How IBM and the Chain of Things Alliance are using blockchain technology to develop the Internet of Things

Blockchain technology has the potential to advance the Internet of Things (IoT) and also drive greater efficiency in resource utilization, as recently highlighted by Ernst & Young (EY).

“Blockchain-powered Industrial IoT networks will allow us to connect industrial assets — everything from shipping containers to MRI machines to construction equipment — to digital marketplaces in real time so we can better leverage those assets.”

IoT enables devices to connect to each other and share information, but it also raises unique security issues; for example, the possibility of data theft and the output of connected devices being hacked. It is estimated that the number of IoT devices will reach 2-20 billion by 2020, however, this growing industry still lacks a standardized security system. Although companies like IBM are exploring the role that blockchain can play in protecting IoT devices, Chain of Things is one such alliance that aims to explore whether blockchain can solve the security threats facing IoT.

How does blockchain advance IoT?

By recording all exchanges into a digital ledger, blockchain can provide a way to track the unique history of a device. In addition, blockchain technology can enable devices to automatically execute various transactions. The authentication provided by blockchain is already protecting billions of dollars in cryptocurrency digital assets, and this technology can also prevent malicious imitation in IoT devices. Through encryption, only verified devices have access rights. Any changes to the device will be recorded on the blockchain and verified by the distributed network, ensuring that forged records are discovered in a timely manner and that data between individuals, devices and networks is seamlessly transferred.

IBM proposes three types of transactions that decentralized IoT should support:

1. Trustless p2p communication

2. Secure distributed data sharing

3. A powerful and scalable form of device coordination

For the third type of transactions, Ethereum has recently made progress, namely their own 'Lightning Network' Radien, also known as the 'Raiden Network', which will help scale the Ethereum blockchain. The creator of the Raiden Network, Heiko Hees, said that the Raiden Network will allow 100,000 transactions per second and will be operational by the end of this month.

The Raiden Network will minimize the amount of data broadcast to the network, which can be achieved by turning the results of thousands or millions of transactions into a single on-chain transaction. Because transaction data is not broadcast on the network, the Raiden Network has the benefit of privacy, which has attracted the attention of many privacy-focused companies.

This blockchain is designed to allow transactions without consensus or transaction fees, which will work well for IoT devices. Hees believes that the next wave of startups creating apps for IoT will be more likely to choose to use blockchain technology.

“I think from an IoT developer’s perspective, this is great, especially since the IoT economy will benefit from interoperability between multiple devices, and blockchain can be a common rail for infrastructure.”

What will it look like when blockchain and IoT are combined?

IDEO Colab recently demonstrated prototype projects that connect blockchain with IoT. One of the most interesting is Witness. The problem that this combination can solve is proving the legitimacy of data. For example, Witness is dedicated to democratizing photojournalism. It is worth noting that news organizations often face difficulties when legally reprinting photos taken by individuals. The legitimacy of the source may be questioned and may be difficult to prove.

However, Witness allows news organizations to make requests for images from people close to a story. Individuals will be able to upload images directly from their phones. By leveraging a system of smart contracts, micropayments, and verifiable metadata, Witness is a trusted platform where individuals and media organizations can transact, creating new markets and increasing productivity.

Another prototype created by IDEO Colabs is Inquire, an app that allows you to access a network of experts to get information, for example, about the food in a certain location. Machine learning is also involved, so the process of finding the information you need is automated.

Blockchain can become an industry-wide standard among companies such as IBM, Microsoft, etc. The Chain of Things Alliance will be an important member to take action to identify potential problems through blockchain technology. Ethereum has received a lot of praise from industry giants and provides the potential to protect IoT. As IBM said:

“Ethereum is able to use blockchain technology in a more full-featured way than Bitcoin, which was designed for finance only. By adding the ability to use executable code inside, Ethereum can be used for many more purposes. This is exactly what the IoT will need.”