Data, algorithms and policies Redefining the digital world FOR SUSTAINABLE DEVELOPMENT WITH EQUALITY Thank you for your interest in this ECLAC publication ECLAC Publications Please register if you would like to receive information on our editorial products and activities. When you register, you may specify your particular areas of interest and you will gain access to our products in other formats. www.cepal.org/en/suscripciones Data, algorithms and policies Redefining the digital world Alicia Bárcena Executive Secretary Mario Cimoli Deputy Executive Secretary a.i. Raúl García-Buchaca Deputy Executive Secretary for Management and Programme Analysis Ricardo Pérez Chief, Publications and Web Services Division This document was coordinated by Mario Cimoli, Deputy Executive Secretary a.i. of the Economic Commission for Latin America and the Caribbean (ECLAC). The drafting was undertaken by Mario Castillo, Valeria Jordán, Jorge Patiño, Wilson Peres, Fernando Rojas, Sebastián Rovira and Nunzia Saporito. The authors are grateful for valuable contributions provided by ECLAC staff members Georgina Núñez and Laura Poveda, and by Julia de Furquim and Vittorio Frazzoni. The consultants and other individuals who participated in the preparation of the chapters are mentioned at the beginning of each one. The boundaries and names shown on the maps included in this publication do not imply offcial endorsement or acceptance by the United Nations. United Nations publication LC/CMSI.6/4 Dist.: Limited Copyright © United Nations, 2018 All rights reserved Printed at United Nations, Santiago S.18-00052 This publication should be cited as: Economic Commission for Latin America and the Caribbean (ECLAC), Data, algorithms and policies: redefning the digital world (LC/CMSI.6/4), Santiago, 2018. Applications for authorization to reproduce this work in whole or in part should be sent to the Economic Commission for Latin America and the Caribbean (ECLAC), Publications and Web Services Division, [email protected]. Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and to inform ECLAC of such reproduction. Contents Foreword ....................................................................................................................................................................................................... 9 Introduction................................................................................................................................................................................................. 13 Chapter I The digitalization of the physical world: the Internet of Things ......................................................................................................... 23 A. The Internet of Things: connecting the physical and digital worlds ................................................................................................ 25 B. The IoT ecosystem ........................................................................................................................................................................... 27 1. Devices ...................................................................................................................................................................................... 27 2. Communication networks .......................................................................................................................................................... 28 3. Software platforms and applications ........................................................................................................................................ 35 C. Areas of action .................................................................................................................................................................................. 38 1. Harmonization of standards and interoperability ..................................................................................................................... 38 2. Transition to the IPv6 protocol and numbering systems ........................................................................................................... 38 3. Radio spectrum management.................................................................................................................................................... 39 4. Public sector demand as an IoT development policy ................................................................................................................ 39 5. Policies and regulations on data privacy, protection and use ................................................................................................. 39 6. Security policies ........................................................................................................................................................................ 40 Bibliography ............................................................................................................................................................................................. 41 Chapter II Blockchain: the Internet of trust ............................................................................................................................................................. 43 A. Blockchain and decentralized computing ......................................................................................................................................... 45 1. How it works.............................................................................................................................................................................. 46 2. Governance ................................................................................................................................................................................ 50 3. Ethereum: a virtual machine...................................................................................................................................................... 51 4. Links with the real world ........................................................................................................................................................... 52 3 Contents Economic Commission for Latin America and the Caribbean (ECLAC) 5. Public networks, private networks and consortiums ................................................................................................................ 52 6. Scalability .................................................................................................................................................................................. 52 B. New disruptive resources ................................................................................................................................................................. 53 1. Nature of the records ................................................................................................................................................................ 53 2. Handling double spending ......................................................................................................................................................... 54 3. Real-time collaborative distributed databases ........................................................................................................................ 54 4. Smart contracts ......................................................................................................................................................................... 55 5. New corporate capitalization models ....................................................................................................................................... 56 C. An open technology for Latin America and the Caribbean .............................................................................................................. 57 Bibliography ............................................................................................................................................................................................. 58 Chapter III An economy and society based on digital platforms ........................................................................................................................... 59 Introduction ............................................................................................................................................................................................. 61 A. Definitions ......................................................................................................................................................................................... 61 B. Typologies ........................................................................................................................................................................................ 64 1. Classification of the Center for Global Enterprise .................................................................................................................... 64 2. Typology of the European Commission ..................................................................................................................................... 65 3. Oxera classification ..................................................................................................................................................................