RBC AI Summit Workbook

Blockchain

Blockchain technology is a way of recording information securely by linking blocks of data in a chronological chain. Each block stores a batch of data and has a unique code (called a hash), which it shares with the previous and following blocks, forming an unalterable sequence. This design makes it nearly impossible to change any part of the chain without altering all the blocks that follow, ensuring the accuracy and security of the recorded data.

Correspondingly, blockchain is inherently suited for secure data sharing (e.g., confidential data in the healthcare sector.) The most famous use of blockchain is cryptocurrencies like Bitcoin and Tether, which are digital currencies that operate on de-centralized, cryptographic networks. Cryptocurrencies are secure, digital representations of value that enable peer-to-peer transactions without intermediaries like banks.

Over the past decade, other applications like supply chain management have become more common. For example, the De Beers Group uses the Tracr blockchain platform to create a transparent and immutable record of a diamond's origin and movement through the supply chain, improving accountability and increasing customer trust^[1]. Similarly, the Ethereum blockchain hosts smart contracts, which are self-executing contracts with the terms of the agreement directly coded in, allowing for automated and secure execution once certain conditions are met. Other implementations include IBM Blockchain, which runs off Hyperledger Fabric and supports a range of business applications (e.g., tracking customer transactions for a loyalty program).

There are several considerations for using blockchain technologies. Firstly, scalability remains a major challenge, as each transaction must be securely processed and added to the chain. Hence, while traditional payment systems like Visa can handle tens of thousands of transactions per second, Bitcoin and Ethereum can only process about seven and 30 transactions per second, respectively^[2]. While solutions are being explored (e.g., processing off-chain), currently, blockchain is not suited for real-time work during high-demand periods.

Secondly, blockchain networks require substantial computational power to validate transactions. Correspondingly, the technologies are enormous consumers of energy, raising concerns about their ecological impact. However, Networks like Ethereum are exploring more efficient validation methods, like Proof of Stake (PoS) consensus mechanisms rather than the commonly used Proof of Work (PoW) framework.

Lastly, as blockchain is still an emerging technology, regulations remain unclear and inconsistent across jurisdictions. For instance, while several countries have banned cryptocurrencies, others like El Salvador have adopted them as legal tender, and others still, like Canada, tax crypto but do not consider it legal tender. Moreover, organizations looking to develop blockchain applications must ensure that their platforms comply with various traditional regulations, such as anti-money laundering (AML) laws, data security requirements, and provisions related to individuals' rights, including the right to be forgotten. These regulations may vary significantly by region and industry, requiring businesses to invest time and resources in understanding and adhering to compliance standards.

The Internet of Things

The Internet of Things (IoT) refers to a network of interconnected devices that can communicate and exchange data over the Internet. These devices, ranging from household appliances to industrial machines, are equipped with sensors and software that allow them to collect and send information, often without human intervention. This connectivity enables real-time monitoring and control, allowing users to access data and automate processes from anywhere.

Already, IoT is being used for real-time asset tracking in logistics, remote patient monitoring in healthcare, and research and surveillance in cities. For business use, platforms like AWS IoT, Microsoft Azure IoT, and Google Cloud IoT allow for connecting, managing, and monitoring IoT devices.

However, implementing IoT systems on a large scale presents significant challenges due to the need for robust infrastructure; for example, in remote patient monitoring, every piece of equipment must connect to the internet and maintain a stable connection at all times. Additionally, discussions around IoT are often fraught with concerns regarding data security, privacy, and ownership, as demonstrated by the highly anticipated Sidewalk Labs smart city project in Toronto, which fell through due to ongoing data privacy issuesy^[3]. Consequently, until robust regulatory frameworks are established, IoT will likely be easier to implement for reporting on inanimate objects, such as manufacturing equipment, rather than for monitoring people.

5G

5G is the fifth generation of mobile network technology, designed to provide significantly faster data speeds, lower latency, and greater capacity than previous generations (like 4G). It operates on a combination of low, mid, and high-frequency bands, allowing for improved connectivity and the ability to support a vast number of devices simultaneously. This enhanced performance is crucial for enabling advanced applications such as the IoT, augmented reality (AR), and virtual reality (VR), all of which require real-time data transmission and processing.

Faster and more reliable networks can significantly enhance real-time data capabilities across multiple sectors. For instance, 5G can facilitate real-time tracking of shipments, allowing logistics companies to optimize delivery routes and reduce costs while improving customer satisfaction through timely deliveries. Similarly, the manufacturing sector can benefit from 5G by deploying IoT sensors that provide real-time data on equipment performance, enabling predictive maintenance and reducing downtime. Along with operational efficiencies, 5G can enable new business models - with faster network speeds, retailers can implement AR shopping experiences that allow customers to visualize products in their homes. Therefore, 5G is foundational to more data-driven, responsive service and innovation.

Quantum Computing

Quantum computing uses the unique properties of quantum mechanics to process information in a completely new way. While traditional computers use bits as basic units, which can be either a 0 or a 1, quantum computers use qubits, which can exist in multiple states simultaneously thanks to a property called superposition. Unlike a bit that’s either 0 or 1 (off or on), a qubit can be in a state of 0, 1, or both simultaneously - similar to a spinning coin that is both heads and tails until it stops. This ability allows quantum computers to perform many calculations at once.

When combined with entanglement, wherein qubits are linked so the state of one instantly affects the other, even more complex calculations are possible. In theory, these properties make quantum computers capable of processing vast amounts of information much faster than traditional computers. However, quantum computing is still in its early stages, with current machines limited by errors and stability issues. While the technology is not yet ready for widespread commercial use, its potential remains promising.

In finance, quantum computing could transform portfolio optimization, risk analysis, and fraud detection by rapidly analyzing massive datasets and running simulations that account for numerous market variables. In pharmaceuticals, it could speed up drug discovery by simulating molecular interactions with high accuracy, enabling faster, more cost-effective development of new medications. Quantum computing could also advance logistics by optimizing supply chains, enhance manufacturing by improving material design, and support energy sectors by optimizing grid distribution. Although these applications are not yet fully realized, quantum computing holds the potential to give businesses powerful new tools for innovation and competitive advantage.