 companies.

Libra in the context of Industry 4.0

So what does Libra actually mean in the context of Industry 4.0? Politicians and industry could make use of this 'Facebook blueprint'. Having lost the first half of the digitization process, Germany must now play to its strengths in the field of industrial software. This requires the two flagship sectors of automotive and mechanical engineering, both of which are facing major transformation processes in the field of digitalization and are heavily dependent on each other due to their mutual economic relationships, to join forces.

The development of the Blockchain Technology Performance Index since January 2019. It includes leading technology and application companies that develop and use blockchain technology, including Intel, Verizon, Alibaba, Tencent, Accenture and Nokia. The index has risen by around 20 % in the current year.

© Solactive

Germany is in an excellent starting position when it comes to blockchain and cryptocurrencies: the German government has recognized the importance of blockchain and adopted a concrete roadmap in the summer with the aim of exploiting the opportunities offered by this technology and mobilizing its potential for digital transformation. The cryptocurrency IOTA, which was developed in Germany, is also a veritable alternative to Libra for establishing new Industry 4.0 business models. Like Libra, IOTA is a foundation. With Deutsche Telekom, Fujitsu and Samsung, IOTA also has prominent members.

IOTA is specially designed for IoT business models and is suitable for secure communication and payment between two machines. The reference software for payment processing is published as open source and IOTA has been recognized as a non-profit foundation in Germany since 2017. Unlike Bitcoin, for example, IOTA does not use a blockchain based on a linked list. Instead, transactions are recorded in a directed acyclic graph. This is intended to reduce transaction costs and achieve better scalability than blockchain-based cryptocurrencies.

This makes IOTA suitable for industrial 5G application scenarios, among others, which are of great importance to German industry. With its ultra-short latency times, the new mobile communications standard enables real-time-capable M2M communication for the first time, which, in combination with blockchain and crypto technology, is ideal for establishing new business models. Like the digital economy, the mechanical engineering sector can use new innovative revenue models in the direction of flexible subscription and pay-per-use models and process them via a cryptocurrency such as IOTA. There are already plans to set up an IoT marketplace based on IOTA technology, on which digital industrial applications with IOTA cryptocurrency will be offered to third-party users.

The key point that we can learn from the Silicon Valley companies: "It's all about marketing". Taking this into account, the major industrial players such as SAP, Siemens, Bosch, Daimler, BMW and VW should join forces with the leading SMEs and, not least, the finance and insurance industries to set up a consortium for an Industry 4.0 blockchain and crypto framework à la Libra or create a global brand, as has already been successfully achieved with Industry 4.0. In this way, Germany's industry could be led into the post-industrial, data-driven world.

Author:
Thomas Rappold is a financial/stock market expert, author (Silicon Valley Investing) and founder of numerous internet start-ups.