IoT and Blockchain: Benefits of Merging Trending Duo

In the last decade, several technologies emerged with the promise to revolutionize economy in general by disrupting almost every sector of the industry: AI, big data, IoT and Blockchain.

Despite adoption challenges which still exists, IoT is among the first to prove its value with the successful projects and implementations ranging from smart cities, healthcare, manducating and agriculture to smart home devices.

On the other hand blockchain with promises to change all aspects of digital business and huge hype created about it, is still in its infancy with many experimental promising initial use cases but still with a small number of implementation which can scale and bring the significant return of investment.

Benefits of IoT and Blockchain convergence

IBM has identified several benefits of using blockchain for IoT: building trust, reducing risk with superior security, reducing costs and acceleration of transaction.

Summarizing, we can say that benefits of IoT and blockchain convergence are twofold:

• Blockchain can answer to important IoT challenges
• IoT and blockchain combined can provide benefits across several industries, and in that way speed up the adoption of both technologies

Blockhan as an answer to IoT challenges

Security

The security issue is identified in many research and surveys as the highest concern among potential adopters of IoT technology.

With an estimated 8.4 billion IoT devices and predicted By 2020 that number could exceed 20 billion, and the fact that IoT devices are astonishingly insecure in current form, utilization of the blockchain comes as necessary.

Hackers have thus far managed to entirely disable cars remotely, control implanted cardiac devices, even used a refrigerator to attack businesses and launch the world’s largest DDoS attack.

With the most robust encryption standards, blockchain ensures a much-needed layer of the security in IoT stack. Any harmful, malignant and dangerous entity/actor will have to bypass this superior layer in order to access IoT data or IoT devices, which will make cyber attacks a way more difficult and time-consuming of possible at all.

Privacy

The use of encrypted, distributed verifiable place to store and share data also means that data can be trusted by all parties involved in the supply chain. Only those with an authorized cryptographic public and private key can read the information, or with no human oversight, machines and smart devices will securely record transactions that take place between themselves.

Furthermore, once data it’s stored in the chain, it cannot be changed or modified in any way, which makes collected data absolutely accurate and precise.

This also implies that hackers can’t collect confidential or sensitive information by compromising IoT devices or manipulate the system in any other way.

Blockchain & IoT use cases across several industries

Besides security and privacy, smart contracts provided by the blockchain technology are also considered as the game-changer for IoT applications.

Basically, with the encoded logic, it is possible to create agreements which will be executed when certain conditions are met. This can be useful as the foundation for many use cases and different scenarios.

Supply Chain

The biggest benefits of the IoT and Blockchain convergence is expected in Supply Chain and logistic in several industries.

IBM, Maersk and 40 other organizations are trying to improve and speed up a very complex and time-consuming process of international trade and shipping and bring transparency to its unavoidable bureaucracy.

Blockchain technology with IoT and sensor data ranging from temperature control to container weight, enable shippers, shipping lines, freight forwarders, port and terminal operators, inland transportation and customs authorities to interact more efficiently through real-time access to shipping data and shipping documents in single shared view of a transaction without compromising details, privacy or confidentiality.

Using blockchain smart contracts allows all these parties involved in international trade to collaborate in cross-organizational business processes and information exchanges, all backed by a secure, non-repudiable audit trail.

IBM has launched another supply chain initiative that harnesses the compound of IoT and Blockchain.

Together with Wallmart, they are trying to address longstanding problems around food safety and traceability since nearly 28 million people fall ill in the United States every year as a result of foodborne illnesses.

To efficiently address those issues, and at the same time prevent massive losses for retailers and suppliers during a recall, IBM and Walmart developed a solution to track products in near real-time through its supply chain, from the farm to the consumer.

All participants, from growers, suppliers, processors, distributors, retailers, regulators, to consumers, have access to secure, reliable and traceable information regarding the origin and state of food for their transactions.

Each node on the blockchain could represent an entity that has handled the food on the way to the store, making it much easier and faster to see if one of the affected farms sold infected supply to a particular location with much greater precision.

Before moving the process to the blockchain, it typically took approximately 7 days to trace the source of food. With the blockchain, it’s been reduced to 2.2 seconds. That significantly reduces the possibility that infected food will reach the consumer.

Logistics

Pharma and many other industries are considering solutions that can generate value leveraging on IoT and blockchain in a relevant way.

In the context of strict regulations, whereby proof is needed that shipped medicines have not been exposed to specific conditions that might compromise their quality (mainly on the level of temperature), the IoT sensor data is verified against predetermined conditions in a smart contract in the blockchain, to offer this proof.

The contract validates that the conditions meet all of the requirements set out by the sender, their clients, or a regulator and triggers various actions: notifications to sender and receiver, payment, or release of goods.

Solving counterfeit goods problem

According to The International Chamber of Commerce negative impacts of counterfeiting and piracy are projected to drain US$4.2 trillion from the global economy.

Counterfeit goods are everywhere -fashion and retail products, digital gadgets and media, software — but the most severe implications are in the pharmaceutical market where counterfeit drugs are now responsible for around 1 million deaths per year.

Tracking drugs on the blockchain throughout their lifecycle — from manufacturer to end consumer, could facilitate counterfeit drug identification or assist drug recall management.

Blockchain’s smart contract functionality with a digital signature along with the use of IoT devices could deliver an effective, real-time tracking as the drug moves through the supply chain, with complete transparency and verifiable proof of what has been delivered to who and by whom.

Insurance

The compound of blockchain and the Internet of Things is shifting ahead of the simple telematics model to the connection of real-time IoT data in several intelligent automated insurance policy applications.

Thus claims management, fraud management, health insurance, and property & casualty insurance will be improved in many ways with smart contracts combined with IoT data from wearable personal technologies, sensors on objects (vehicles, shipping containers), location-based sensors (factories, warehouses, homes, alarms, cameras, industrial control systems).

For insurers that have relied on agents and brokers, the ability to directly access objective, unfiltered granular and precise customer data will represent an enormous change.

Peer-to-peer energy trading and facility optimization

Building and facility management and building energy management is one of the areas where IoT technology already proves its value.

Brooklyn Microgrid is one of the interesting projects where the convergence of Blockchain and IoT improves energy efficiency and facility optimization trough peer-to-peer marketplace for distributed energy, in this case, coming from local solar microgrid.

Neighbors in Brooklyn are buying and selling solar power from each other, but more than enabling small-scale trading of environmentally friendly electricity, this project will have battery storage units within the grid in order to ensure supply during the next storm-related emergency.

Smart meters except measuring energy production and consumption, communicate with each other and form blockchain where these transactions are taking place.

The potential of blockchain and IoT in the energy industry could be transformative, and over the past two years, we have seen a host of startups with similar peer-to-peer marketplaces for distributed energy, trying to disrupt global energy market, still trapped in a previous era.