Polkadot Is Deutsche Telekom’s Latest Crypto Experiment

Deutsche Telekom’s T-Systems purchased a “significant” amount of DOT tokens “to put its money where its mouth is,” according to blockchain lead Andreas Dittrich.

Dec 21, 2021 at 11:19 a.m. UTC
Updated Dec 21, 2021 at 4:06 p.m. UTC

Europe’s biggest telecommunications company, Deutsche Telekom AG, is throwing its weight behind Polkadot, an interoperable framework of public blockchains created by Ethereum co-founder Gavin Wood.

Deutsche Telekom’s digital innovation subsidiary, T-Systems Multimedia Solutions (MMS), is no slouch when it comes to supporting blockchain tech.

The telco has already gone deep into the space by providing infrastructure support (as well as participation in) the proof-of-stake (PoS) consensus mechanisms of blockchain oracle service Chainlink; Flow from non-fungible token (NFT) pioneer Dapper Labs; and Celo, a mobile-first payment network.

But by diving into Polkadot, Deutsche’s innovation department is going one step further: T-Systems will not only be providing node-running infrastructure to users staking assets on Polkadot, but the firm has also purchased a “significant” trove of Polkadot’s native cryptocurrency, DOT, to stake on its own behalf, which has involved integrating a crypto business function into the telco’s accounting system.

While Polkadot will be the fourth blockchain Deutsche Telekom is working with, it is the first network T-Systems evaluated for running infrastructure, and has been on the firm’s radar from the beginning, said Andreas Dittrich, head of Deutsche Telekom’s Blockchain Solutions Center. As such, T-Systems will be running several validators, both private and public, for the Polkadot network, Dittrich explained.

“Like we did before with Celo, we are also investing in DOT tokens to be able to participate in the governance of the network, and basically put our money where our mouth is to support our infrastructure case,” Dittrich said in an interview with CoinDesk. “The main difference now is that this is not a VC [venture capital] or innovation budget anymore; we are doing this from our business unit. So this really has become a business case for us. I have to say, I’m really proud we are doing this.”

T-Systems may have had to wait a year or two until Polkadot was up and running, but the timing of this audacious move is sharp: The network’s first “parachains” went live over the weekend.

Currently, decentralized finance (DeFi) applications, stablecoins and Ethereum-compatibility protocols are the focus of the “layer 1″ networks anchored to the “layer 0″ that is Polkadot. Layer 1 refers to blockchains that run independently of other blockchains – as contrasted with “layer 2″ systems that aim to speed up transactions on existing blockchains like Ethereum.

In terms of use cases that T-Systems might identify, Dittrich pointed to the early days of enterprise blockchain, when Deutsche Telekom joined the Linux-affiliated Hyperledger stable of permissioned ledgers.

“I think the opportunities that Polkadot provides for enterprise use cases are really interesting,” Dittrich said. “It gives you the flexibility and security of a public, permissionless blockchain, but it has both a separation of concerns by parachains, and interoperability among use cases. So even the good old supply-chain use case could make a lot of sense on Polkadot, and I know that big industry consortia are definitely eyeing that ecosystem.”

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Ian Allison is a senior reporter at CoinDesk.