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Below is an interview with the co-head of Deutsche Telekom’s Web3 programme Marcus Schorn and Senior Director of Corporate Strategy Jens Herrmann.
Interview conducted by Tom Lyons
Deutsche Telekom has been very active in the blockchain space for a long time, which may surprise people. Can you tell us when you started and why?
Marcus: We’ve been involved in defining Web3 since 2018, starting with our team in Berlin. Perhaps influenced by the vibrant Ethereum community in Berlin, we experimented with putting self-managed e-scooters on the blockchain in 2018. It was too early for such an integration, and interest waned during the first and second “crypto winters.” However, we continued to work on blockchain topics, and today, Deutsche Telekom MMS runs validation tools for major blockchain networks.
Jens: We are a cloud provider in Europe using our own infrastructure and helping blockchain networks to physically decentralize. Initially, we started by running an oracle for Chainlink as our first major blockchain project. From there, we moved into staking, particularly as an early adopter of the Flow blockchain, running some of the first flow validators for projects like Dapper Labs and Top Shots. This early involvement created significant momentum. After staking, we expanded our blockchain activities by moving to indexing. Overall, our journey has evolved from running an oracle to staking and finally to indexing, with each step increasing our experience and presence in the blockchain space. We are part of the Helium ecosystem, and participate in decentralized clearing and settlement with ClearX. Celo was our first strategic token investment, making us at the time one of the very few companies of our size managing cryptocurrency assets.
What specific technologies does Deutsche Telekom focus on and why?
Jens: To get started, we run validators for both major and secondary blockchains, including Ethereum, Polygon, Celo, Flow, Q, Energy Web, The Graph, MutiversX, Aleph Zero, etc. We support Chainlink’s oracle node network, allowing DeFi applications to access external data. However, we are primarily focused on EVM-compatible public blockchains, as we want to support building a new Internet on open infrastructure.
Marcus: At the moment, we focus on Ethereum-compatible platforms. We see Ethereum as the current standard, and companies are still grappling with the possibilities that Ethereum offers.
We’re particularly excited about what we’re building with Celo, a mobile-first blockchain and layer-2 futures protocol on Ethereum that uses mobile phone numbers as identifiers on the blockchain for digital assets. This opens the doors to the future of tokenized real assets, where users can send digital assets directly to mobile phones. And here we want to be part of it.
You seem very committed to providing core blockchain infrastructure services. Why?
Marcus: What we’ve learned over the past few years is that our service provides a unique selling point. EVMs require decentralization for optimal performance. It wouldn’t be ideal if Ethereum ran entirely on AWS. Therefore, it is very useful to have a reliable second or even third option for cloud infrastructure.
Being a telecommunications company gives us unique advantages in maintaining high uptimes, which we also apply to running validation tools. This is what sets us apart from some other cloud providers, and this has worked well for us. Notably, it establishes our credibility in the blockchain and Web3 communities, demonstrating our early and committed support for decentralized public networks. This credibility will also be useful when we provide future services.
Jens: First, operating decentralized networks is part of our heritage as a telecommunications company; It’s in our DNA. Second, we are motivated by the asymmetric benefits gained by big tech companies. Web3 provides an opportunity to level the playing field.
I see Web2 and Web3 as a natural progression in the evolution of the Internet. We have been providing infrastructure services for years, starting with phone lines and moving to the Internet. It is essential for us not only to participate in future developments but also to guide them. That’s why understanding how blockchain ecosystems work and key elements like digital wallets is crucial. That’s why we are actively exploring the roles we can play in this evolving landscape.
What enterprise-level blockchain use cases interest you?
Jens: Our current focus is on helping other companies move into the Web3 space. For example, with Celo, the mobile phone number acts as the wallet address. In the past, even storing an encrypted mobile phone number on the blockchain did not meet our privacy standards. So, we have to get creative and look at “one-click wallets”.
The future of mass market wallets may not just be MetaMask, but rather wallets built into mainstream apps created by brands and companies. We want to make it easier for brands to integrate wallets into their native apps. We’ve built a prototype that achieves this with just one click.
Marcus: What we have discovered through our experiences is that digital ownership is an integral part of these new systems. One of the challenges companies face is dealing with legacy systems when implementing new engagement plans, which usually requires significant effort and cost. However, if these legacy systems generate something as simple as a QR code, you can link that code to the blockchain. This allows you to offer advanced features and games outside of the legacy system while maintaining ownership status on the blockchain. This approach of layering on legacy systems will change the game dramatically, especially for Web3 use cases.
When talking to enterprise customers, especially those outside the Web3 space, do you find that there is an increasing level of understanding, or do you still need to educate people?
Jens: There is still a need for education and explanation in this area. We’ve been working on this internally for some time. We have held cross-group sessions for senior executives. The need for education also extends to our B2B clients; The level of understanding varies depending on the person you are talking to.
Marcus: Interestingly, the current “crypto winter” has benefited us to some extent. When we started this project two years ago, the landscape was full of expensive JPGs. Many people have wondered why they should be interested in concepts like blockchain, the metaverse, and NFTs, especially when they do not align with the interests of major players. So, this period has helped clarify and improve people’s understanding of Web3.
What unique and innovative decentralized business models do you see companies exploring or adopting, and how do they differ from traditional models?
Jens: They are really a couple. For example, clearing and settlement is a promising decentralized business model, allowing parties to settle directly between themselves without the need for an additional service provider in between. Decentralized physical infrastructure networks are also very interesting. Instead of just building the infrastructure on our own, telecom companies or infrastructure providers can also interact with users to motivate them to set up the network infrastructure. Is it a model that will fly in the future? No one knows for sure right now. But we think it’s important to try to understand how the mechanisms work.
Marcus: Then there are the more diverse things, loyalty programs, etc. What’s interesting is the composition. There are so many opportunities. For example, we’re working on a way to incentivize employees to do more online training, and we thought we could incentivize them by giving them reward codes. This is a simple enough idea. But what could these bonus codes be? This could be by planting trees via an on-chain carbon offset protocol or on-chain digital rewards. So you can mint an educational token that can be exchanged for a carbon offset token. Because they are on the same chain, it is very easy to connect them together. You don’t have to create huge backends because this is natively part of the blockchain. Easy installation with supported digital property. This is one of the superpowers of blockchain.
Markus Schorn is a bestselling author and private consultant on emerging technologies and business models. He is an expert in digital transformation and innovation across industries and revenue models.
Jens Herrmann brings more than 18 years of experience and passion for technology, business and entrepreneurship to his work in blockchain, Web3 and the metaverse. His focus includes leading and advising key developments in telecom blockchain projects, data trends, and challenges in decentralization.
In-depth reading:
https://www.telekom.com/en/company/topic-specials/special-blockchain
https://geschaeftskunden.telekom.de/digitale-loesungen/infrastructure-as-a-service/stake-en
