Space Economy Applied Analysis
by Flow Collingwood
Introduction
The Space industry is a broad market featuring innovation which has made its way into our lives, from access to memory foam pillows to technologies like satellite navigation being available on devices like the smart watch on our wrist.
The traditional economy of Space, termed “Old Space” has given us much to enjoy with the utilitarian uses of the government funded programs becoming a series of necessity comfort goods and services which are often taken for granted when used in our daily lives. These advancements being offered to us has been seen as the commercial distillation and extraction of value from the Space Economy.
The emergence of New Space
Over the last decade, much has changed, previously launch costs and the complexity of navigating bureaucracies has kept Space out of reach for many ambitious businesses.
SpaceX has pushed development by designing new reusable rockets and propulsion technologies, more organizations can now access launch services. This has impacted on the downstream value we get from Space as we now have a growing eco system of new Space suppliers offering data from Space along with more of the world being connected through advancements in telecoms.
These changes to the traditional space economy, is creating a boom in new market entrants, technological advancement and use cases for Space.
Pan Galactic in the context of studying the New Space Economy
In this study of the New Space Economy, I have selected to play the part of an entrepreneur operating a Space business, I am currently the CEO and Co-founder in Pan Galactic, a UK Space company working to develop the future data infrastructure of Space.
The company has been selected for and completed a series of UK Space Agency Accelerator programs and recently won the UK SpaceTech Start-up of the Year award for 2024/2025.
Infographic: The New Space Economic Value Chain and Pan Galactic
Pan Galactic: An overview
Globally the Space economy is worth $548 Billion per year with commentators such as McKinsey stating that it expects the Space economy to grow to be worth $1.8 trillion per year by the year 2035.
Within the Space economy data accounts for 83% of the value we extract from Space UK Space Survey 2023. Space data is a critical component of 17.8% of the UK’s GDP annually.
It is for this reason that at Pan Galactic, we say that ‘Data is the Oil of Space’, it is the precious commodity which we extract from Space now, but it is also the fuel of the future Space economy because it serves to keep the industry connected, informed and growing. If the future is to expand the use of Space, then with it the infrastructure will need to grow to support it.
On Earth, we are also seeing significant parallel change in the web and computing as industries, and this has a bearing on how the new Space economy will evolve too.
Web technologies are evolving toward a new shift in the way user data is held with a shift toward user centric products such as blockchains, this is already being adopted by governments and the finance sector and is often termed as Web3.
Further into the future there are potential changes which also include automation and the use of AI as potential convergence of new technologies in the ‘Post Web’ era (Outlier Ventures etal 2024). This is important to consider as it will play into how future data economies operate on Earth and in Space.
Secondly, advancements in the world of Quantum computing will challenge data security. Quantum is a generationally significant technological advancement, it is a technology which will allow operators of quantum computers to decrypt even the most secure encryption methods such as RSA Encryption with relative ease. RSA is currently the gold standard of defense grade encryption which is the standard method used by US military contractors such as Northrop Grumman or KBR.
Space programs and the telecommunications sector, rely upon specific standards of cyber security and encryption for information which will soon be outmoded. This development in computing not only will make Space hardware using antiquated encryption vulnerable, but it also adds to the complexity for protecting them in the future.
The American standards organization NIST recently approved its first selection of approved encryption methods needed to keep systems safe from quantum computers and is planning to discontinue the use of old methods by 2035 according to their recent publications.
Pan Galactic also sees two other broader challenges for Space data, due to an increase threat of cyber-attacks, the Russian led ViaSat Hack in 2022 at the start of the Ukraine War which forced system outages, removing single points of failure might have mitigated the loss.
Using a distributed technology like blockchain would have created a hive-mind operation between satellites, allowing for missed data during an outage to be reinstated as a full system backup.
Cyber-attackers could also plant unreliable data, later relied upon by a user. Pan Galactic has identified that data integrity is critical for a system that could serve the Space economy. Blockchains record tamper-proof data with each data record being given its own digital signature which acts as a chain of provenance.
Pan Galactic’s short-term goal, is to create a safe and secure foundation, removing complexity by creating an easy-to-use platform which gives customers data integrity, data security for current and future threats, and resilience in their systems by removing single points of failure. This foundation, created to support current uses of Space, would be an advantage to Space operators and end users alike.
Long term, Pan Galactic’s vision is in building an infrastructure which could provide a base level ecosystem for a future Space economy capable of serving the ‘Beyond’ layer of the infographic. Pan Galactic is creating a platform which is easy to adopt, hardware agnostic and has functions which support the Space economy now and for the future.
Simplification
In order to make our infrastructure accessible we knew we need to save customers time, complexity and money first, and so to do this, we are building a software operating system, much like using Microsoft Windows, or MacOS, we are designing ‘GalacticOS’.
On the surface this is familiar for users and provides a useful platform for the user to create the set up they need for their own specific projects.
Beneath the familiar user experience, we are building-in the post quantum cryptography, the security features and creating a bespoke blockchain which allows the users to have the benefit of all these security, integrity and resilience features without having to understand or interact with them.
