A Blockchain Connected World
Key Takeaway: Blockchain technology may be the missing link to resolve common IoT issues such as scalability, security, and reliability.
The Internet of Things is the next frontier in tech innovation – enabling free-flowing conversations between humans, machines, software, and hardware. Rapid technological change has enabled billions of people to connect via the internet. According to Cisco, upwards of 50 billion connected devices will hit the market by 2020. With so many connected devices all sending, receiving, and processing instructions the sheer amount of data now available is overwhelming to the average organization. While data overload is by no means a new phenomenon for the tech sector, advances in wireless technology and the standardization of communication protocols is finally making it possible to collect this data almost anywhere and at any time and process it to generate actionable insights into machine behavior. These developments pose significant and novel security, analytical, and data storage problems that, experts fear, may not scale well with today’s traditionally centralized infrastructure systems.
So how can Blockchain technology revolution the Internet of Things? Blockchain can help eliminate some of the more vulnerable mechanisms associated with always-connected, always-on devices and the proliferation of disparate and uneven networks. These devices often carry sensitive information, such as customer data or trade secrets, making data and network security an expensive proposition. Blockchain can eliminate the threat posed by single points of failure by introducing a decentralized approach and ensuring that compromised devices cannot disrupt or create false records within a business process, creating a more resilient ecosystem for connected devices. Such single points of failure could otherwise cause large scale outages in centralized systems. Let’s look at a few examples that illustrate how Blockchain could change the nature of the IoT for the better:
#1: Supply chain tracking with connected devices and sensors
Blockchain can be used to automate the tracking of cargo containers with integrated sensors from one destination to the next. These cargo containers are virtually untouched by human hands, their movements recorded securely in cryptographic ledgers. Indeed this use case is already a reality with some pioneering companies. Walmart has teamed up with IBM and Beijing’s Tsinghua University to automatically track the movement of pork shipments across the Chinese countryside. By removing the human element, companies can greatly reduce the risk of theft, spoilage, and counterfeiting. Blockchain provides another time-saving and money-saving advantage – reducing tedious paperwork. Some experts predict that a large cargo shipper can generate as much as 1 kg of written paperwork which often needs to be signed off manually.
#2: Self repair and maintenance
Residential or commercial devices and machines within a network, such as industrial systems, smart appliances, or connected vehicles could access and automatically leverage the data collected on a blockchain. This data could be used to verify operational or network problems and automatically optimize device usage, order required resources such as spare or replacement parts, and execute software updates as needed. It could also be used to signal that manual intervention is needed by human workers. Industries such as insurance could, for example, use a blockchains smart contract technology to automatically activate a claim when an IoT sensor measures a defect or accident.
#3: Securing networks
Blockchain technologies allow IoT devices to securely interconnect through cryptography, reducing vulnerability to device spoofing and impersonation attempts. Connected devices can identify and authenticate one another using nodes without having to utilize a centralized broker or certification authority. Blockchain can also provide a way to track the history of individual devices by recording all operational data exchanges, making detection and auditing much easier for network administrators.