A new line of argument is surfacing in India in support of the Currency of the Criminals and Terrorists namely the “Bitcoins” and Crypto currencies”. …that “The space has become too large to ignore”

Well, whether it is the Taliban in Afghanistan or Crypto currency in India, if we follow  “Procrastination” as a policy of Governance, the menace will only become larger  and the monster will become stronger.

Had US and India collaborated and ensured that the Afghanistan is not left in the lurch, we would not have seen Talibanis sitting in Kabul today and taking over the arms and other assets of the Afghan army. With this tackling Talibanis is only becoming more difficult than otherwise. While USA is not directly affected by this development, India is going to face an adverse impact of the raise of Taliban in Afghanistan.

Similarly the Government is unable to take a decision for passing the “Banning of Crypto Currencies bill” because the Finance Ministry is either confused or is under the influence of the Crypto Mafia.

Today any action in Afghanistan has to be tempered because we may have our people stuck in there and cannot be endangered. Similarly, the more time we take for banning the private Crypto Currencies in India, greater will be the problem later since many innocent investors would get stuck with the holdings.

Just as USA believed that Taliban has changed (though many believe that USA was only pretending to believe), Indian Government seems to believe that Bitcoins are technology innovations to be supported and are harmless. What if it is digital black money? What if it is used for terror funding?, What if it is used for extracting ransom?, it is still dear to our politicians because they can take bribes in Bitcoins and stash it away in foreign countries by a click of a button.

It is a shame that US plunged Afghanistan into this turmoil and it will be an equal shame for the Modi Government to plunge the Indian Economy into a turmoil by letting Crypto Currencies become a replacement currency for Indian rupees.

Some of the experts are creating confusion in the minds of the Finance Ministry that we need to have a Crypto Rupee before banning Bitcoins. This is only a tactic for delaying the decision since a Government Controlled Crypto Currency will not command the premium that Bitcoin commands since Crypto Rupee would be accountable for tax purposes. Hence any intelligent Crypto currency owner will not convert his current crypto stocks to Crypto rupee and would rather convert it through the virtual havala route into a foreign currency. None of the black wealth currently in the form of Bitcoins etc will therefore come to the open because Indian Government comes up with its own Crypto Rupee.

Sooner the Government realizes the dangers of delaying action against the Crypto Currencies, it is better for the country.

Dear Mr Modi and Mrs Nirmala Sitharaman, Procrastination in handling the Crypto Currency bill will not pay and you will come to regret your decision to delay. I will be there to point it out again and again until you wake up from your slumber.

Naavi

The demand for “Transparency” in processing of personal data is part of every data protection laws. As an associated concept, most data protection laws also mandate that there  shall be no automated decision making.

As the technology develops, many organizations use AI/ML algorithms that are opaque about how data is processed within the algorithm. The algorithms may also be property of third party service providers which data controllers may use.

Some of the service providers who provide their service under the SaaS model operate as “Joint Controllers” and not as “Processors” since they would not like to share the “Means of Processing” with the Data Controllers. They commit on the end result and hold the processing in confidence as their trade secret or protected intellectual property.

Many data protection laws allow for masking of information from normal disclosure requirements for reasons of protection of trade secrets.

In this environment, there are a few thoughts that are emerging about “Algorithmic transparency”.

Algorithmic transparency is the principle that the factors that influence the decisions made by algorithms should be visible, or transparent, to the people who use, regulate, and are affected by systems that employ those algorithms.

Under this principle, the inputs to the algorithm and the algorithm’s use itself must be known, and they need not be fair.  The organizations that use algorithms must be also accountable for the decisions made by those algorithms, even though the decisions are being made by a machine, and not by a human being.

The concept of “Algorithmic accountability” raises a question about the protection of trade secrets  involved in development of such algorithms which may be the core element of many start ups.

Recently, a study by Saasbhoomi.com has come up with a finding that Indian Saas ecosystem has the potential to create $ 1 trillion in value and nearly half a million jobs by  2030 

If however the Saas ecosystem has to realize its full potential, it has to wade through the challenges posed by the emerging concept of “Algorithmic Transparency” in privacy laws.

Though most data protection regulations do respect the presence of “Trade Secrets” in business and accommodate some flexibility in application of transparency norms, the issue may gather momentum in the coming days through Privacy Activism.

The old Canadian Privacy law PIPEDA already spoke of the need for Algorithmic transparency and indicated in its model code that Transparency  in the context of Privacy requires  algorithmic transparency. It said that Consumers would now have the right to require an organization to explain how an automated decision-making system made a prediction, recommendation or decision.

