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Blockchain Brings Democracy to The Space Industry. Why NASA Should Be Concerned

Anastasia Ermolaeva

Innovative technologies in the space industry were discussed on the Future of Space & Astronomy summit that was held in Moscow last week. Alexander SHULGIN, an entrepreneur and the event organizer stated: "Blockchain can become a trigger and a serious assistant in the development of almost any industry, most especially space."

Decentralization, that is the fundamental principle of the technology, can induce drastic changes in a very closed sector. Today most of space projects are run and funded by government institutions such as NASA, ESA and Roscosmos. Centralised management and lack of access to space infrastructure have resulted in disruptions, high costs and delays in projects implementation. Given the budget of $20 bln for the fiscal year 2019 NASA seems to experience a lack of practical achievements in space exploration as a bulk of their missions has only a general scientific nature.

The percentage of private business on the market is relatively small. Space X can be called a striking exception, however it can not be perceived as an example of a classic startup since Elon Musk established the company on the funds made out of Zip2 and PayPal sale earning $12 mln and $165 mln respectively.

A classic startup model is not common in the space industry since businesses face the challenge of high operating costs caused by recruitment and payment of qualified employees and an expensive research and development process that requires constant financial injections. Once the initial funding is done, it takes a lot of time to finish the R&D, but a startup can ask for additional or further investment only after the technologies release on the market. Venture investors are not ready to take risks of possible failures that are most likely to happen on early stages of the R&D.

However now space enthusiasts with small budgets finally have a solution in the form of a crypto-economic model similar to the crowdfunding idea. By holding an ICO, they will be able to attract both institutional investors and large capital holders as well as individual investors who may be particularly interested in asset-backed tokens, that are connected to a tangible or intangible products with economic value - it can be, for instance, a space flight. Thus, more people will gain more access to the space sphere and an opportunity to support interesting space initiatives. Moreover, the possibility of utilizing smart contracts as a way of allocating funds will improve funds management and increase the trust of investors - the technology allows to precisely determine the funds expenditure in accordance with the project roadmap.

Space is becoming more democratic as more and more crypto startups are entering the market. For instance, SpaceChain is striving to build the world’s first open source satellite network, which will offer a revolutionary alternative solution in data transmission, storage and analysis and will push the development of a completely new decentralised infrastructure. Developers from all over the world will be able to use SpaceChainOS, which is founded on Qtum blockchain, to launch, test and deploy their decentralized applications. Lowering the barrier for developers will increase the number of applications per satellite, which will enhance the efficiency of spacecraft utilizing and reduce its cost. Therefore more users will be involved in the space industry and consequently the total number of scientific studies will grow. Organizations will be able to develop and run collaborative projects using smart contracts in an audited secured ecosystem.

In February SpaceChain launched the first demonstration satellite into orbit onboard a Chinese C-2D vehicle. Larger satellites with more powerful processors are planned in the future and will include camera and open-source based sensor APIs for developer access.

SpaceDecentral believes that only joint efforts will be able to boost the space exploration process. The decentralized autonomous agency (DAO) aims to create a social network on the blockchain for engineers, scientists, future astronauts and space enthusiasts, where they will be able to share knowledge and intellectual property, propose, discuss and carry out new gen space initiatives. Herewith, the revenues made by this space research laboratory will be fairly distributed among its participants. The company claims that the space industry lacks crowdsourcing and crowdfunding projects, which can be game-changing and make space exploration more focused on the needs and interests of all mankind rather than just of the government institutions.  

The data flow through the network as well as the governance of the network itself will be facilitated by self-executing smart contracts. Token ownership will establish voting rights on various issues, such as which projects should be added to the laboratory program and how  work on projects should be organized.

It is worth noting that not only space needs blockchain, but vice versa - blockchain needs space. In August 2017 Blockstream began to develop the Blockstream Satellite Network in order to make bitcoin and crypto transactions available anywhere in the world and solve the problem of the internet deficiency and unsafe net connection. The rented satellites will allow people who face unstable economic and political situation in their country to conduct crypto operations. Dr. Adam BACK, co-founder and CEO at Blockstream, said that: “The Blockstream Satellite gives even more people on the planet the choice to participate in Bitcoin. With more users accessing the Bitcoin blockchain with the free broadcast from Blockstream Satellite, we expect the global reach to drive more adoption and use cases for Bitcoin, while strengthening the overall robustness of the network.”

At the moment the project covers Africa, South and North America, Europe. Running a full Bitcoin node, which is the safest way to utilize digital currency, will require a small satellite dish.

Another blockchain company Nexus Earth in cooperation with the light spacecraft producer Vector Space Systems plans to use satellites to enable the distribution and use of their cryptocurrency. NSX hosting through the blockchain in space on the satellite platform Vector GalacticSky will allow Nexus not to tie its digital currency to a nation-state which will create a more decentralized financial system. In order to improve reliability and the overall performance data can be distributed across multiple satellites. This peer-to-peer network will facilitate the company's mission to make transparency in access to global financial services.

Government institutions are clearly not eager to share the market with private business. Global revenues in the satellite industry solely reached $268.6 bln in 2017, while the entire global space economy amounted to $348 bln. So they are also actively working on implementing blockchain in their operation. In April NASA communicated the news about giving a grant in the amount of $330 thsd to a developer of an autonomous spacecraft that will make decisions using blockchain technology without human intervention. The spacecraft will be able to analyze the environment, detect space debris and dodge them more quickly than a person on Earth will be able to react and send a command. Decision-making based on Ethereum smart contracts will enable the spacecraft to perform more tasks and collect more data which will end up in scientists having more time for their analysis. Seyed SAJJADI, the R&D engineer at NASA, believes that: “Given the complexity of the systems that many space missions use, one can imagine the advantage of blockchain technology in securing communication between various components of such systems. For instance, the natural transactional behavior that exists between a spacecraft and a ground data system can be secured to ensure malicious uplinks and downlinks are not being transmitted. Blockchain technology can ensure that the data transmission cycles through all mission communications are secure.”

Noah POPONAK, a senior aerospace and defense research analyst at Goldman Sachs, in his report Space: the Next Investment Frontier comes to a conclusion that we have already entered the second space age, where governments funding or a flurry of enthusiasm for space on the part of the scientific community are overshadowed by an innovative vision the ambitious private companies offer. The introduction of blockchain technology will only strengthen this trend and help space become even closer and more accessible.

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