The internet is evolving into a new technology paradigm based around smart systems, the blockchain, platforms, and IoT. In the coming years, these technologies will interact and converge in new and unpredictable ways. The convergence of IoT and blockchain will be a major part of this evolution, enabling new automated service systems and business models but many unresolved issues remain. Internet of Things is the merging of our engineered physical environment with information systems to create smart adaptive objects and environments it is a fast-growing, increasingly complex network of connected physical systems that are able to process information and communicate peer to peer in order to enable common services.
These devices are becoming increasingly ubiquitous ranging from autonomous vehicles to sensors monitoring industrial processes, to smart homes and smart cities. IoT is growing rapidly, according to Gartner the global IoT network will connect 26 billion devices by 2020. The development of an IOT infrastructure to our economies will probably be the greatest engineering challenge of our time, dealing with the sheer amount of data due to come on-stream and security are primary concerns before mainstream Internet-of-Things adoption can really take hold in a safe and sustainable fashion, these, among other issues, will need to be resolved.
The blockchain is a secure distributed database for recording transactions, millions of computers networked to create a distributed database for recording and authenticating exchanges of value. With the blockchain, value of any kind can be exchanged directly peer to peer without a centralized authority to record and validate the transaction. The blockchain can provide an automated and secure transaction infrastructure for next generation IoT systems in its capacity to track billions of connected devices and enable the frictionless processing of transactions and coordination between devices. This decentralized approach would eliminate single points of failure, bottlenecks and potentially make data and transactions more secure, creating a more resilient ecosystem for devices to run on. Likewise, it would automate transactions, enabling fully autonomous service systems; reduce cost and reduce settlement time from days to seconds.
One example of an IoT Blockchain system is Slock, a door lock that is connected to a smart contract on the blockchain that controls when and who can open the lock. One of the developers of Slock Christoph Jentzsch described its workings as such: “The owner of a Slock can set a deposit amount and a price for renting his property, and the user will pay that deposit through a transaction to the Ethereum blockchain, thereby getting permission to open and close that smart lock through their smartphone.” Such technology bridges the blockchain and the physical world by making automated smart contracts, thus enabling the frictionless and automated temporary exchange of assets such as bikes, parking lots or rooms. “Smart contracts, a feature of “Bitcoin 2.0” technologies such as Ethereum, could soon operate on the Internet of Things (IoT), control objects in the physical world, and power a new decentralized version of the sharing economy, for example sharing services similar to Uber and Airbnb that operate in pure P2P mode without centralized management.” – Bitcoin Magazine. Leveraging blockchain for IoT offers new ways to automate business processes and build distributed autonomous service systems. “The true value of the underlying technology — the blockchain — has only just begun to be explored, and potential applications to the Internet of Things and Smart Systems are vast.”