Even in UK where there is a competitive privacy activism against GDPR, there are discussions on Algorithmic transparency. One of the recent articles in blog of the Center for Data Ethics and Innovation  recommended that the government should place a mandatory transparency obligation on all public sector organisations using algorithms when making significant decisions affecting individuals requiring the proactive publication of information about the algorithms.  It will not be long before activists take up the idea and start pushing the concept in the private sector also.

If innovation has to be nurtured, there needs to be an appropriate regulation which does not mandate disclosure of what the Saas developers would consider as their proprietary information.

If however  the Saas developers tend to ignore the privacy regulations, there will be ground for the Privacy activists to push hard for algorithmic transparency.  This could lead to a new round of conflicts between the IPR supporters and the Privacy supporters. Considering the attitude of some of the supervisory authorities in EU and the EUCJ itself, it will not be surprising if some of the Supervisory authorities may start ruling in favour of algorithmic transparency.

We hope that the upcoming Indian data protection law recognizes the need for encouraging innovation by supporting some level of confidentiality of the trade secrets which include the way algorithms process personal data.

If there is a need for balancing of the demand for algorithmic transparency with the disclosure of automated processing, the Indian authorities may consider using the Sandbox system and demand that the information about the processing of personal data by algorithms may be escrowed in confidence  with the Data Protection Authority and protected by the Copyright laws.  In the recent days Indian Patent authorities have been liberal in interpreting the “Software” for patent and have provided patent for essentially software operations. Some algorithm creators may use Patent to protect their innovations and if so it may satisfy the privacy activists. Probably the sandbox system will come to assist the patent applicants during the time the patent application remains in contention before approval.

Naavi

The human tragedy in Afghanistan is well captured by the above picture where people are desperately trying to enter an aircraft which can take them to a land where they can survive and hopefully prosper.

Unfortunately the developments in Afghanistan is a result of a self centered world of USA, Russia, China and Pakistan and we are mute spectators to this tragic development. Unfortunately, we may not be able to positively influence a change in Afghanistan.

But we can learn from this tragedy and ensure that we stay protected. While their is a political lesson in this tragedy, which we hope the Government of India learns, we as private citizens have to dilute the depressing feelings arising out of these developments by diverting our attention on the lessons that we can learn and apply in our other activities. 

It is in this context that I have taken the liberty of extending the analogy of this mad rush to leave Afghanistan to the mad rush of investors to invest in Loss making companies in India.

My apologies for making the human tragedy a part of this discussion.

Naavi

When we observe the political turmoil in Afghanistan and the disruptions caused in the investment world with the IPOs of loss making Start ups like Zomato, some similarities strike us hard. Many of the persons fleeing from Afghanistan were desperate to get in to an aircraft without knowing their future after they get in. Many clung on to the wheels and later fell down to their death when the aircraft was in the air.

This visual has now become a “symbol of desperation”.

While the Afghanistan desperation was to run away from a problem, the desperation can also be seen in another light …desperation to join a bandwagon…like the investors who flock to buy the shares of loss making start ups with the hope that if a series of events materialize, then they will reap a huge reward.

There is no doubt that Stock markets are full of examples where winners have emerged from most unexpected quarters and created history. Zomato may be one such company in all probability.

At the same time, Stock market is also full of examples of companies which have raised money with grand hopes and are now languishing or have already closed down. Unfortunately, successes are reported and failures are buried.

Market perceptions are created around the success stories but we should not forget that  the risks represented by the failed companies lurk behind and can surface any time.

Will Zomato succeed or fail in the long run? is anybody’s guess. But the logic is that if there are enough number of desperate investors who can take the risk, the game of creating value out of nothing will succeed.

Such companies who create value out of nothing but perceptions are what I call as “Crypto Companies”. It is like 100 people saying “Let this data file be called a Crypto currency and be valued at Rs 1 lakh each”. The 101 st person has to say “Amen”.

The success of Crypto Currencies is before our eyes. Despite the value of a Crypto Currency is all in the mind, there are people who have made money in crypto currencies. (… and several more number of people who have lost money).

Zomato like companies create value in the minds of investors through  heavy promotional expenditure. Many investors believe that Zomato has so much of data about the eating habits of people that this can be converted into money through “Cloud Kitchen” or charging subscription from Hotels for listing etc. It is the power of “Big Data” that investors are banking upon.