The benefits of the platform are designed to grow with every customer we onboard, the community of users makes the network more secure the larger it grows.
GalacticOS is a platform capable of hosting applications either from our own marketplace or those produced in house or by innovative developers, these applications to benefit from inheriting the same underlying cybersecurity and is a means to liberating the Space economy and foster growth and innovation through software and will open access to the Space industry to more people.
Layers in the New Space Value Chain and Pan Galactic
In the Upstream application of our products, we are working to secure satellites and in-orbit data center hardware now through partnerships with such as the one we have with AS23 its launch with Airbus and others to the ISS on the horizon.
Currently, we are also researching how we might also support our other partners in their avionics business by providing the encryption elements for the computers which launch vehicles use.
Downstream services supported by our product GalacticOS will start with applications to facilitate data processing in Space on in-orbit data centers.
We are building an application GalacticData on the platform which helps end users of Space data to be able to have the data they want to receive packaged up and sent down to earth. Data processing in Space reduces the file size being sent and increases the efficiency in time and money for sending data down.
On uses cases for beyond category of the infographic, Pan Galactic’s approach supports free market economics through software and data; by providing an ecosystem it is possible to create market for software which can support future space endeavors.
The future financial architecture of Space built on data
Space does not yet have financial technologies, nor an economic model which is agreed upon democratically, and regulation serves to undermine any one single nation’s claim emergent models from achieving mass adoption.
It would be a lost opportunity for humanity if we were to replicate the issues we have here on earth by trying to develop the Space economy based on the tenants of our terrestrial history and the inherent inequalities we might bring to Space.
Pan Galactic’s proposed approach to this specific issue, is creating an economic model which works for all is centered around tokenizing compute power and data transaction records as a model which is free from geopolitics and instead is based on the code serving as law.
This aim of decentralised finance is consistent with the key themes of arguably one of the most important pieces of regulation on Space, the Outer Space Treaty 1966 (United Nations), in so much that Space should be accessible to all countries and have no national claims of ownership or Space sovereignty.
It is proposed that the enforcement of using one nation’s currency as a de facto reserve currency for Space would be in contravention of the 1996 Treaty aims, owing to the fact that the nation from whence that currency came would benefit disproportionately beyond others from the future exploration of Space.
History shows different nations imposing economic sanctions on others, often using reserve currency as a weapon which can be seen in denial of access to international financial markets, building dependencies on one nations currency and nations not being able to priorities their own, to restrictions on trade and investment and the burden of sovereign debt to name a few examples.
Blockchains by their very nature, in being transparent systems with deterministic rules, providing certainty, seemingly provide a great opportunity at designing a new type of economic structure.
Bitcoin for example was founded specifically on these foundations as a reaction to the 2007/2008 economic crisis (Nakamoto 2008), serving as a cultural shift towards coded rules rather than the abuses on the citizen from the traditional finance system of the day.
The operation of blockchain based systems provide immutable records and thus to some degree, Pan Galactic’s Quantum Blockchain based eco system will serve to be a Universal Truth Machine providing computed proofs for participants in its eco system to rely upon.
This certainty forms part of the foundation of the better choice of methods of exchange we will see in Space in the future.
Instead of money being based upon assets like gold, or governments printing more money when they wish, the currency of Space in our vision, will relate to the use of a finite supply of tokens used for an increasing number and need for data transactions.
The creation of such tokens will be based on finite hard coded rules and initially issued to validators for their efforts in working to keep the ecosystem secure and maintained or users of the eco system.
Interestingly though, we are seeing the mass adoption by nations like the USA for such technologies as Bitcoin or other digital finance architectures with countries like the USA aiming to be a superpower within this area of tech (Bidder, R. 2024).
It is accepted that the quest by nations to increase their central holdings of similar assets such as Bitcoin and control it, somewhat diminishes the point of such technology.
Even still, the operation of such financial technology will be based upon code as law and may still be a better alternative to our traditional FIAT systems when applied to Space.
It is pertinent to state that blockchains are not a silver bullet by which we can solve all of the potential economic power plays of space finance.
However, at least creating an inherent lack of need for trust in institutions within such systems is helpful, as the honesty is hard coded and backed by the community of validators, this provides a better standing for building such an economy as the one we will need for Space.
Outside of the fintech of Space, blockchains used for data integrity, cyber security and resilience through distributed computing still remains our initial core focus, it is on these foundations on which we will need to stand for the longer term success of Pan Galactic’s business.
Value and Growth in the Space Economy
In returning to broach the layers of the New Space value chain now, the contrasting future Space market valuations by a number of prominent organizations has been considered.
The difficulty in drawing direct comparisons between these predictions, is the range of valuations, how far this value is calculated across differing timescales and space use cases.
This point is compounded by the article published by Center for Space Policy and Strategy (2024) entitled Rational Exuberance: Understanding value and performance in the Space Economy. The critique of market valuations the paper discusses centers on the varying degree to which either ‘top down’, ‘bottom up’ and ‘derived economic value models’ are used as the basis for forecasting from the plethora of organizations stating the future value of Space.
