The Internet of Things is rapidly expanding its potential to transform everyday life with smart homes, cities, farms and manufacturing facilities. There are huge growth prospects for the market, when considering the prediction of the Gartner report that there will be more than 20 billion connected things by 2020.
This development is already taking place, however, he current server infrastructure and internet architecture is unlikely to be able to support the imminent IoT revolution. With so many devices connected to the internet, management and security are a concern. The servers will become overloaded and represent a single point of failure, making the system vulnerable to cyber-attack. A possible solution to this issue is blockchain technology, which is the distributed ledger behind virtual currencies, such as Bitcoin.
Released as open source software, blockchain is basically a public ledger of all cryptocurrency transactions that have ever been executed. Transactions are added as blocks in a linear, chronological order by a “node” or computer connected to the Bitcoin network. It makes for a complete and accurate recording of transactional data from the very first block to the current. It was developed and released by the mysterious Satoshi Nakamoto, which may in fact be a pseudonym for a person or group of people.
The blockchain fundamentals
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Blockchain allows digital information to be distributed but not copied and in doing so has created a new type of internet that seems incorruptible. Initially designed for financial transactions blockchain technology can be used to record just about anything of value. The objective is to create a single version of any particular transaction, containing more information than what can be offered by any one singular system, revealing transparent, real-time data for various uses.
The technology itself underpinning blockchain consists of encryption enabling security and anonymity, mutual consensus verification resulting in collective network updates and hence an accurate dataset at all times without the need for a central governing authority.
There are, however, challenges and in the early phase of development these are to be expected. Standardization of the input models and computational costs need to be taken into consideration before broadly implementing this system. Concerns regarding the nascent technology and vast computing power that is required to enable the fast transaction speeds and verification processes may be a limiting factor. Additionally, there may be integration issues as a shift to a decentralized network is necessary for this technology to succeed.
The benefits of blockchain for IoT
By providing a secure mesh network, blockchain can deliver a platform for IoT to interconnect reliably and avoid the threats that plague central server models. There are companies already using blockchain to power IoT systems, especially in the agriculture and manufacturing industries where there is a need for remote sensors and automation. IoT, powered by blockchain technology, enables a low power, secure network that can remotely manage physical operations without centralized cloud servers.
Smart homes are the next port of call for blockchain technology, as demonstrated by Telestra, the Australian telecom. The company is using blockchain to secure smart home IoT ecosystems by storing biometric and authentication data on a private blockchain. In this way, blockchain is able to verify identity of IoT devices and the people interacting with them to prevent compromised devices usurping the platform.
The future of IoT
Right now, IoT is mainly concerned with collection of data, remote monitoring and device automation. Going forward, the transition is likely to be towards a network of autonomous devices that interact with each other and the surrounding; and make input-based smart decisions, without any human involvement.
Blockchain has the potential to support this communal economy based on machine-to-machine interactions. For example, one scenario comprises a smart washing machine that automatically orders and pays for detergent with virtual currency on depletion. It has the ability to negotiate the price through smart contracts and takes into consideration the owner’s preference.
Blockchain will permit the monetization of data, whereby IoT device owners can sell data generated from IoT sensors for digital currency. The potential here is to facilitate investments into renewable energy sources, whereby energy produced by IoT equipment generates income in the form of cryptocurrency that is registered on the blockchain.
There are many promising developments in the field of IoT, made all the more thought-provoking and sustainable with the implementation of blockchain technology. With the ability to create a secure and equal framework for interactions, where no one individual is in charge, incidentally levels the playing field and opens a development platform for digital entrepreneurs.
It is still early days for this technology and developers are still ironing out the kinks. It is likely that in the foreseeable future, blockchain will become the broad scale technology underpinning IoT.
Date:June 07, 2017