tl;dr: a new marketplace for data that leverages crypto-economic primitives has the potential to become a dominant force in the world’s search for new oil.
It’s almost cliche now: “data as the new oil.”
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Still, that doesn’t make it any less accurate. The algorithms that rule our world get better when they have has more data on which to train themselves.
Growing Demand for High-Quality Data
The challenge for anybody looking for more data is that the maxim “garbage in, garbage out” really applies.
If you add bad data to your data set, the end results are going to be sub-optimal.
So, there is a search for more data. At the same time, data buyers need to know that it’s of the highest quality.
Data is Everywhere
Simultaneously, we have an explosion of sensors (and soon 5G networks) that will bring even more data online.
A few months ago, I was with my family driving home from Chicago back to DC. We were on I-70, passing downtown Columbus. I was listening to The Information, so data was on my mind.
At some point, I had a flash of insight (or I like to think of it in that way, at least) and I saw all of the data being created at one moment.
- I saw the rotation of the tires of the cars, shooting off data about revolutions per minute, torque, and road conditions.
- I saw the road giving off information about how many cars were on a certain section every second or minute.
- The bridges were telling us not only how many cars were on them, but the wind and sun conditions.
- Meanwhile, a billboard was counting the number of cars passing by and communicating it back to the advertiser.
I’ve called this “The Industrialization of Data.”
Every single piece of data has an originator and an owner. Plus, it has a potential buyer. Someone wants to know that piece of information.
The challenge for a data buyer, however, is to be confident that the data is accurate.
If you are interested in “how many cars are passing over the bridge leading into Columbus, OH on Mondays between 11am and 1pm EST?”, you want to have confidence in its accuracy.
You have a few options.
One of them, of course, is just trusting the seller that the data is accurate.
But this is a world of a cryptoeconomic future where the axiom is “trust, but verify.”
So, we don’t trust, we look for proof.
ErasureBay: an Open Marketplace for Data
ErasureBay is a new marketplace for information of any kind.
It was built by the team at Numerai (long-time fan).
ErasureBay “can be used to create credible signals over possession of local knowledge.” [disclosure: I own a very small amount of NMR tokens].
In other words, the owner of the data from the in Columbus can make a claim that the data she is providing is, in fact, accurate.
The way she does this is by putting “skin in the game” and staking tokens against the veracity of her data.
People are incentivized to weed out the false claimants because they get the stake if you are proven to be disingenuous. This, for example, is how Civil enables community-led enforcement to maintain high journalistic standards.
But it goes beyond that.
Each data owner, by participating on the platform, creates an immutable track record. It’s like an eBay rating for sellers. As each data set is received and confirmed as being high quality, the blockchain serves as “proof of trustworthiness.”
It’s ratings/reviews on the blockchain, but for data and data owners.
The combination of “skin in the game” and an immutable track record can give prospective buyers greater confidence in a potential purchase.
A reconciliation/adjudication system provides an additional level of security and insurance. Native crypto-payments simplify the transfer of value for the data.
Business Model Innovation
I don’t know if the team deliberately went with an “eBay”-like name or not. My guess is they did, but it doesn’t really matter.
What is important about ErasureBay is that it is a business model innovation for data marketplaces.
Today, many of these marketplaces are centralized and data quality is varied.
ErasureBay offers a decentralized marketplace where high data quality is incentivized.
Ultimately, this is a better value proposition for algorithm creators (human or machine).
The data sets and algorithms that obtain higher quality data ultimately will be the winners.
For more on Erasure, here’s Fred Wilson’s write-up.
How ErasureBay Might Reinvent Data Marketplaces was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.