Adding trust to the IoT with Blockchain
January 5, 2022
Without trust there is nothing. So, while the IoT is changing many parts of the digital transformation landscape, real trust is often the missing component for businesses to fully embrace the technology. How can we be sure that the temperature gauge was working and calibrated? Was it really in the location it said it was and was the limit the actual limit? A simple example, but if we are going to make real-time, automated, and critical decisions or transactions based on IoT data, we need to really trust it. Is it accurate and true, has it been tampered with or compromised? All good questions, although the broader issue is that as the IoT growth accelerates there will simply be too many devices and too much data for human intervention to add the checks and balances. Clearly big data technology is capable of processing and analysing large volumes of information but it does not provide sufficient transparency, security and trust.
Where does Blockchain IoT come in?
As a distributed database or ledger technology, blockchain stores and manages data in so-called blocks, encrypted and linked together to form a chain. Each block contains an immutable record of exactly when it was created which cannot be corrupted, lost or changed without the network knowing about it. Public blockchains were developed for and largely associated with cryptocurrencies and are designed to treat all users equally and preserve an individual’s anonymity. With a public blockchain, anyone can download the peer-to-peer client software, view the ledger and interact with the blockchain. However, when it comes to enterprise applications – including managing IoT ecosystems – the strength of public blockchains also becomes a weakness and poses several challenges around privacy, control and transparency.
For many enterprises, the idea of allowing every participant to have complete access to the entire contents of the database does not sit well. So, the next generation of B2B blockchain is emerging, where a single authority or organisation ultimately retains control, and no one can enter this type of network without proper authentication. Of course, some private blockchains look like centralised networks but they offer many, if not all, the distributed benefits of public blockchains but retention of overall control improves security and eliminates many of the illicit activities often associated with public blockchains and cryptocurrencies.
B2B blockchains are ‘permissioned’ where participants are known or trusted and provide audits, checks and balances to prove the data really is the data. And with fewer nodes needed to manage IoT data, decisions and transactions can be supported and processed at a much higher speed. For reasons of performance, as well as accountability and cost, B2B blockchains are more suited to enterprise IoT applications, where the technology empowers and supports the overall business rather than individual users.
Smart contracts are a key part of Blockchain IoT and are essentially an agreement between two IoT devices, that takes place when certain pre-conditions are met. They will play a fundamental role in the automated authorisation of transactions based on IoT data and a single version of the truth distributed across participants. For example, if all IoT devices had smart contracts with the device makers, it could be used to update the device software automatically as soon as it became available. You would also know that the update was coming from a trusted source and not from some person or something posing as the device maker.
Smart contracts can also be used in supply chains underpinned by blockchain IoT technology. For example, perishable goods are typically subjected to varying environmental conditions as they pass through transportation and warehousing networks. By combining IoT and blockchain, the location, time and temperature data can be collected and incorporated into the blockchain to create an immutable history of the product as it passes through the supply chain.
IoT sensors can also be placed in trucks to record key events on a blockchain to help manage fleet whereabouts and returns and to support more meaningful billing practices. Blockchain can also help with user authentication in smart homes or cities for validation onto IoT devices. By creating immutable records of the people in your home or city using a blockchain, you have a single record to track authenticated users. This means there would be no need to manually provide access to each person every time you add a new device. By using connected sensors, lights, and meters, for example, data can be easily collected and analysed ensuring round-the-clock functionality. Blockchain IoT, once again, provides the perfect foundation for smart city IoT devices such as air, light, noise and quality sensors, ensuring the security and validity of data.
A strong future together
IoT is thriving and gearing up for explosive growth in the coming years. By the end of this year, there will be 13.8 billion connected IoT devices worldwide—a number that’s expected to almost triple by the end of 2025. At the same time, the adoption of blockchain technology is also on the rise, with 84% of major businesses already actively involved, according to PwC. This trend is partly fuelled by the growing number of blockchain IoT use cases from manufacturing to retail, supply chain to mobility.
B2B blockchains look set to become the main contributor to blockchain market growth and retain the largest market size in 2021, according to Gartner. B2B blockchains provide more opportunities to utilise the technology for blockchain IoT use cases and deliver higher efficiency, privacy, reliability, and transparency. Large enterprise blockchain-based IoT solutions will be custom developed according to business needs, while SMEs will take advantage of cost-effective pre-packaged solutions. Gartner forecasts that the business value generated by blockchain will reach $176 billion by 2025 and $3.1 trillion by 2030.
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