But “Data” is only a tool and the ability to convert it into profitable and sustainable business needs to be established. If Zomato turns out to be a “Company without Promoters”, every body investing in Zomato including the VCs and current managers are in the game only to  make money by exiting at an appropriate time. If so, who is there in the long run? to realize the hopes of a number of small investors who will be investing their money in Zomato shares today?..Only God knows.

It is in this context that the emerging situation in Afghanistan appears to hold a mirror to the shareholders of Zomato.

Taliban has disrupted the political system in Afghanistan with a new perspective on human rights.  What if in other parts of the world, Women are considered equal to men, in Talibani Afghanistan, women will be a commodity and are consumed by the Talibani men. It may be disgusting for many to even think of such a proposition but it is an accepted reality within the jurisdiction of Afghanistan.

From the abject surrender of the Afghan Government it appears that there will be lot more of Afghanis who are not Talibanis but donot mind Talibani rule. We know that there are many in India who think it is right in their religion to subjugate women as a commodity and welcome the Talibani rule even in India. The world has to therefore learn to live under this dual system of “Talibani” and “Non Talibani” systems of Governance.

Similarly, the investment world seems to be entering a phase where stock markets will have a Larsen Toubro or Maruti Suzuki or BHEL whose shares are traded along with the Zomatos and PayTms and people will make or lose money based on when they enter and exit a stock. This is a great time for Share Brokers who as intermediaries with insider knowledge (or pretending to have such insider knowledge) will be able to rule the investment world.

The Indian Government preferred to accept its inability to influence the developments in Afghanistan and perhaps will also accept its inability to influence the raise of “Crypto Companies” in the Indian investment scenario.

The solution for investors is “Identifying the Risk, investing within their risk appetite limits” and be prepared to trade on the “Probability of making a profit in one investment that offsets the losses in another”.

The Risk on the Horizon

But on the horizon lurks the risk….. Just like the possibility exists that Talibans may enter India, destroy the Country and India embraces Shariat law (as the trend that has emerged in some parts of Kerala), the “Crypto Companies” may suck up all the investment capital and starve the genuine manufacturing companies of the L&T variety. Then we may have only Crypto Companies ruling the investment world and the giant manufacturing companies will only be subordinate companies.

In such a world dominated by Crypto Companies, we may not have any “Make in India” companies, as every investor would like to invest only in the “Magic of Monetization of Dreams of the future” through advertising and brand building.

I wish we give a serious thought to reversing this trend.

Create Zomato s within L&Ts

One solution to this is for all companies to immediately recognize that the “Value that Zomato has created in the minds of investors” is also available to other companies like L&T which otherwise als have a huge valuation from their traditional business. Even  companies like Vodafone which may have reached the near zero valuation in their traditional business also have the potential of re-birth through proper valuation of data in their possession.

Most companies therefore need to set up a R&D activity on “How to Monetize my Data”? and try to build their own versions of Zomatos and PayTms within their existing companies. This will enable them to increase their valuation taking into account their strengths both in the Non Digital economy and the Digital economy.

The “Digital Transformation of the Asset base of a Non Digital Company”…is an exciting opportunity for professionals to discover and harness.

Naavi

Just as India celebrates the 75th Independence day, it is time to introspect our own approach to professional life and whether we are unconsciously pursuing a path which is negative and self destructive.

Let us remember that our freedom has to be protected by our Constitution. We all consider the Constitution as sacred. But our politicians who are more concerned about their vote banks have successfully corrupted the constitution with “Appeasements” of all kinds and today our Constitution does not support the basic principle of democracy which is “Equality for all”.   Caste and Religion are the basis of all our political decision making and our Constitution supports this discrimination and our Courts uphold the constitution.

Similarly, when it comes to Freedom of Expression and Right to Privacy, our intelligentsia appear to have a misplaced priority that  “Freedom” means license to do what we want. “Duties” appear to have no place in our law and only “Freedom” matters. It appears that “Jungle Raj” is the dispensation that represents “Freedom”.

In pursuing this policy, we are endangering our society’s existence and soon all our concerns for Privacy and Freedom will be drowned in the Jungle Raj. What is happening in Afghanistan is staring at our face. What is currently happening in Afghanistan can happen in India when we schedule our 100th year independence.

People are more worried about “Climate Changes” that can affect us in the next 25 years  than the political changes that may sweep us off our feet and make climate changes irrelevant.

It is necessary for our intelligentsia to foresee the probability of our country being destroyed by not being strong and not supporting the “Right to Security” as the fundamental of the fundamental rights of citizens.

