Despite growing adoption, trust is often the missing component for businesses to fully embrace IoT technology. After all, if we are going to make real-time, automated and critical decisions or transactions based on IoT data, we need to know it is accurate and true and has not been tampered with or compromised.
For example, how can we be sure that the temperature gauge is working and calibrated, and it really is in the location it says it is? As IoT growth accelerates there will be too many devices and too much data for human checks and balances. And while big data technology is capable of processing and analysing large volumes of information, it does not provide sufficient transparency, security and trust.
Enter blockchain IoT. As a distributed database or ledger technology, blockchain stores and manages data in so-called blocks, encrypted and linked together to form a chain. Each block contains an immutable record of exactly when it was created, which cannot be corrupted, lost or changed without all the network knowing about it.
Public blockchains were developed for and largely associated with cryptocurrencies and are designed to treat all users equally and preserve an individual’s anonymity. With a public blockchain, anyone can download the peer-to-peer client software, view the ledger and interact with the blockchain. However, when it comes to enterprise applications – including managing IoT ecosystems – the strength of public blockchains also becomes a weakness and poses several challenges around privacy, control and transparency.
For many enterprises, the idea of allowing every participant to have complete access to the entire contents of the database is a major barrier. So, the next generation of private blockchain has a single authority or organisation that ultimately retains control, and no one can enter this type of network without proper authentication. This improves security and eliminates many of the illicit activities often associated with public blockchains and cryptocurrencies.
Private blockchains are ‘permissioned’, where participants are known or trusted and provide real- time checks and audits to validate the data. And with fewer nodes or participants needed to manage the blockchain, decisions and transactions can be supported and processed at a much higher speed.
For reasons of performance, as well as accountability and cost, private blockchains are more suited to enterprise IoT applications, where the technology empowers and supports the overall business rather than individual users.
Smart contracts are a key part of Blockchain IoT and are an agreement between two IoT devices, that takes place when certain pre-conditions are met. They play a fundamental role in the automated authorisation of transactions based on IoT data and providing a single version of the truth, distributed across participants. For example, if all IoT devices have smart contracts with the device makers, it could be used to update the device software automatically as soon as it becomes available. You would also know that the update was coming from a trusted source and not from some person or some thing posing as the device maker.
Smart contracts can also be used in supply chains underpinned by blockchain IoT technology. For example, perishable goods are typically subjected to varying environmental conditions as they pass through transportation and warehousing networks. By combining IoT and blockchain, the location, time and temperature data can be collected and incorporated into the blockchain to create an immutable history of the product as it passes through the supply chain. IoT sensors can also be placed in trucks to record key events on a blockchain to help manage fleet whereabouts and returns and to support more meaningful billing practices.
Blockchain can also help with user authentication in smart homes or cities for validation onto IoT devices. By creating immutable records of the people in your home or city using a blockchain, you have a single record to track authenticated users. This means there would be no need to manually provide access to each person every time you add a new device. By using connected sensors, lights, and meters, for example, data can be easily collected and analysed, ensuring round-the-clock functionality. Blockchain IoT, once again, provides the perfect foundation for smart city IoT devices such as air, light, noise and quality sensors, ensuring the security and validity of data.
A strong future together
By the end of this year, there will be 13.8bn connected IoT devices worldwide according to Statista – a number that’s expected to almost triple by the end of 2025. At the same time, the adoption of blockchain technology is also on the rise, with 84% of major businesses already actively involved, according to PwC.
This trend will be partly fuelled by the growing number of blockchain IoT use cases from manufacturing to retail, supply chain to mobility. Private blockchains will become the main contributor to blockchain market growth, according to Gartner. Private blockchains provide more opportunities to utilise the technology for blockchain IoT use cases and deliver higher efficiency, privacy, reliability, and transparency. Large enterprise blockchain-based IoT solutions will be custom developed according to business needs, while SMEs will take advantage of cost-effective pre-packaged solutions. Gartner forecasts that the business value generated by blockchain will reach $176bn by 2025 and $3.1tn by 2030.
– Originally written by Jonas Lundqvist, CEO, Haidrun –