Blockchain and IoT
According to recent estimates, an average person creates almost a Gigabyte of data each day. With this statistic in mind, the idea of an ecosystem of ‘smart’ everyday devices interacting with us during our daily activities, otherwise known as the Internet of Things, seems less outlandish and more a reality. Our usage of devices and their own individual activity, whether for personal reasons or industry applications, will require new, secure decentralized networks in order to support the huge swaths of data said devices produce. This futuristic phenomenon provides one of the most exciting blockchain use cases.
Current IoT networks rely on centralized communication processes, known as the ‘Server/Client Paradigm.’ This means that any interaction between devices needs to be processed by a monolithic, central database, even if they are positioned next to each other. While this method has allowed the internet as we know it to flourish, it is not sustainable to process the waves of data that future IoT networks will produce and demand to support. Applying traditional centralized, cloud-based data processing solutions to IoT networks would carry unsustainably high infrastructure and maintenance costs.
The implications of IoT are as important for the end user as for the global industry. This technological phenomenon will vastly improve the collection of data, especially how, when, where and why it is collected. However, as we progress into this ‘Internet of Things’, obvious security concerns come to mind. The idea of a rogue device, virus, or agent taking over and disrupting our homes or transportation systems has been used to scare viewers in many science-fiction films.
The threat of vulnerability of traditional network infrastructures supporting IoT ecosystems couldn’t be more real. A recent International Data Corporation (IDC) study estimated that 90% of companies that currently use IoT will suffer a IoT-based break in of their back-end by end of 2017. Whether that figure held true across all industries, it signified a professional research body identifying a glaring issue of vulnerability that is facing the current model of supporting IoT data networks. The decentralized, encrypted technology provided by blockchain will not only help secure these future micro-systems, but will open up new avenues of processing data and empowering the individual user.
It is estimated that by 2025, there will be more than 80 billion inter-connected devices around the globe. Blockchain can help IoT machines drastically improve industries such as agriculture, manufacturing, transportation and as well as consumer-based applications. Collecting and controlling data from such newly found networks will help civilization gather better insights and make better choices about how to optimize life, or increase cost-efficiency of a particular process. However, as these networks progress and get more sophisticated, with potentially millions of similar devices joining a particular network, new methods of network administration and scalability will have to be invented in order to facilitate the traffic that will arise.
Blockchain and the Internet of Things
In order to avoid major crashes and system failures, blockchain IoT networks could use a decentralized ledger to store and process swaths of data, as well as various requests, all at the same time.
Introducing blockchain into this equation will allow future IoT networks to benefit from being supported by and stored on billions of devices that compile it. This blockchain example will drastically improve computation capabilities and prevent major network disruption with traffic being evenly distributed across a plethora of nodes.
When discussing the blockchain use cases of future smart machines interacting with not only human recipients, but also each other in real time, we can envision the key role smart contracts will play in ensuring each party fulfils its part of the working relationship. Going a step further, its also within reason to assume the existence of blockchain IoT applications as a combination of a multitude of smart contracts with a human-focused interface. Within the context of smart contracts, we can predict a future where smart machines interact with a ledger based on their specific preconditions. For example, an insurance company can automatically adjust rates for an automobile, or apartment properties depending on particular parametres and current state to make sure the end user benefits from dynamic, case-dependant prices.
The tokenization feature of a blockchain IoT also means that smart machines can be used for revenue generation. Through tokenization, IoT device owners will, for example, be able to use blockchain to manage and sell data they generate for digital currency.