Filament blockchain IoT project raises $5 million in Series A funding

Filament announced that it has completed a $5 million Series A financing round from Bullpen Capital, Verizon Ventures and Samsung Ventures.

This is the first time that Samsung Ventures, the investment arm of consumer electronics giant Samsung, has invested in the blockchain industry. Previously, Samsung Ventures made a splash by participating in IBM's ADEPT project. The ADEPT project uses Bitcoin and Ethereum networks to build a decentralized Internet of Things. IBM and Samsung chose three protocols: BitTorrent (file sharing), Ethereum (smart contracts), and TeleHash (p2p messaging system) to support the ADEPT system.

Eric艾瑞克•詹宁斯, co-founder and CEO of Filament, said Filament is a decentralized IoT software stack that uses the Bitcoin blockchain to enable devices to hold unique identities on a public ledger. By creating a directory of smart devices, Filament's IoT devices can communicate securely, execute smart contracts, and send microtransactions.

With that in mind, Jennings sees his project as being similar in nature to ADEPT, except it will target the industrial market, enabling large companies in industries such as oil and gas, manufacturing and agriculture to achieve new breakthroughs in efficiency.

Jennings told CoinDesk:

“Almost all of these companies have the same concern – what is my IoT strategy? Many companies have little experience in setting up mesh networks or blockchain, but they know they need to connect these networks to improve efficiency.”

Filament will develop two hardware units: Filament Tap, a sensor device that allows the device to communicate with phones, tablets and computers within a 10-mile radius; and Filament Patch, a hardware extension of the technology that enables customization of hardware projects.

Filament said that by leveraging a blockchain-based stack, companies can better manage physical mining operations or agricultural irrigation without having to use inefficient centralized cloud or file-based solutions.

Filament was founded in 2012. The company's original idea was to build a wireless home security system on a mesh network. Later, it was renamed pinocc.io. In October last year, the company's project was selected into the TechStars incubator, so it was renamed Filament again, and the company's development goal was positioned on industrial use cases to achieve connectivity between devices.

Crosslink Capital, Digital Currency Group, Haystack, Work Lab Capital, and TechStars also participated in Filament’s Series A. With the help of the funding, Jennings said he will expand the company’s team from 15 to 30 people as they aim to launch a hardware device in the fourth quarter of 2015.

Open standards approach

Filament claims that Jeremie Miller, the inventor of the Jabber/XMPP communication protocol, is the company's CTO. The Jabber communication protocol was launched in 1999 as an open standard alternative to chat applications such as AOL Instant Messenger. The protocol was eventually adopted to varying degrees by Facebook, Google and Microsoft, and Filament decided to replicate the success of the Jabber communication protocol.

Jennings explained:

“The success of the Jabber communication protocol has taught us that a decentralized system is more valuable to the companies and users who use it. This is the spirit we have learned from it, and what is more valuable is that this decentralized system can achieve equal status among users.”

Filament’s theory is based on the quest for a similar platform that could be used to enable decentralized communication between connected devices, which Jennings believes is based on business logic rather than any ideological support.

“Decentralized systems are more valuable to the people who interact with them… That’s something that’s worth noting,” Jennings said. “Why use blockchain? Because it makes the system more powerful and more valuable.”

Filament's technology stack will use five layers of protocols - blockname, telehash, smart contracts, pennybank and BitTorrent. The operation of Filament sensors depends on the first three layers of protocols, and the last two layers of protocols are optional for the user end.

Hardware and Technology Stack

The Filament Tap is the smallest unit offered by the company, sold in units of 10 for those interested in testing the product.

According to Jennings, the product has many advantages, including ease of use. "Taps has sensors so they can be connected to equipment in an office space and be up and running in 20 minutes, and can start monitoring infrastructure right away."

Each device will be equipped to handle all five of the company's communication protocols. Blockname creates a unique identifier that is stored as part of the device's embedded chip and recorded on the blockchain. Telehash, in turn, provides end-to-end encrypted communications. BitTorrent enables file sharing.

“In the blockchain, when a device is manufactured, we store a unique hash of the network address. When we manufacture our devices, we create a unique global IP address and in lockname, we store the hash that can be solved there, and if device A wants to talk to device B, blockname tells them how to do it.”

There is a fee for using the device, and payment is processed through a smart contract.

Jennings stressed that they are currently using the Bitcoin blockchain, but will decide on that in the future.

Support small transactions

Of the five stacks the company plans to build, Jennings acknowledged that the ability for IoT to conduct micropayments, or device transactions, is still in the early stages of development.

Filament will use the bitcoin-based protocol and has already developed a microtransaction technology called pennybank, partly because of its unique needs.

Jennings said:

“Our devices are not very high powered and are not always online, so in order for these devices to be able to process transactions, they cannot be a lightweight wallet.”

In effect, Jennings said PennyBank created an escrow service between two devices, allowing them to settle transactions when they are connected online.

Jennings said his early conversations with clients made him realize that businesses wanted a real-time payment method, so in his opinion, the only way to meet this market demand was through blockchain technology.