The Intersection of IoT and Blockchain

A key element of my investment thesis has been that entrepreneurs innovate when institutions can’t — or won’t. That’s especially true in networking, where I’ve been proud to back winners who innovated their way past skeptics to create incredible value in the tech ecosystem. When networking was first rolled out into public networks, our support of TCP/IP was dismissed and telecom monopolies wanted to use the archaic ATM architecture to support public data networks in 1996. TCP/IP didn’t end up just extending beyond wired networks; it became the framework for whole industries that were built to make wireless communications an integral part of the world’s daily work and personal lives. Starting today, blockchain is going to fuel innovation in the Internet of Things just like TCP/IP did in the world of wireless.

The historical context above helps illustrate my point. When the wireless world was thinking of voice, innovators were thinking of data and TCP/IP. Innovators are always three moves ahead of the rest of us, and TCP/IP drove a wireless revolution that wired telcos couldn’t capitalize on. Brands like AT&T were made irrelevant and reconfigured (AT&T was essentially sold to Cingular in a complex multi-part transaction), and companies like Cisco, known as enterprise vendors back then, became household names.

Yet the more things change, the more they stay the same. Institutions like the telcos and Cisco, who were once innovators but are now incumbents — rose but then became complacent. They’ve been touting the promise of the Internet of Things for years, but consumers and the tech industry have seen little real progress outside of the occasional connected thermostat or wireless speaker, and even mature technology like Bluetooth gets glitchy after a few meters. A world that was once chomping at the bit to embrace IoT now regards it with a healthy dose of skepticism.

Helium, one of Khosla Ventures’ portfolio companies, is using a bleeding edge combination of RF (radio) and a protocol blockchain to deliver IoT from its past missteps and create unbelievable value — and doing it faster than telecom giants could ever hope to and in a way compatible with TCP/IP. The blockchain adds unique capabilities which no network can offer. Decentralization, security, and native geolocation are built-in. At scale, Helium adds exactly what’s missing in IoT — a new layer of connectivity that is less power-hungry than WiFi, has more range than Bluetooth, and is much more affordable than cellular. A physical blockchain providing an incentivization and economic layer for radio communication is a blueprint that can be applied to other networking technologies, even potentially disrupting cellular networks and city-wide WiFi infrastructure.

Helium’s low-power, long-range connectivity doesn’t just deliver on what IoT should have done already, it solves some of the Fortune 500’s biggest problems. A sensor that fits in the top of a vial and costs practically nothing to monitor allows life sciences companies to visualize the location, temperature, and ambient conditions of vaccines as they are distributed globally. The same technology keeps track of goods in factories, enables new smart home solutions, monitors utility infrastructure, and much more.

But most interestingly, Helium is accelerating deployment of its networking technology by using blockchain to incentivize deployment, provision infrastructure, and bill usage. Most blockchain projects largely remain outside the domain of physical solutions, but Helium is using blockchain as a catalyst for change and value creation. IOT networks free to telco pricing will need strong network effects and the blockchain is perfect for creating such a network effect, compensating those who take the risk of joining early far more than those who join later. In Helium’s case, the blockchain levels the playing field for anyone, regardless of means, to be a network provider and earn passive income. The cost of deploying smart cities solutions should decrease dramatically making it possible to bring benefits of innovation to the most impoverished communities. These kinds of approaches are few and far between, but they have the power to change the world.

MIT’s Technology Review has always been great at being out in front of the biggest tech trends. This story is a terrific breakdown of Helium. Watch this space to see how blockchain can create a new decentralized machine network and disrupt the IoT industry. It won’t be the last you read about Helium. If you want to continue the conversation, please join Helium here.

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