Enabling autonomous and secure smart objects by utilising blockchain-technology
Internet of things (IOT) is described as the third wave of information technology driven competition. The transformation from mechanical products to products where information technology is a part of the product itself, is making way for IOT. Smart connected products pave the way for new business opportunities, autonomous products and cloud services that store and analyse product data. IOT enables objects to communicate, sense their environment and based on information processing, make decisions without human interaction.
Devices and objects that will play a key role in IOT are smartphones, RFID-tags, sensors and other devices that are able to communicate and interact with each other and their environment. IOT has the ability to enhance consumer products as well as business related products and processes. The boundary between the physical and virtual world will be more blurred with the influx of IOT.
IOT also poses a number of challenges that needs to be resolved before widespread adoption. When every object, product and thing have the ability to be equipped with technology that enables tracking, sensing of environments and autonomous behaviour, the importance of privacy, security and trust becomes top priority. Autonomous behaviour and decision making will also require a method of ensuring and validating every action that are conducted by the smart objects.
The IOT paradigm will also lead to the generation of massive amounts of data from smart objects that enables vendors to personalize the user experience and help product development in creating new offerings to the market. Companies needs to adapt their business to encompass the new paradigm. General Electric (GE) decided to embrace the IOT paradigm after competitors threatened to steal market shares by utilizing smart objects. In 2011, GE decided to invest billions of dollars in developing a industrial internet consisting of smart objects feeding a cloud with data that can be utilized through advanced analytics and algorithms.
This post will elaborate on key concepts in relation to IOT and the blockchain technology will be proposed as a way of complementing the use of smart objects to ensure a secure and transparent network of autonomous things.
IoT, big data, privacy and the blockchain
The internet of things is a paradigm that will affect consumer products and business models. The way a business creates values for its customers and how the organization capitalises on its value creations will change with the arrival of smart objects and IOT. A description of the new IOT paradigm will be given in regard to how it affects value creation. Big data, privacy and the blockchain will then be described as challenges posed by IOT (big data and privacy) and a proposed solution to these challenges (blockchain).
A new paradigm IOT challenges the current method of product development. Historically, products are rapidly changing to meet customer expectations and are often outdated after a short period on the market. With IOT comes the ability to continuously adapt products and product ranges to meet the rapidly changing market and user requirements.
GE utilized IOT by changing its value creation in relation to a wind farm and partnership with E.ON, a global energy provider. Traditionally, when power demands increase, GE would try to sell more power generating equipment to companies who generate power. By utilizing data and advanced analytics, E.ON and GE met demands through real-time analysis and control by making a little investment in technology that made it possible to connect all of the turbines in a network. By utilizing massive amounts of data, GE are able to optimise performance of equipment and implement intelligent preventive maintenance.
Big Data By creating objects and products that are able to sense their environments and report its status to a cloud, massive amounts of data will be generated. The data can be utilized by consumers and companies to improve value creation and daily life. Big data enables companies to measure and obtain deeper knowledge about its operation, leading to improved decision making. Until now, big data has only been available to digital companies such as Facebook, Twitter, Google and other companies collecting data about its users in the digital space. IOT will be able to transfer this opportunity to also include the physical world.
Big data is described using the three V’s: large amounts of data (Volume), data that is being generated at high speed (Velocity) or data that comes in different formats (Variety). The data collected is also often unstructured and contains a lot of noise, but patterns and knowledge can be found using algorithms and analytics. Research have also shown that data driven organizations are 6% more profitable than competitors while being 5% more productive.
Privacy In a world where smart objects are becoming more widespread and data about individuals and companies are fed into the cloud, the privacy of people and companies needs to be guaranteed by vendors. Smart objects such as smartphones, fitness trackers and smart watches are becoming popular in the consumer market and data about private health are being stored in the cloud. Personal health is considered an area that most people would like to keep private, but smart objects challenge this notion. Privacy can be seen as a social contract relative to the context of a given culture or society. The unwritten laws of privacy are often that one can listen to public conversations, but not take notice of it.
IBM is a company who sees great potential in smart objects such as RFID-technology, but at the same time the privacy challenges of smart objects are taken into account. Best practices are developed by IBM to ensure that RFID-technology does not intrude on user privacy and they are recommending their partners to do the same.
Bitcoin and the blockchain In an attempt to bypass financial institutions in relation to online payments, Bitcoin was proposed as a peer-to-peer solution relying on cryptography instead of a trusting third party. The system relies on honest nodes to stay secure, and incentives are in place to keep nodes honest. At the core of bitcoin lies a chain of blocks where each block is reliant on the previous blocks in the chain. The chain is also public and every transaction is available to every node who wants access. Since every block in the chain is reliant on all of the previous blocks, tampering with transactions becomes difficult as every block succeeding the tampered block also needs to be tampered with.
The nodes in the network are also confirming transactions and blocks as they are added to the chain. While several chains of blocks are possible, the longest chain will be extended given that the majority of CPU power is under control by honest nodes.
Blockchains can also be used for other purposes than handling the electronic currency of bitcoin, and can act as a public ledger that is hard to tamper with and can be verified at any given point in time.
The internet of things paradigm will change how companies drive and capitalize on value creation. Connected and intelligent smart objects enable functionality that can be divided into four areas: autonomy, monitoring, optimization and control. Smart objects will be able to act without human intervention, they will know their status and environment, they can be controlled remotely with commands and algorithms, and it will be possible to optimize performance of individual- or clusters of smart objects. Monitoring, optimization and control are all areas that are achievable, but the author argues that true autonomy requires a more robust solution. A smart object may be able to act without human intervention based on data and algorithms, but if a number of decisions require human control on later stages in a process, autonomy is not fully implemented.
The gap between IOT and autonomous smart objects requires open protocols, lookup services and interfaces. Autonomous objects will act on behalf of humans and trust needs to be established to enable such transactions. The proposed solution to better enable autonomous behaviour of smart objects is to implement a centralized blockchain, thus creating a central and verifiable ledger of every decision made by objects. Information about the localization of objects, owner history, status, maintenance etc. can also be stored in a blockchain. While IOT alone can create smart objects, it lacks a centralized authority to ensure that every decision and events are verified and traceable. For IOT and smart objects to succeed, a transparent and secure system needs to be implemented so that the system can be trusted. Such a system would also protect the privacy of individuals and companies.
Studies that investigates the internet of things and blockchain-technology is needed. Research papers available through the search engine Google Scholar containing such studies are lacking. The amount of computing power needed for the internet of things with a blockchain is also a field of future interest. As the blockchain is a CPU intensive system, the amount of computing power needed could be an important research area.
In this post, the paradigm of internet of things is described in relation to what it is and how it will affect value creation, privacy and the need for traceability and verification. A proposed solution to the challenges of traceability, verification and privacy is outlined. The solution proposed will also better enable fully autonomous smart objects that can act on behalf of its user/owner. The proposed solution is to implement a blockchain in relation to the internet of things so that every event is recorded as blocks in a chain. The solution is CPU intensive, but traceability, verification and security is preserved.
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