Kevin Ashton, the man who coined the term “Internet of Things” (IoT), wrote in 1999:
“If we had computers that knew everything there was to know about things – using data they gathered without any help from us – we would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best.”
In 2015 Kevin was again quoted in Smithsonian Magazine:
“In the twentieth century, computers were brains without senses—they only knew what we told them. That was a huge limitation: there is many billion times more information in the world than people could possibly type in through a keyboard or scan with a barcode…”
What Kevin didn’t foresee was the invention of the blockchain—a technology that allows you to store data in a transparent and unchangeable way—which offers IoT a solution to many, if not most, of the security problems preventing it from realizing its full potential today.
Why should IoT meet blockchain?
Combining these two concepts allows companies and even consumers to directly monetize the “billion times more information” that is generated by the approximately 30 sensors in your car, engine sensors in airplanes measuring 5,000 elements per second, and billions of other sensors in every part of our daily lives measuring things like weather effects, pollutants, location, fuel, temperature, humidity, moisture, sound, vibration, wind resistance, pressure, weight, electricity, and more than 300 other types of elements.
GE and Cisco Systems, two of the top companies in this field, estimate that we will have 1 trillion sensors in the world by 2020.
With this, one can imagine the possibilities of opening up gazillions of data points measured every day by these one trillion sensors to public (or private) marketplaces built on blockchain technology specifically designed to sell and buy this data.
To give an example: A car company could track the relation between air resistance and fuel consumption in their cars, stream that data to the marketplace in real time and sell it directly to manufacturers of car parts, who can then use these metrics to improve the design of the overall structure to reduce fuel consumption.
Yes, it is true that helping competitors in this way could be negative – but what if the income from selling the data is worth more than the competitive advantage of keeping that data to yourself in the first place?
Similarly, what happens if you, the owner of the car, could directly sell this data to any number of companies interested in improving different parts of the vehicle, but who lack the myriads of data to effectively do so?
Selling wind resistance data is just one out of maybe a hundred marketplace use cases which are possible today, thousands within the next 5 years, and perhaps hundreds of thousands in this century.
I haven’t even touched on the potential use cases outside of marketplaces, like trustless supply chains or autonomous vehicles talking and microtransacting with each other.
But if these use cases are so well suited for blockchain, then why are we only talking about hypotheticals and not real-world examples?
We can imagine it, but can we build it?
The sensors exist. The blockchains too exist (however not in the most compatible manner). But the glue to bind IoT and blockchain together doesn’t exist. Especially not the kind of tamper-proof “super glue” which is needed to make most of these use cases… useable.
For the past years a very limited amount of top corporations have been testing basic use cases which will be deployed sometime next year, but nearly no one is using IoT-blockchain solutions today, and many soon-to-be-launched blockchain projects in e.g. the supply chain sector will only be using the “blockchain” part of IoT-blockchain to track their goods, but still input the data manually.
Will IoT and blockchain eventually collaborate or will they continue to simply co-exist?
To summarize, these are the problems standing in the way of an autonomous future:
- There is no software standard for connecting blockchain to IoT.
As a result, every single vertical company has to build the entire use case AND infrastructure from scratch, which can literally take years.
- Existing blockchains are immature and are outdated quickly.
No company wants to commit to a technology that a) doesn’t work properly for the intended use case (due to slow validation times or hardware constraints on the IoT device), or b) could be outdated in 6 months.
No one knows which distributed ledger technology (DLT) will be the best one for X use case in Y years.
An embedded wallet for the Internet of Things seems to be a promising solution at the moment, basically making a “Ledger Nano” for machines. This would allow almost any device to connect with any DLT, and by not being an IoT gateway it retains the security benefits of the blockchain while by not being a full node it dramatically reduces the load on the IoT device.
This could be one of the ways to go if we want a fully scalable infrastructure for an autonomous, machine-driven economy in the decades to come.
Blockchain is still comparable to the Internet of a few decades ago. The Internet we know today looks nothing like it did back then, and the same can be said about blockchain looking forward. In essence, blockchain can add a whole new dimension to the Internet by introducing new standards of data transparency and peer-to-peer communication. A few decades from now, I reckon the blockchain (and IoT) use cases we see today will look like the incredibly slow Internet we saw when it became public in the 90’s. Devices can now not only transfer data but also monetary value, opening up brand new markets worth trillions in the coming years