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How Blockchain can enhance the IoT

Blockchain and the Internet of Things (IoT) are two of the most commonly used words in the technology industry today. In our previous blogs, we have talked about what the IoT is and how new key technologies can enhance IoT initiatives and deployments.

This blog will explain how Blockchain and the Internet of Things can work together to deliver enhanced services along with improved security and governance relating to an individual’s personal information. 

What is Blockchain?

Blockchain is a hot topic around the world these days, yet few people know exactly what Blockchain is or how it works. Blockchain can be thought of as a decentralised database that keeps records of digital transactions. Rather than having a centralised administrator like a traditional database, Blockchain distributes the ledger to multiple computers simultaneously.

Blockchain technology is like the internet in that it has built in robustness.  By storing blocks of information identical across its network, Blockchain cannot be controlled by a single entity and failure is almost impossible as it has no single point of failure.

Blockchain is probably most associated with the digital currency Bitcoin, although the technology has many other applications. New uses of Blockchain are emerging including electronic voting, digitally recorded assets e.g. land registry, to regulatory compliance and trading.

When people talk about smart contracts in relation to blockchain they are describing computer code that can facilitate the exchange of something e.g. money, content, shares etc. When run on blockchain, a smart contract becomes like a self-operating computer program that automatically executes when specific conditions are met. Because they are running on blockchain, they are guaranteed to run exactly as programmed without any risk of failure, fraud or third party interference. 

So how can Blockchain play a part in the Internet of Things?

The Internet of Things consists of connecting everyday objects – physical devices, vehicles, buildings, wearable technology etc. with embedded electronics, software, sensors allowing them to send and receive data. Assembling all this data allows for intelligent decisions to be made either by humans or by machines against pre-set rules. IoT is an enabler for change and can allow systems and devices to intelligently talk to each other in real time. 

Some of the areas where Blockchain technology could potentially support IoT solutions include:

  • The ability to implement Smart Contracts - Blockchain makes the automation of large scale remote systems management possible. The exchange of data between sensors and software over the network e.g. in a City wide smart lighting service, and the resulting ability to manage, monitor and contractually track the service performance can result in increased efficiency and a reduction in the overall costs.
  • Identity Management – providing individuals with the ability to effectively control and manage their digital identity is very important in today’s high tech world. Especially when our smart devices are gathering information about us and potentially sharing that with a myriad of companies. Blockchain technology can be used to support the ability for individuals to opt in or out of providing access to personal information e.g. details relating to their physical activity, current location and regular journeys. On the reverse side, the technology can also provide companies with the ability to enable individuals to opt in/out of giving access to specific personal data when deploying a service. Access to an individual’s personal information could be required to provide the service e.g. displaying information on the next available bus home, or it could be in way of payment for accessing a service e.g. Public WiFi. Providing users with the ability to opt in/out is critical to comply with user acceptance of the service and possibly to meet legislation.
  • Personal Data marketplace – In addition to providing the means for creating and managing your digital identity, Blockchain can also deliver the ability to effectively manage the buying and selling of data whilst ensuring strict control and privacy. This could involve providing specific companies with real time access to information gathered by smart devices in return for a discount on services e.g. life insurance.
  • Governance – The Internet of Things provides the ability to deploy remote sensors to measure near enough anything. As a result, sensor networks are being deployed to measure air quality, water level monitoring, traffic levels etc. Blockchain can be used alongside these smart solutions to ensure that the results are fully transparent and publicly accessible, via the fact it acts as a distributed database.

In conclusion

Blockchain has a lot to offer the IoT world, and the ability for users to control their digital identity and effectively opt in or out of trading their personal information in return for access to services or financial rewards is exciting. Imagine a world where you could:

  • Receive a discount on an insurance product in return for providing them with real time access to your physical activity information
  • Request a quotation for a financial product e.g. car insurance and not have to complete  those online quote request forms multiple time, as you can grant the relevant companies one time access to the relevant parts of your personal information in order to provide you with a quote
  • City wide services e.g. Smart lighting. Where the services are delivered under a smart contract ensuring they meet the defined KPI’s and SLA. The smart contract can also ensure that the service company is automatically paid in accordance with actual deliverables and achieved service levels. So a better more efficient service that benefits the consumer and provider.

We are still in the early stages of Blockchain development, and the rollout and acceptance of the Internet of Things solutions on a wide scale basis. One thing we can be sure of is that both technologies are here to stay and will affect our lives greatly over the coming years. The question is more on what businesses are willing to roll out and what we as individuals are willing to accept. Both technologies have the ability to drive fundamental changes in our everyday lives.