At first glance, they may not seem like they have anything to do with each other. But when technology trends as hot as the Internet of Things (IoT) and blockchain are involved, you can bet that lots of smart, ambitious people are working overtime to find ways to leverage both at the same time.
The biggest connection, naturally, revolves around security issues. Many companies and pundits see blockchain as a powerful way to bring scalable, decentralized security and trust to IoT devices, applications and platforms, which are similarly distributed and decentralized.
Earlier this month, for example, IBM spotlighted blockchain’s “potential to securely unlock the business and operational value of Internet of Things.” The combination could securely track and register the history of individual items and packages, creating audit trails and enabling new types of “smart contracts.” And blockchain technology could provide a simple infrastructure for two devices to directly transfer a piece of property such as money or data between one another with a secured and reliable time-stamped contractual handshake.
The company hosted a panel — Combining IoT and Blockchain Toward New Levels of Trust — designed to help customers “understand the benefits and constraints of blockchain as a public, decentralized, and autonomous technology that can serve as a foundational element supporting IoT solutions.”
One panelist, Michael Casey, a partner at Agentic Group and a senior advisor for MIT Digital Currency Initiative (DCI), called blockchain “the truth machine.” Economist and MIT professor Christian Catalini was more measured, saying blockchain is using an “ecosystem perspective” to drastically reducing the “cost of verification” and the “cost of networking” for all kinds of transactions, including IoT transactions — without having “to give too much control to one single entity.” That can go a long way towards making IoT networks more resilient to attacks, he said.
Dell’s Jason Compton, meanwhile, wrote last year that blockchain “offers an intriguing alternative” to conventional IoT security approaches. “Because blockchain is built for decentralized control, a security scheme based on it should be more scalable,” Compton wrote. But he also warned that solving IoT security issues will be a tougher problem than Bitcoin, for example.
Blockchain provides more than just security
But “blockchain technology can improve not just compliance … but also IoT features and cost-efficiency,”notes i-Scoop. Since blockchain is all about “applications that involve transaction and interactions,” it fits well to monitor IoT processes with “smart contracts … automatically carried out when a specific condition is met, for instance regarding the conditions of goods or environmental conditions.”
Specifically, blockchain can support IoT identity and discovery, facilitate micro-transactions and establish proof of payment among IoT devices.
4 ways IoT can use blockchain technology
In fact, vendors are already working to make the IoT-blockchain connection in multiple ways. A recent whitepaper from Siva Gopal at Tata Consultancy Services suggest four ways IoT can exploit blockchain technology:
- Trust building
- Cost reduction
- Accelerated data exchanges
- Scaled security
Basically, as i-Scoop puts it, “Blockchain technology could provide a simple infrastructure for two devices to directly transfer a piece of property such as money or data between one another with a secured and reliable time-stamped contractual handshake.”
Real-world IoT-blockchain examples
According to Hackernoon, Korean industrial giant Hyundai is backing IoT blockchain startup HDAC (Hyundai Digital Asset Currency), which is building its own private blockchain designed specifically for IoT.
And Blockchain startup Filament recently announced a new chip designed to enable industrial IoT devices to work with multiple blockchain technologies. The idea behind Filament’s Blocklet chip is to let [IoT] sensor data be coded directly into the blockchain. Again, the goal is to “provide a secure foundation for decentralized interaction and exchange.” (Emphasis mine.)
Of course, many operational and compatibility issues remain to be addressed, much less solved. And the legal and compliance issues raised by IoT-blockchain combinations have yet to be sorted out. Still, given the momentum behind technologies individually, and the potential synergies between them, the combination of IoT and blockchain is on track to arrive very soon.