How Blockchain Can Change the Future of IoT
The Internet of Things (IoT) is a network of physical objects (“things”) embedded with electronics, software, sensors, and network connectivity. By 2020, it is estimated that there will be 200 billion of these connected “things” collecting and exchanging data.
While the potential of IoT is already being felt in traditional industries such as banking, health care, infrastructure and insurance, the real change is yet to come. Key challenges with regards to security, data privacy and ownership, connectivity as well as standardisation and adoption remain.
Blockchain (together with other advances in, e.g., real-time data acquisition, processing and analytics platforms as well as sensor development) is regarded as a key accelerator for IoT as it (among others):
- provides a secure mesh network that can deliver a decentralised platform for “things” to interconnect reliably and to exchange data more democratically;
- is built on strong cryptography, immutability and transparency enabling better and cheaper IoT security;
- allows for smart contracts that could enforce business conditions on IoT interactions; and
- is making big strides in solving problems of data security during data exchange by incorporating zero knowledge proofs, homomorphic encryption, and secure multi-party computation.
On Oct 11, 2017, I had the pleasure of joining a panel discussion on How Blockchain Can Change the Future of IoT together with Markku Lepisto, Solutions Architect (JAPAC) at Google, Conor Colwell, Co-founder of Chain of Things, Pavel Bains, CEO at Bluzelle Networks and Paul de Long, Managing Director at Otonomos.
Coverage of the panel was published online in the Asia Pacific Security Magazine at How BlockChain can Change the Future of IoT, with the PDF version of the print edition available here.
Given that our team at Wismut Labs (together with its clients) is particularly interested in Enterprise Blockchain applications for IoT-driven use cases such as supply chain / asset management, I shared some of our experiences working towards respective proof of concept solutions:
Generally speaking, key challenges we have come across frequently include:
- containing overinflated expectations from the hype around Blockchain;
- scarcity of experts with experience building Enterprise Blockchain solutions (e.g., based on HyperLedger Fabric, R3 Corda or Ethereum's permissioned implementation - Quorum);
- ensuring that a Blockchain based solution is really what addresses the initial problem / use case best;
- understanding that often the larger eco-system has to change (i.e., yet another technology adoption / standardisation challenge) as the more entities participate, the more valuable the solution typically is; and
- managing data privacy effectively.
With respect to supply chain projects, a possible approach is that every component along the manufacturing supply chain is tracked and stored in the Blockchain ledger. Every time a component passes from one person-in-charge to another, a corresponding transaction is added to the ledger, which provides a tracking history throughout the life cycle of the product.
What this means is that clients can better monitor their assets and data which transform into actionable insights like supply and demand optimisation. And provide better clarity in logistics and storage as parts and components are tracked along their journey from source to destination.
This also enables verification checks to minimise manufacturing defects. And at the same time, repairs and replacement of parts and components can also be tracked and recorded in the Blockchain ledger to build up a comprehensive history of asset health.
So, on these aspects, we work with clients to assess their current state, their needs, and what their pain points are. We typically start with a proof-of-concept with a small defined group of stakeholders in the beginning, and work closely with them.
Once proven, we open the ecosystem to other parties, such as external suppliers and logistics providers. The engagement model differs depending on the client such as the extent to which business model or process has to change, but the staff retraining aspect is always a must in order to adopt the new technology.
And sometimes we have to disappoint the clients and tell them that Blockchain may not be the best solution for their use-case they have in mind.
Data privacy is important, and we work with clients to determine what data can go on-chain at which transparency level (e.g., unrestricted vs. selective sharing vs. encryption ... or often a mix of the former) and how to support computation on data not fully disclosed (e.g., via zero knowledge proofs).
For more information on our capabilities in Emerging Technologies, download our Emerging Technologies capabilities sheet or reach out to us via our contact form.