How Blockchain Impacts IoT

It seems like every major tech company is making significant inroads in the vast market of the Internet of Things (IoT). Whether they desire to get a digital assistant in every living room or the self-driving car initiative, IoT is everywhere. Currently, there are over 8 billion IoT connected devices, and Mckinsey and Co. estimate that number to increase to between 20 and 30 billion by 2020.

That’s a lot of devices. Inevitably, with all these connected devices, there are bound to be some failures, and there have been. Some have been more egregious than others, but it only takes one family’s baby monitor to be hacked to cause some serious trepidation about the proliferation of IoT. It seems that, for all its growth and promise, IoT requires some significant improvements to fulfill its potential as a world-altering technology.

IoT isn’t the only thing altering the technological landscape. This year, the blockchain, the decentralized ledger system that enables cryptocurrencies like Bitcoin and Ethereum to thrive, is also proving to have beneficial use cases that extend far beyond just cryptocurrencies. The blockchain offers many benefits including its unparalleled security, its decentralized system, and its broad usability. About the blockchain, Deloitte writes, “The technology carries the potential to disrupt business models in many industries…and can increase transparency, and efficiencies in the process.”

Both technologies are just getting started, and it appears that their correlating ascension can be for the benefit of both. Bringing blockchain to IoT will introduce the emerging blockchain concept to a broad audience. For IoT, blockchain seems poised to provide increased capability, improved reliability, and valuable security enhancements that will help proliferate both platforms.

1. Capability. While this can have many nuanced meanings for IoT, capability is primarily measured by speed. Many essential IoT use cases require incredible speed to be effective. For example, the driverless car initiative has vast implications for IoT. Not only does the actual car rely on fast data from several different information sources, but it can also communicate with several other IoT services to mature the entire ecosystem. Smart cars can convey gas prices, traffic conditions, road conditions, and additional helpful information to an IoT network that is improving the experience for all users across several different domains. Tokenization of data on the blockchain is what allows this to happen. Companies like Streamr utilize the tokenization of assets and smart contracts embedded in the blockchain to ensure that IoT devices are safe and secure. Their DATAtoken allows users to buy and sell IoT related data while also providing fast, usable data to power IoT infrastructure.

2. Reliability. For IoT to be successful and not just novel, it has to be more reliable than its human counterparts. If it’s ultimately easier for people to do a job then IoT is failing to provide its intended service. To improve reliability, the blockchain doesn’t use a centralized server, so an outage in one place doesn’t impact performance in another place. IBM’s Watson initiative cites this removal of single point of failure as one of the most compelling features of the blockchain. For IoT to thrive with regularity, it has to work correctly all of the time, and blockchain helps ensure that it can.

3. Security. As Bitcoin and other cryptocurrencies have soared in value this year, the blockchain has proven to be a strong security force against possible theft or intrusion. In the post-Equifax technological landscape, this is undeniably impressive. The blockchain uses smart contracts, digital agreements comprised of computer code that ensure that the right people have the right information at the right time. When it comes to our technology having an active role in our lives, its integrity is a critical consideration, and blockchain helps ensure that convenience isn’t prioritized above security.

Blockchain and IoT are engaged in the proverbial “you scratch my back, and I’ll scratch yours.” IoT is poised to alter the technological landscape entirely, but it needs better systems to ensure that it can meet the hype. In contrast, blockchain is one of the most capable and compelling technologies available. It’s already powering valuable cryptocurrencies, but its real potential lies in its compressive implementation across industries. As companies like Streamr bring the power of blockchain to IoT, everyone benefits from a safer, more reliable, and more capable internet of things.