The analysis of our study of the Space Economy has referred to the $1.8 trillion by 2035 predicted by McKinsey and the World Economic Forum (WEF) in April 2024 which on reading seems to consider the broader range of calculation and whose thinking seems to be matched by analysists at Deloitte in their referencing predictions that space will reach $1 Tillion by 2040.
For the purposes of this analysis, the choice has been made to consider the stance of McKinsey, WEF and Deloitte to be the closest to ‘prevailing wisdom’ in future forecasting. It is also noted that Deloitte put a heavy focus on the impact of Space data in their analysis too and this particular segment is of specific interest to Pan Galactic’s business.
From valuation studies to the new breed of businesses charting the path
Whilst it can be easy to be swept up in considering exuberant future forecasts made by expert analysists, we also need to consider the future class of innovators coming to the fore who will drive this growth.
In established players, we see incumbents like SpaceX, Axiom, D Orbit and others leading the charge on New Space raising significant investment and incrementally improving the commercial infrastructure of Space with enhanced capabilities, lower costs, increased sustainability and reduced complexity.
One of the more exciting areas of New Space development is coming from the start-up community which is now also triggering new investment interests from private equity and venture capitalists.
This next generation of Space industry innovators is set to shift the paradigm of what we believe the Space economy today, toward the future which the analysts predict. An example of which is the current momentum behind in-orbit data center businesses, operating to process data in Space.
Whilst this paper has spoken about Pan Galactic’s plans in this area, first providing the software infrastructure and later considering pursuing hardware into our business model, a great example of a leading Space business set to do great things is, the US start-up Lumen Orbit.
Lumen Orbit is set to create solar powered in orbit data centers in VLEO, working towards the creation of a 4km squared solar panel array and then hosting data center hardware in order to offset the carbon associated with the needs of AI computation on earth to be done more sustainably in Space. In 2045, it is thought that the compute power needed to power the AI systems of the future will match that of the total compute power we use across all computation globally today (Feilden 2024).
Lumen Orbit recently completed the one of the world’s most celebrated tech accelerators Y Combinator and raised $2.2 Million at demo day to then go on and just a few months later run their next round of $11 million in funding which attracted over 200 VCs who wanted to invest in the business. This is a sign of things to come and a great shift in investor interest into the Space industry.
This is exciting for Pan Galactic, as the business is operating in the right area of the new Space economy at the right time, with a specifically useful product range to this new focus for Space.
Investment trends with the move from major investment funds such as Y Combinator, A16Z, Sequoia Capital and others joining the Space investment ranks alongside leaders such as Seraphim Space. The investment landscape is changing, the challenge here though, is educating new investors on the challenges of Space, long lead times for deployment and the capital-intensive nature of the industry.
If an investor can stomach this level of risk the potential upside is financially significant, with the impact of such investments having potentially game changing ROI for humanity in the long term.
The future of the Space Economy and Pan Galactic
In final analysis of the future Space Economy there is much to digest, this paper has discussed much of the emergence of New Space, its value chain and also highlighted some of the new businesses changing the landscape.
Space by its very nature presents the opportunity to problem solve and develop new innovation, which has long since had a trickle-down effect into our daily lives, introducing everything from satellite navigation, mobile connectivity, to more lesser-known advantages such as technologies protecting our national security, assisting the finance markets and others.
The steep learning curves and unknown nature of Space presents a high bar but keeps the innovation coming and from the bravest and best minds working in the industry, and we are all better for it, knowingly or unknowingly.
The challenges for businesses to operate in the space economy are numerous, including everything from the uncertainty of success of hardware in Space, the complexities of compliance, regulation and insurance to significant costs associated with Space activities.
All of such challenges including the standard scope of business risk management apply to our business at Pan Galactic.
At the moment, the current main technological narratives have come to marry closely to those assumptions on which we have built the business since we started in 2022, and we are seeing opportunities arising because of that.
The future success of our project will require us to balance risk mitigation, expand our team and accelerate production of our eco system in order to capitalize on the opportunities before us.
Conclusion
It is the submitted view that if the rate of advancement in the upstream launch and transport areas of the industry continue to economize at the rate they are, we will see continued knock on effects to the downstream application of Space and acceleration of the next phase of physical infrastructure such as in-orbit gas stations and commercial space stations.
In a world where we are continually interconnected by web and data, we will see the advancement of Space continue, with a greater need for next generation data technologies like GalacticOS.
Pan Galactic is working to be the supporting infrastructure for these Space market changes, with the aim of improving how data is managed and protected for the future success of the new space economy.
Interest in Space from investors and the general public is on the rise again thanks to the efforts of the leaders of the new Space economy and we feel that Pan Galactic has a key piece of the puzzle which makes up the true picture of the future.
Our task now is to capitalize on this opportunity and work to position Pan Galactic to be to data what SpaceX is to launch services.
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