Blockchain Will Upgrade the Internet of Things Into the Economy of Things

By Rae Hadley

Blockchain, as a conceptual system, is deeply interwoven with the idea and systems of cryptocurrency; however, these two are not mutually exclusive. Cryptocurrencies use blockchain ledger concepts within their systems; and yet, blockchain itself can be used for so much more. The Internet of Things, and the fast approaching Economy of Things are data-led, ‘intelligent’ arenas which have the potential to draw images of SmartCities, and inter-communicative devices from our minds into our day-to-day reality.

Building Blocks

Blockchain is a system which retains the information given to a ledger, in a specific block, and holds that transaction there, securely. Once the block has been validated, a hash is assigned to it, and the next block has been created or ‘mined’. Once added to the chain, it is extremely difficult to get back into it to change any of the data.

In order to get in, you would have to get all the different nodes that validated the data to agree that the change is viable, and you would have to either get into the block before the next one logs — thus avoiding a hash-string debacle — or change the hash signatures on all of the blocks, including, and superseding the one you want to infiltrate. Does it sound impossible? Good, because it pretty well is!

AI and the Internet of Things

The Internet of Things (IoT) is the connectivity between devices and the exchange or flow of data between items like TV, furniture, smartphones, and smart-home systems. According to Cisco, by the year 2030, there will be 500 billion devices attached to the Internet. That is a mind-blowing number, and when we stop for a moment to consider the amount of information these devices will be processing, well, the numbers just went off the charts.

At IoT’s micro-level, it is, in effect, the conversation of a team whose goal it is to create the environment an individual has envisaged. At its macro-level it can be a citywide or global network of data ‘conversations,’ sharing information and acting with predetermined behaviours to specific stimuli.

All of the items around the globe which have inter-device connectivity fall under the incredibly broad parameter of the Internet of Things. This network runs parallel to the human internet world, with its own systems of communication and niche ‘communities.’

The ways that devices attached to the IoT convey, manage, and store personal data has become a concern, a hot potato, which is heading in the direction of decentralisation.

Liquid Economy

The Internet of Things is set to become the Economy of Things through the “liquification of the physical world”. We are in a time — and an ecosystem — when the assets around us have the capacity to be searched for, managed, and monetised in the same way you would a digital commodity. Digital information — data — has become a viable type of goods, with pieces that are tradeable for financial gain. Whether we have systems in place to maximise the financial potential of our data ourselves is a question we should all be asking. Regardless, that time is upon us and if we do not look to manage our data someone else will. Data is currently being sold and shared between companies because the majority of the originators — consumers — are not conscious of how to retain ‘authorship’ of their personal data.

Data Decentralisation and Ownership

Ideally, blockchain would be in charge of handling the personal and transactional data from the IoT, creating a safe haven for this information to ‘dock.’ In order for it to be safe, it needs to be beyond current encryption/decryption hacks and blockchain, by its hash-signature nature, for the main part is. Currently, the only real issue with this decentralised system is the threat posed by quantum computing, and even this threat appears to be on the wane as different hash iterations are developed or found to be quantum proof.

The machine-to-machine ecosystem of the IoT works in tandem with product AI in much the same way that decentralisation and data privacy are the hand in the glove. These duos reflect back on each other and impact on their working mechanisms in an evolving dance of two connected, contact improvisation partners. By their mutual contact, the one is transformed by the other.

If data is the new gold then why are these gleaming nuggets — data from wearables, smartphones, and smart-home appliances — in the hands of the technology manufacturers and not in the hands of their progenitors? The adoption of blockchain as part of a viable, machine-to-machine ecosystem, by consumers, should start with the reinstatement of data ownership to them.

Giving “More Than One IOTA”

IOTA is at the forefront of the trustless, permissionless, decentralised blockchain-like systems. It is similar to blockchain in it’s peer-to-peer, decentralised, distribution ledger technology. However, it diverts from traditional blockchain technology through its use of a scalable system of simultaneous and non-linear transaction that ‘issues’ rather than ‘mines’ blocks.

Scalability has, until now, been an issue with blockchain. The huge amount of energy needed to ‘mine’ the blocks, and the validation system which must be completed before there is a possibility of moving on and creating the next ledger, has caused issues with the capacity for greater numbers of transactions. The rapid growth of the IoT has greatly impacted exactly this issue.

The exponential leap in numbers of devices, all communicating and (eventually) commodifying their data, has meant that the current systems have a potential bottleneck. However, with the advent of 5G comes a comparable leap forward in processing times and the possibility of alleviating these problems. Working hand-in-hand with blockchain and the IoT, 5G has incredible possibilities. This triad, forming the underpinning of the financial aspect of data use in the EoT, creates room for data originators to also be, at least for a time, the beneficiaries and initial managers.

Bosch and Volkswagen are two major players who are currently teaming up with IOTAs Tangle, a transactional data and settlement system for connected devices. In a move potentially aimed at innovation and inter-system dialogue, Bosch launched their XDK (cross-domain development kit) and is being hotly pursued by Volkswagen, Hyundai’s Hdac, and Australia’s Ultimo Digital Technology, all of which are looking at different ways to utilise blockchain for information authentication, supply chain transparency, and verification of product from origin through to consumer.

The importance of the verification process cannot be underestimated especially in an age when processes and decisions are being made on the basis of previously provided information. The necessity for valid (confirmed and correct) date can have far-reaching consequences when the arenas within which it is being viewed are health, finance, and governance, and the actions being taken are automated responses to the preceding information. The integrity of the data being validated in the inter-woven IoT, is obviously critical.

At this current juncture in history, it is abundantly clear that “AI needs data, IoT needs intelligence and insights, and both need security and transparent marketplaces.” With the advent of decentralised, non-linear blockchain technologies, these interlinked needs are fulfilled in a purposeful, win-win scenario for individuals and big business — and it’s about time, too.

These AI, IoT, and EoT developments are likely to become even more of a social and even political concern as they progress. Here at Revain we have placed ourselves in the midst of technological advancement, ready to provide the latest information and savvy critiques to enable you to grow along with us and advance your business and your knowledge bases. Check-in regularly, for updates on trends and developments in blockchain, AI, cryptocurrency, and fintech.