Blockchain and the Internet of Things are two topics that are creating a lot of hype at the moment – not just in the technological world, but in the wider business context too.
Blockchain primarily consists of a continuously growing list of records called ‘blocks’ which are linked together in an open and secure distributed ledger that can record transactions in a robust, efficient and secure way. The Internet of Things on the other hand, consists primarily of a network of physical devices, such as vehicles or home appliances, that are embedded with electronic sensors, software and connectivity which enables these objects to connect and exchange data.
Combining the two could result in something even greater than the sum of its parts. And for good reason – you would have a verifiable, robust and permanent method of recording data processed by ‘smart’ machines in the IoT.
The main benefit of combining the two technologies is the transparency. With blockchain technology, activity can be tracked and analyzed by anyone connected to the network and should anything go wrong, the blockchain record would make it very easy to identify the root cause and take the necessary action.
The decentralized nature of blockchain would also mean less bottlenecks and strains on connected devices. As more data is stored on centralized cloud storage devices for example, these systems would become ever more bloated – a problem that blockchain could remedy thanks to its distributed nature.
In addition, blockchain offers the potential of greatly enhancing the overall security of the IoT infrastructure. Much of the data generated by IoT such as in smart home devices for example, is highly personal. It is this data that needs to be shared with other machines, but it also means that there are far more opportunities for hackers to exploit in this regard.
Moreover, the combination of blockchain and IoT would better facilitate ‘smart contracts’. This would be highly useful when it comes to authorizing a payment once certain conditions are met in a transaction.