Blockchain + IoT: Scope of Application
The first and most obvious point of intersection of such global phenomena of the modern IT-world, as blockchain and the Internet of things (IoT), is security. The stories of how hackers hacked entire servers through “smart” devices, unfortunately, have not been isolated instances for a long time. It is possible that the solution to this problem will be blockchain. If the devices communicate via a decentralized network, rather than through central nodes, like now, the security of the system will be close to 100%. We wrote more about this here.
In fact, the features of blockchain technology open up much wider opportunities for strengthening the Internet of things.
One of the effective possibilities of the IoT is the possibility of interaction of “smart” devices among themselves in an autonomous mode, that is, without the participation of a person. “The IoT is when your toaster mines bitcoins to pay its debts to the refrigerator,” said Andrew Miller in 2015. The interaction of multiple devices with each other implies the interaction of different economic agents. In the classical economy, this requires the participation of several financial institutions, at the least lawyers and banks. Accordingly, this model can not be called autonomous.
This problem can be solved by smart contracts, which are already actively used for automation and security of transactions. For example, on our platform SHIFT.cash (specializing in loans secured by car titles) all transactions will be carried out on the basis of smart contracts. This means that third parties are not needed for conducting transactions, while investors’ funds and their personal information are reliably protected by blockchain technology.
In the case of IoT devices — it’s all the same. The use of smart contracts may allow the system to obtain objective information about the compliance by economic agents with the conditions followed by the establishment of appropriate incentives or penalties for business participants. And do it autonomously, without the participation of a person.
An example is the Brooklyn Transactive Grid project, which distributes solar energy between neighbors. For homes with solar panels on the sunny side of the street, it makes sense to sell excess energy to neighbors from the shady side. Such a model would be impossible without the “communication” of solar panels with each other and without smart contracts, because to sell excess energy otherwise would require the involvement of third parties.
Another point is the safe storage of information about the device. Blockchain can help in the development of the IoT by tracking the history of a particular device on the network. All data on the interaction of this device with people, the network, the outside world and other devices will be contributed to the individual block. As an example, we can cite Bosch’s blockchain solution against fraud in the field of car insurance. Data on the state of the mileage counter are fixed, and then sent to the blockchain system.
Another great area, where the symbiosis of the IoT and blockchain will be actively used, is the supply chain. For example, Intel has demonstrated its blockchain platform for tracking the supply chains of seafood. The platform allows to effectively control the seafood production, increases the accuracy and reliability of their accounting, starting from the moment of catching the fish, and promotes compliance with the storage conditions of the goods in accordance with sanitary requirements.
In addition, the decentralized nature of the network means greater opportunities for scaling: centralized networks are rather limited in the number of devices that can be connected to them.
We gave only a few examples of an effective symbiosis of the IoT and blockchain technology. Already, there are many more, and in time will appear all the new ideas and solutions in this direction.
