In 2008, a secretive inventor—or group of inventors—named Satoshi Nakamoto created the cryptocurrency Bitcoin and its underlying blockchain (or alt-chain) technology. Blockchain is a peer-to-peer distributed ledger system in which transactions are recorded but cannot be copied. This methodology that remedies many of the drawbacks of traditional internet networks as a blockchain is essentially a self-auditing ecosystem that reconciles transactions every ten minutes in groups known as blocks.
Since blockchains cannot be controlled by a single entity and have no single point of failure, they are remarkably robust and ‘trustless’ in that no user has to have faith other users are honest. This offers all-new layers of transparency as the data is embedded within the network as a whole and is, therefore, public. Overriding or altering any information component within the blockchain would require tremendous computing power as the entire distributed ledger network would have to be brought down. In fact, Bitcoin never has had a significant disruption since its inception. Any problems have been due to deliberate human intervention in the form of mismanagement or hacking.
What does this have to do with IoT? Plenty!
On a pure strategic level, blockchains offer immediate advantages to any IoT application. As mentioned, trust is built in for all parties involved and, if an issue ever arises, there is a constant ledger itemizing each transaction. IoT already offers significant cost benefits, but blockchains extract even more savings as the peer-to-peer design eliminates middle-man costs common to legal agreements and other contractual commitments. Likewise, every transaction is accelerated as the absence of a middle man enables quick legal and contractual negotiations.
These low barriers of entry, combined with the unique nature of blockchains as a technology, open up a world of possibilities. The security advantages of IoT enable you to offer superior device systems—from smart homes to city infrastructures—that reduce verification time and feature advanced tamper resistance and detection. In other words, the devices are able to police themselves more effectively than traditional solutions, and seldom require (often expensive) human intervention.
Other applications with potential blockchain markets include community solar projects where neighborhoods can generate/sell their own electricity with precise accuracy, including shared maintenance costs; shared machinery (such as 3D printers in a maker space) where an owner can rent time/materials—even to remote users—knowing the system has completely validated each participant; or community/municipal environmental system maintenance, where the blockchain knows when maintenance is due and if it has been completed on schedule, thereby ensuring the contract is being honored for its duration.
By incorporating blockchains into your business model, you can offer your customers tremendous savings in time, money and effort—in addition to eliminating security and uptime concerns. Like IoT itself, blockchains are in their infancy as a paradigm shift, making this the ideal time to become the acknowledged expert in your marketplace. In fact, blockchains enable you to instantly create markets by overlaying blockchain infrastructures on existing systems (such as a community solar project).
For more information on the advantages of IoT, please visit Aeris / Neo.