Blockchain technology - the best way to move towards the fourth industrial revolution

The first industrial revolution brought steam power and factories. The second industrial revolution produced railroads and electricity. The third industrial revolution gave us the internet, digital computers, and the conveniences of modern society.

Each revolution began and ended with better, more efficient machinery. But the fourth industrial revolution, expected to be based on the Industrial Internet of Things (IIoT) and just around the corner, won’t follow the same pattern as the first three.

The fourth revolution will not be centered around the pursuit of faster, more powerful machines: it will revolve around machines that can process, share, and act on information without human intervention. This revolution will fundamentally change our relationship with our tools, the world, and each other.

Data Revolution

It’s not coal, steel, or silicon, but data that will become the currency of the fourth revolution.

The amount of data generated by a gas turbine connected to the Industrial Internet is four times the amount of data generated by all Twitter posts in the world every day, but less than 1% of this data is actually used for analysis. Bill Ruh, CEO of GE Digital, predicts that current analytical tools are simply unable to handle such a large amount of digital information.

“Ten years ago, we were generating maybe a terabyte of data a day, and now we’re generating about 10,000 terabytes a day. By 2020, we estimate we’ll be generating about a million terabytes a day.”

I remember when I was at Yahoo, our bodies couldn't operate the machines fast enough to keep up with the amount of information the website needed to send out. This was in 2004, and we were only facing millions of users. Now we are facing hundreds of billions of machines.

The real miracle of the Fourth Industrial Revolution is not the sheer volume of information being produced; it is the ability of intelligent machines to process and analyze that data and communicate the results of that analysis to other similarly intelligent machines over a network. Each connected machine will take action, change its processes to become more efficient, and then communicate those changes back to the network.

Expect these reactive machines to push the world economy to the extreme: Ruh and GE believe that smart machines and the Industrial Internet of Things will add $10 trillion to $15 trillion to the global economy over the next 20 years. Considering that global GDP was about $74 trillion in 2015, that’s a huge increase.

The foundation of the revolution

This coming revolution requires two important components: a centralized Industrial Internet communication network, such as GE’s Predix, and a decentralized approach that facilitates commerce by disincentivizing dishonest communication.

This IIoT network must be able to serve as a hub for smart machines to connect to each other and to their human creators. Smart machines’ sensors can collect vast amounts of information data and then transmit that data in real time. This can conceivably be done machine to machine. But in order for these smart machines to relay findings and make decisions without human intervention, i.e., to create a truly smart network, they need a single communication network.

Blockchain is already revolutionizing elsewhere

Of course, blockchain technology is already being used to advance the financial industry. But digital information, like the dollar, is a discrete asset, and blockchain creates a digital record of its existence and transfer. Blockchain technology is essentially a ledger that records digital events. The ledger is decentralized and shared across the network. Updates to the ledger can only be made when consensus is reached on the network. Once an entry is created, it can never be erased.

Blockchain technology is the missing link of the fourth revolution as it is able to define trust between smart machines and stakeholders. For example, the recent Volkswagen emissions scandal. Volkswagen’s tests showed that its vehicles emitted too much nitrogen oxide, so they chose to use a “failing” device to hide the problem.

Although blockchain cannot prevent physical tampering of machines or data, it can create a transparent, shared and indelible archive of raw emissions data. Once this data archive is created and shared through the blockchain system, it will be impossible for Volkswagen to falsify it because the difference between the two data will be too obvious to regulators.

The benefits of the Industrial Internet of Things are obvious, and we have already developed machine-to-machine communication technology.

Different companies have different goals; but if we all benefit from the efficiency improvements brought by the Fourth Industrial Revolution, we must develop a machine-to-machine business model. Because there is no communication network without business, we must integrate blockchain into the business system. In an environment where data needs to be constantly modified and sensitive to information trade conditions, blockchain is our best path to the new industrial revolution.