Financing the 4th industrial revolution!
In the previous post, I have introduced MerkleBot and explained why we are using Robonomics to enable the robot-as-a-service model to help companies of all sizes adopt robotics.
Now let’s look at the bigger picture. I want to give you a quick history tour to explain how the new decentralized finance (DeFi) tools will help us finance the 4th Industrial Revolution.
History of industrial revolutions
Wait what?! There were three industrial revolutions?!
When there is a radical change in technologies in industrial production we say that an industrial revolution happens.
All of us know about the first industrial revolution where steam-based mechanical production was introduced. Society started to change, people moved to cities and more scalable manufacturing appeared.
The second industrial revolution started in around 1870 with the introduction of electricity. Suddenly, many more processes could be automated, machines became more complex, powerful, and efficient.
The third industrial revolution is described by the introduction of microcontrollers on the manufacturing floor. First industrial robots started to appear and processes could be fully automated.
The 4th industrial revolution is here!
Now we are at the height of the fourth industrial revolution. In the latest report, the Boston Consulting Group has identified nine technologies that are transforming industrial production today. Sensors and IoT devices are affordable for businesses of any scale and they generate petabytes of data. This “big data” enables real-time decision making.
When you combine this with tremendous advancements in simulation technology that allows testing really complex systems in a physically precise environment without high costs and risks, we can have enough data to enable AI algorithms for fully autonomous robots in factories without people, so-called “lights out” or smart factories.
The biggest trend in Industry 4.0 is the connection of all devices and equipment into a unified system under cloud control. And here I need to say that cloud can be both centralized, like AWS or Azure, and based on distributed technologies, like Robonomics network, each having their unique characteristics.
All of these technologies have now reached a point when they are ready to be introduced to the market. And large enterprises have already been implementing them gradually over the past few years. However, like any new technology that appeared during the previous industrial revolutions, these are still often prohibitively expensive even for larger companies.
Therefore, it is important to see how the financial tools and instruments have been evolving to help companies adopt new technologies and bring the previous industrial revolutions and explore what financial instruments we have now to bring these great technologies to the market today.
How did financial tools change over time?
During the first industrial revolution, the first stock exchanges started to pop up in major cities around the world, including London (1698), New York (1792), Tokyo (1879). They became organized markets where investors could buy and sell shares of stock and bonds in companies. Capitalists could participate in the industrial economy by investing in companies that implement new technologies. These companies, in turn, became more efficient and produced a profit for investors.
Industry 2.0 has brought active investment banking. Investment bankers actively influence the management of the client companies by advising or even being a part of the boards of directors, financing the innovation practices to improve efficiency. They were a response to significant capital requirements that were tied with the exponential growth of the American economy. Investment banking in the US served the expansion of railroads, mining companies, and heavy industries.
In the 1980s, the emphasis on dealmaking shifted to a new focus on trading. Real-time communication and connection, microchips and computers allowed to speed up the process of financing and picking the companies. High frequency and a large volume of trades allowed to generate a profit by taking advantage of small changes in market conditions. This democratized the process of financing the innovations even further and allowed more companies to adopt the latest industrial technologies.
What we see now is that industrial equipment is becoming increasingly complex and a factory becomes a cyber-physical system, with a steady flow of information and commands throughout different parts of the factory, both physically and digitally. However, this complexity reduces the dependence on single vendors and allows companies to build modular systems and keep the factories lean and flexible.
Additionally, individuals not only have a chance to participate in financing through the stock market but also as consumers can get directly involved in the manufacturing process and order customized products at fully autonomous factories already.
This trend gives individuals more influence to pick the companies that they want to support, both through the stock market and by being “activist” consumers.
Current trends and path to the future
As we can see, the financing tools have evolved gradually from being the privilege of the few to being accessible to every individual consumer. But as the factory floors are becoming more automated, the role of the people becomes much more critical in directing and controlling these autonomous factories.
As a society, we have financed the construction of the first manufacturing plants, national railroad systems, and iconic infrastructure like the Bay and Golden Gate bridges through bonds. They evolved over time and now, as the process of digitalization is at its peak and industrial equipment is getting directly connected to the internet, the bonds are ready to evolve as well.
Part of what we do at MerkleBot is building financial tools for individuals to get direct access to the value resulting from robotization and digitalization of industrial processes. Thanks to the Robonomics team we can have the robots that have an identity, a wallet, and the ability to create contracts directly with humans. This means that an industrial robot can issue bonds on its own to finance its installation and as it starts generating revenue, pay back the bond to the investors.
Throughout this process, all operations are logged securely in the blockchain to guarantee that the accounting happens correctly and the payments are directly tied to the operations that the robot has performed. While the advances in blockchain instruments and token economies have allowed us to give access to these robot bonds to anybody around the world.
Our mission is to help society go through the 4th Industrial Revolution in a way that would benefit everybody. Please reach out to learn more about how you can take part in the Industry 4.0 trend!