Yesterday, the Mumbai High Court has stayed the operation of part of the Information Technology (Guidelines and Digital Media Ethics Code) Rules 2021 indicating that “Ethical Code for Digital Media” is an intrusion on the Freedom of Expression. (Refer report on livelaw). The essence of the judgement is that  Digital Media is a privileged medium and will not be subjected to the same ethical codes that the Print Media and the TV medium is otherwise subjected to.

It is difficult to appreciate that “Voluntary Ethical behavior” could have a “Chilling Effect”. In fact not having a ethical behavior and purveying fake and motivated news has made digital media the most potent weapon of destruction of our society.

The Court failed to visualize the dangers of fake news purveyors presenting themselves as part of the fourth pillar of democracy. The decision is therefore disappointing.

I was also listening to an erudite discussion by some experts recently on the “Necessity” and  “Proportionality” principles in applying surveillance laws. We are all very eager to say that the Privacy law being formulated in the Country is giving too much power to the Government without understanding the need for “Empowerment” in a law and how all international laws of similar nature also have similar empowerment. But we seem to trust the GDPR authorities more than our own authorities and hence we try to reject our laws on the basis of some semantics and argue that “Necessity” and “Proportionality” are not the same.

I fully understand and respect the need for a democratic country to respect freedom of speech and right to privacy to the extent that neither the Government nor the Business should misuse and make the citizen uncomfortable with excessive controls.

However, I am not sure if the experts in a bid to express their commitment to Privacy and Freedom of Expression as democratic right are forgetting that these rights become relevant only if the society is able to survive as a democracy. The world is not as beautiful as we would like it to be. Look at Afghanistan. The tragedy is that all the “Freedom lovers” of India have no view on Taliban and the danger it poses to the world.

We in India are well on our way to inviting destruction of the country. There are dangers of the country being torn to pieces because some of our politicians are power hungry and place their individual corrupt practices well above the national interests.

At this time, “National Security” is a fundamental priority of the country and the Courts and Activists need to take a deep breath and self introspect if their concept of “Chilling Effect” is misplaced.

On this 75th Independence day, we donot know if after another 25 years, India will remain as it remains now unless we take some serious measures to correct the way we think what “Right” and “Freedom” is vs “Unfettered freedom” which is a license for Jungle Raj.

It is therefore essential for us to place our priorities right. We need to declare that “Security of the Nation” should be our priority.

When laws are made, Courts should not focus on  how we defeat the law but try to find out how best the law can be implemented with checks and balances to prevent its misuse.

Rather than staying the operation of the Intermediary guidelines, if the Court had directed the Government to set up appropriate measures to prevent misuse, it would have been more constructive.

But our Courts are not interested in guiding the Government to better governance. They are slaves of their own perception that a non performing Government  is better than a performing Government and the most important duty of the Judiciary is to prevent the Government from functioning on any pretext taking a stand as a “Protector of Constitution”.  It is the same Courts which allowed our Constitution to be amended and bringing in all the “Appeasement Politics” into the Constitution and have to take the responsibility for the present constitution which proliferates inequality and inefficiency.

We can appreciate the Courts if they can come up with positive suggestions on how the law is to be corrected rather than passing judgements striking down actions of the Government. I am aware that this is difficult. They have the power to read down the law and allow that law as drafted may continue with the read down meaning rather than using the sledge hammer and striking down the law or staying a law.

One wiseman said thinking is difficult and we therefore “judge”. This applies aptly to our Judiciary.

On this 75th Independence day, we must decide to change this attitude.

I therefore request all erudite professionals who criticize the Government actions, all journalists who champion the freedom of speech and all Courts who uphold such freedom start thinking,

“If I am the person who is taking the executive decision which I am unhappy with, what would be the alternative solution I would suggest”. 

May be the future of India would be better if all of us develop such a positive thinking, though it is difficult.

Naavi

Between 2003 and 2021, there is a time gap of 18 years. Between the ideation of DVIIS and E Rupee has been such a distance in time. DVIIS was invented and proposed by Naavi and E-Rupee has been introduced by the Modi Government.

In between, DVIIS or Digital Value Imprinted Instrument System was proposed for patent and discussed with many IT companies including Cognizant, TVS Electronics, TCS, Mind Tree, Infosys etc. But none of these IT wizards could understand the utility of this idea called DVIIS. Subsequently, the ITZ card. It was also discussed with a couple of so called “Venture Capitalists” who were supposed to identify innovative projects ahead of times.

