What opportunities and challenges will the Internet of Things face when it encounters a blockchain?

Internet of Things and blockchain

Blockchain is a form of distributed ledger technology that has gained significant attention in areas other than cryptocurrency since 2014: blockchain + Internet of Things (IoT), blockchain + security, block Chain + finance, blockchain + logistics and more. In this article, we will analyze the opportunities, developments, and challenges of blockchains in the IoT space.

Blockchain technology or distributed ledger technology seems to be changing all aspects of digital services, and according to Don Tapscott, the father of the digital economy, blockchain is more important than the Internet. The blockchain combined with the Internet of Things is also extremely important, and I will explain why later.

By 2019, 20% of IoT deployments will have basic blockchain services (IDC)

Blockchain (in fact, there are many blockchains, not just one of the bitcoin used), and almost all research institutions have mentioned that this is a rapidly evolving field of evolution, and not just financial services companies. Financial technology is the first application of blockchains beyond encrypted digital currencies. In fact, the convergence of blockchain and IoT has become the agenda of many companies. In addition to the Internet of Things and financial services, there are several areas where blockchain solutions and initiatives have been implemented.

Distributed Internet of Things meets distributed ledger technology

As IDC analyst Frank Gens said, blockchain is becoming more and more important in next-generation security. Blockchain can't cope with all the challenges of the digital economy, but it will definitely play an increasingly important role in the Internet of Things. Forrester, a well-known market research company, mentioned the potential of blockchain for IoT solutions:

By definition, IoT applications are distributed in their own right, so distributed ledger technology (blockchain) can play a role in how devices communicate directly (distributed ledger technology is not just tracking devices, but also about them) How to interact, maybe even in which state, and how to "handle" in different situations).

Blockchains are designed to be the basis for applications involving transactions and interactions. Includes smart contracts (smart contracts are automatically executed when certain conditions are met), and other smart applications that support a specific IoT. Therefore, blockchain technology can not only improve the compliance of the Internet of Things, but also improve the functionality and cost-effectiveness of the Internet of Things.

Don't wait and see, take action

Although it is still in its early stages, large technology companies have already begun to act.

For example, the IBM Blockchain has allowed the (private) blockchain to be extended to the cognitive Internet of Things. In fact, in the end this will be a combination of artificial intelligence, the Internet of Things and the blockchain. Through the blockchain, we are adding a more diverse digital infrastructure to the ever-changing digital infrastructure that will impact development in many areas, including analysis and security, in a centralized environment to date.

With regard to the benefits of blockchain and IoT convergence, IBM applies smart contracts to complex trade channels and logistics, tracking all individual items and packages through blockchain technology. Benefits: audit trails, accountability, new forms of contracts and speed, and more.

In the infographic below, IBM summarizes three key benefits of the IoT application blockchain. The three benefits of the blockchain for the Internet of Things are: building trust, reducing costs and accelerating transactions.

What opportunities and challenges will the Internet of Things face when it encounters a blockchain? The challenges that the Internet of Things and blockchain need to address

It is time to start researching the convergence of the Internet of Things and blockchain, although the combination of the two may not be applicable to the current environment. Participants in the Internet of Things and blockchain ecosystems must address three types of challenges:

Technology, mainly security. Security has become a challenge for the Internet of Things and needs more attention. It is worth noting that the blockchain is also a way to improve the security of the Internet of Things.

The security flaw of the Internet of Things lies in the lack of mutual trust between devices and devices. All devices need to be checked against the data of the Internet of Things Center. Once the database collapses, it will cause great damage to the entire Internet of Things. The distributed network structure of the blockchain enables the devices to maintain consensus without verifying with the center, so that even if one or more nodes are compromised, the data of the overall network system is still reliable and secure.

Operational challenges: business model and hands-on aspects, because this requires multiple parties to agree, Imagine the example of IBM logistics.

Blockchain technology can provide point-to-point direct interconnection for the Internet of Things to transmit data, rather than through a central processor, so that distributed computing can handle hundreds of millions of transactions. At the same time, you can make full use of the computing power, storage capacity and bandwidth of hundreds of millions of idle devices distributed in different locations for transaction processing, greatly reducing the cost of computing and storage.

Legal and compliance issues, some people mentioned the issue of responsibility when the device takes action, which is based on rules that are automatically executed by the blockchain application, triggered by another blockchain-based application. Then there is an example of the smart contract mentioned above. As you know, even outside the IoT and blockchain, reaching a contract is far from easy.

What opportunities and challenges will the Internet of Things face when it encounters a blockchain? Blockchain is the answer to the IoT challenge

In the book "Either Digital, or Dead," the author describes the practical problems that blockchains can solve in the Internet of Things, and how the blockchain accelerates the development of the Internet of Things:

Blockchain technology is expected to bring no third-party "certified" IoT. It addresses scalability, single point of failure, time stamping, logging, privacy, trust and reliability in a very consistent way.

Blockchain technology provides a simple infrastructure for two devices to directly transfer assets such as money or data through a secure, time-stamped contract. In order to achieve message exchange, IoT devices will utilize smart contracts and then simulate the agreement between the two parties. This feature eliminates the need for centralized authorization for the autonomous operation of smart devices. If you extend peer-to-peer transactions to people and people or people and objects/platforms, you get a fully decentralized trusted digital infrastructure.

Blockchain + IoT Cross-industry Case: Insurance

Several industries are testing blockchains. In these industries, there is a link between blockchains and Internet of Things in specific industries. For example: blockchain IoT and insurance industry.

The main use cases for the insurance business blockchain are smart contracts and the strengthening of claims management processes. Other applications include fraud management and the application of legal compliance.

In the context of blockchain and IoT, the application of blockchain and IoT in the insurance sector will be very interesting and will increasingly shift from a pure telematics model to a real-time IoT data connection, each An intelligent automated insurance policy application.

Although this may seem to be a far cry from the blockchain application in the insurance industry, it is worth noting that from the perspective of IoT investment, in early 2017, IDC predicts that by 2021, the insurance industry will become the fastest growing. One of the industries, although the main focus is on telematics (smart contracts can be applied).