Data-Driven Opportunities: Pairing Blockchain with IoT

Part 1 of 3 of a Series on Democratizing Investment

In this month’s edition, we’ll examine the value of harnessing IoT and blockchain’s vast potential for data-driven businesses and discuss how to bridge the gap between inventors and investors.

Whether you are considering investing in a steadily growing market or simply broadening your technical knowledge, this piece provides useful insights on an ever-evolving landscape.

Serial Disruption

In a recent Crowd Fund Insider interview, Zoe Adamovicz, co-Founder of the blockchain-based asset tokenization and issuance platform Neufund, compares the discovery of blockchain technology with the invention of electricity and the Internet — all of which “disrupted not one or two industries, but rather, the whole world.”

Blockchain is indeed more than just a technology; it is a disruptor that engenders a fundamental paradigm shift, set to democratize investment and democratize technology. As a company builder in IoT and blockchain, we are highly tuned into the symbiosis between IoT and blockchain technology.

Blockchain & IoT: A Logical Pairing

An IoT network is gradually constructed; it’s the true technology-enabled network of all networks. Connecting the physical with the digital by turning conventional devices into smart and autonomous entities that exchange data, enables new efficiencies and insights. It also delivers challenges of managing large amounts of data generated by these inter-connected agents, while keeping the newly-produced and stored information secure.

Blockchain proves to be a key technology transforming the way data is kept secure, shared, and treated. Integrating blockchain into the IoT ecosystem brings about several notable improvements [1]:

  1. Decentralization and scalability: Shifting from a centralized architecture to a distributed, or peer-to-peer system, removes central points of failures and bottlenecks. It also can help prevent monopolist scenarios, in which only a few companies heavily control data processing and storage.
  2. Identity: By using a common blockchain system, participants can identify individual devices. All data that is fed into the system is immutable and, the blockchain can provide trusted distributed authentication and authorization of devices for IoT applications.
  3. Autonomy: Blockchain empowers next-gen application features: smart autonomous services, assets and hardware. Through blockchain, devices are capable of interacting with each other without involving servers. IoT applications benefit from this functionality to provide decoupled-applications and device-agnosticity.
  4. Reliability: IoT information remains safely distributed over the blockchain. At any given moment, participants of a distributed system can verify the authenticity of the data. The technology enables sensor data traceability and accountability.
  5. Security: Information and communications can be secured if stored as transactions on the blockchain. Current secure standard-protocols used in IoT can be optimized through blockchain, which treats device message exchanges via validated smart contracts, securing inter-device communications.
  6. Market of services: Blockchain has the potential to accelerate the creation of an IoT ecosystem of data marketplaces where transactions between parties are possible without central authorities. Microservices are easily deployable and micro-payments are safely made in a trustless environment, therefore improving IoT interconnection and the access of IoT data.
  7. Secure code deployment: Code can be safely and securely pushed onto devices via the blockchain’s secure-immutable storage capabilities. This allows manufacturers to track status and updates with the highest confidence. Also, IoT middlewares can use this characteristic to safely update IoT devices.

At Next Big Thing AG, we strategically leverage these advantages of coupling IoT and blockchain in our approach to tech company building across industries. We build business models around data, because data is vital to decision-making and empowers scalability.

Going Global, with Purpose and Scalability

A perfect example of a team that values data is our venture in the healthcare sector, AssistMe (formerly called Assistr). They anticipate the consequences of a growing ageing population with a concrete product and plan to use the generated patient data to further improve healthcare services.

Around the world, nearly 200 million people deal with incontinence issues and the incontinence market is set to reach $25 billion by 2022. In response, the AssistMe team at NBT (image below) is developing a smart incontinence-care pant called AidMate. The venture plans to introduce the technology in care homes and hospitals across Germany while expanding the scope of their tech solutions beyond preventing incontinence.

AssistMe team at the Next Big Thing AG offices, Factory Görlitzer Park Berlin

Another Next Big Thing AG venture, Weeve, has a different approach to data. Weeve enables the commercial usage of IoT data through autonomous trading of blockchain-secured digital assets. In doing so, the platform empowers the Economy of Things. In fact, the scalability of the platform can increase dramatically: once established in Germany’s IoT industry, the venture’s data marketplace and data security protocol can find applications in other 4.0 industries around the world. Recall what Zoe Adamovicz pointed out:

“[The] blockchain market is global — geographical differences don’t apply here as much as in other industries.”

When business models of IoT and blockchain applications are built on top of data, the potential for expansion into new IoT markets is unlimited: data can be used for customer-focused services, processes-maintenance, new products & business models, and more.

Bridging the Gap Between Inventors and Investors

As startups from Silicon Valley to Berlin enter competitive markets and struggle to obtain funding, inventors or entrepreneurs are challenged to persuade investors to join their business. CB Insights crunched the numbers to reveal reasons startups tend to fail: nearly 67% of startups stall at some point in the VC process, or simply fail to exit or raise enough follow-on funding.

Initial Coin Offerings (ICOs) have proven a valid means of generating capital for some tech startups. Within an ICO, startups issued utility tokens — a quasi-voucher to use their service once their business would be established. The technique of crowdsales though, has come under scrutiny and is under increasing regulatory threat since in many cases, securities law were breached.

Zoe Adamovicz and Marcin Rudolf, who co-founded Neufund, realized early on that a regulated sale of securities on blockchain would become a viable means to raise capital. They created a platform and a set of open-source protocols for the end-to-end issuance of legally-binding security tokens.

The first application of the company’s tech and legal architecture are “Equity Tokens” which enable companies to conduct regulated offerings on blockchain. An Equity Token Offering (ETO) allows any type of company, blockchain and non-blockchain based, to issue equity tokens on a blockchain in a public or private placement.

For every investment conducted through the platform, investors get rewarded with Neumarks, a token which represent economical co-ownership of Neufund. With those protocol tokens, investors share in platform revenue, and are further incentivised to bootstrap the platform and grow it with further investments.

NBT has been selected as one of the first startups to be included in Neufund’s cohort of companies going through an ETO. In this new way, NBT will continue to build bridges between inventors and investors.

[1] Diaz, M. et al. (Nov. 2018). On blockchain and its integration with IoT: Challenges and Opportunities. Elsevier: Future Generation Computer Systems, Vol. 88, pp. 173–190. Retrieved from: www.sciencedirect.com .

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Originally published at blog.nextbigthing.ag.