IoT and blockchain, a match made in heaven?

The Internet of Things (IoT) has been subject to severe criticism regarding security and sustainability, but now it appears that blockchain could offer the best solution.

The most profound technologies are often those that disappear, because they become so integrated into everyday life that they are no longer distinguishable.

On September 1, 1991, Mark Weiser published his landmark paper, "Computers in the 21st Century," in Scientific American magazine.

Although the term 'Internet of Things' was first publicly coined by British entrepreneur Kevin Ashton in 1999, Weiser's publication was in some ways the start of the 'Internet of Things'. In 1991, Weiser advocated for rethinking the concept of computers to integrate them into the natural human environment and make them ubiquitous. He wrote at the time that "computers and light switches, thermostats, stereos and microwave ovens" could all be "connected together through a ubiquitous network", essentially using the term we call the "Internet of Things" today.

IoT: Opportunities and Challenges

According to IDC, IoT can be described as “a network of uniquely identified endpoints (things) that can communicate with each other using IP connections without human intervention — either locally or elsewhere around the world.

In 2014, IDC predicted that by 2020, there will be 28.1 billion IoT units installed, compared to 9.1 billion in 2013, and the annual revenue of the IoT market will reach 7.1 trillion US dollars. Gartner predicts that the number of IoT devices in 2020 is lower, about 20.8 billion. McKinsey believes that by 2025, the annual output value of IoT will increase to 11.1 trillion US dollars.

The IoT market has attracted a lot of attention and investment from large global companies, such as Apple, AT&T, IBM, Intel, Philips, Oracle, Microsoft, etc.

IoT and blockchain

The idea of ​​applying blockchain technology to the Internet of Things (IoT) has been around for some time. In fact, blockchain technology looks like a suitable solution for at least three aspects of IoT: big data management, security and transparency, and the convenience of micro-transactions based on the exchange of services between interconnected smart devices.

Big data and record keeping

IoT is essentially connected to big data. As the number of installed IoT units increases, the data on consumption habits and behavior patterns collected in IoT increases exponentially. How to handle this huge amount of data has become a problem that must be solved. In this case, some people think that "there is no other choice but to use blockchain technology."

Blockchain technology not only provides a suitable solution for recording the data of all IoT units, but also ensures that once the data is recorded, it cannot be changed later. Therefore, Alex Tapscott, co-author of "Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World", said:
“The Internet of Things needs a ledger of things that records everything that happens within the Internet of Things, including what was said, who owes whom money, etc., and coordinates everything that happened.”

Safety

Blockchain technology can be further used to address security and identity issues surrounding IoT. This is exactly what the newly established Chain of Things think tank and industry alliance is all about. As Security Ledger points out,

“One of the biggest challenges in securing the Internet of Things is the question of identity. More specifically: how do we ensure that billions or tens of billions of smart devices can connect and communicate securely with each other? It looks like blockchain can provide the answer.”

Chain of Things is trying to answer the question “Can blockchain essentially save IoT? Yes or No?” CoT is currently conducting a series of case studies. The first CoT use case is in the energy sector, aiming to securely record solar energy production data on a distributed ledger. The initial experimental results will be presented at the Chain of Things annual conference on June 1, 2016.

Internet of Things for Small and Micro Enterprises

Amy Cortese has pointed out that “every blockchain-based device can be considered a small business,” a statement that is particularly applicable to the energy sector.

Solar production was not only the subject of the first CoT case study, but also the first energy market to witness peer-to-peer product trading. On April 11, 2016, Park Slope activist Eric Frumin successfully sold his excess energy to Bob Sauchelli, former national director of ENERGY STAR. The transaction marked the official launch of TransActive Grid, a New York-based peer-to-peer trading platform powered by Ethereum.

The platform supports the so-called Brooklyn Microgrid, which connects local green energy suppliers, consumers and Ethereum, using the existing electrical wire network.

Lo3 Energy is the developer of the TransActive Grid project. Its founder is Lawrence Orsini.

Blockchain has the potential to improve the Internet of Things (IoT) in terms of security, transparency, and big data management. Success stories are growing, such as Filament’s hardware and software IoT solutions. However, to be truly successful, IoT needs to become ubiquitous, to the point where, as Weiser points out, people will “not even realize it’s there.”