It has however taken 18 years for my idea to come into wide use and perhaps the vision of all the wizards in IT was inadequate to spot a project that was that much ahead of time.

I am however happy that Modi’s Government has taken up the idea independently through NPCI and has replaced the “Paper Token” which I had proposed in 2003 to a “Digital Token” which is the order of the day.

This is not to claim any IPR related issue in the Government using the idea, and I am happy that the Government is using it. But I wonder if it takes 18 years for such a simple idea to be understood and absorbed, how long will some of my ideas of the current years take to become a reality. But life must go on. We need to keep ideating and some day it may become useful.

I will take a little time to explain what I proposed as “Digital Value Imprinted System” which was also proposed in operating form for Stock Holding Corporation of India, Bangalore Corporation etc., but was not approved for usage.

DVIIS is a system where a pre-printed paper token would be issued as a scratch card with a hidden serial number. The number would be used to load value in a digital server. The card would be hand delivered to a payee who would download the value of the card. It was meant to be used as a Digital Stamp, alternative to cheques (at that time UPI and other digital payment systems were not in place), bus ticketing, etc. (One sample instance of the digital stamp system is available at https://naavi.org/dviis/Website/index.htm).

I had spent nearly one year with a Cognizant team to develop the idea into a product but the company was happy as a service company and did not want to develop a new product all on its own.

The Arbitration.in was another such idea which was introduced in 2005 and was even taken to the Supreme Court IT committee for introduction of E Courts. But it took the Covid to make the Supreme Court realize the potential of the ODR system and accept it.

But these were footprints in the sands of time that make us realize that one needs to be at the right time at the right place for any work however good it is to be considered a success.

I hope PDPSI and DVSI would not have to go through this 1-18 year gestation for the idea to be realized. Probably the army of FDPPI which was not in existence in 2003-2005 will ensure that PDPSI and DVSI will realize the potential for which they were created.

Naavi

P.S: The name ZEMO I used at that time for Zero Memory card to replace smart cards is now being used by some Game!

Also refer:

Black Money Policy of Narendra Modi.. Here is My Idea

(Continued from previous article)

The world is today speaking of “Data Driven Organizations”. Essentially, this means that “Data Engineering” is used to increase the productivity of companies. There could be several ways  by which “Data” can help a company to earn revenues beyond the simple observation that “Better quality”, “More accurate” and “More innovatively processed” data can improve the productivity.

Recently Zomato made a public issue of shares and raised Rs 9750 crores. The company had accumulated losses of over Rs 4211 crores in the last three years but investors were prepared to buy its shares at a fantastic price of Rs 76 per share and it is now traded in the stock markets at a higher value than at which Vodafone global shares are traded…around Rs 130 over 120.

The magic here is the monetization of the perception that Zomato has data about its customer’s eating habits which when filtered through an efficient data analytics system can enable the company to improve its earnings in the next 10 years and turn it around into a profitable company. For Zomato which is still not able to show a profitable stream the projections that “It has data that can be monetized and share holders can take that future potential for current valuation” may be a highly speculative proposition. But for Vodafone which has a global potential proven for many years, any such thought that its data is valuable and can be monetized better is a certainty.

If Vodafone floats a tender for Big data companies to make proposals on how its data can be monetized, then they will be surprised to know that the data of 27 crore customers and their behavioral pattern can generate very interesting proposals.

Let me make one point clear here… The exploitation of data of its customers by Vodafone will involve “Privacy” issues. But “Consent”, “Pseudonymization” and “Anonymisation” can be the “Trishul” with which Vodafone can prime its data holding for monetization even considering the upcoming Personal Data Protection Act of India.

We may recall that American Airlines, USA valued its frequent flyer customer base (AAdvantage) at around us$ 19.5 to 31.5 billion last year. Similarly the United Airlines also revalued its loyalty program data at about $ 20 billion. Caesar Entertainment cashed its total rewards customer data base for over $ 1 billion during a bankruptcy proceedings.

If these valuations were acceptable to investors then it is possible that post-Zomato success, revaluation of data of Vodafone could raise enough money to not only clear Vodafone’s AGR dues but perhaps its entire debt.

If Vodafone does not know the value of its data and the potential, I urge the Government to  take a pledge of Vodafone customer data for AGR dues and create a SPV to monetize the data value. It may be able to realize much more than the AGR dues.

Will the Telecom Minister consider such a possibility?

Naavi