Why IoT Could Be the Key to Unlocking Blockchain’s Mainstream Appeal
Blockchain has established a foothold in nearly every industry as a force of change, yet it hasn’t had the same impact in each one. While it’s barely made progress in some fields, blockchain has sparked a quiet revolution in places like finance, and not just because of cryptocurrency. Banks and financial institutions are currently testing blockchain-based settlement platforms that already help them avoid transactional overheads and simultaneously pad their bottom lines. This behind-the-scenes support among corporate banking entities is hardly considered “mainstream”, however, in the way that most people consider it.
When blockchain truly goes mainstream, it will be with a platform, product, or service that achieves universal recognition among retail consumers—regular Joes—as both indispensable and impossible without blockchain itself. This is likelier to happen in the IoT (Internet of Things) space than anywhere else. Thanks largely to the high relevancy that blockchain enjoys with the concept of IoT, it will prevail, but also because the sheer number of devices connected to the IoT represent a large pre-built network that is ripe for blockchain’s takeover. Successfully monetizing this network or making it more useful to device owners represents an opportunity to bring blockchain more into the mainstream in a timely and lucrative manner for all parties involved.
Defining Decentralized Networks
At the epicenter of blockchain’s utility is the decentralized ledger, which is capable of organizing and recording an immutable list of transactions coming from any number of connected peers. This applies to transactions on the Bitcoin blockchain just as it does a platform for storing an ever-changing database of medical records, or a network of computers which share cloud storage. The bottom line is that blockchain is excellent at creating a story out of data, because its impressive cryptographic capabilities are able to keep any number of users, and all their accompanying transactions, accountable and transparent.
This is useful for people trading coins, who want to avoid double spending and prove their ownership over assets, but also applicable to the most miniscule data-transmitting devices. Decentralized networks are commonly thought of as groups of peers who use their computers to contribute to a distributed idea, but peers don’t have to be large PCs with sophisticated graphics cards or processors. Anything that can connect to the blockchain is capable of contributing in some small way, opening a window of opportunity for virtually every IoT-enabled device (smart home products, security systems, mobile speakers and phones, and countless others).
The opportunity for blockchain in this space is to help connect these devices and incorporate blockchain ideas like tokens and the tangible value of data. If blockchain has taught us anything, it’s that data has value, which is already evident if one takes a close look at the big data industry and how they monetize user data. IoT devices are an excellent way to capture helpful data—environmental conditions, usage statistics, and more—and connecting them to the blockchain would mean owners of these devices could monetize their device data, but also unlock the autonomous capabilities of IoT itself.
The basic problem that blockchain solves in IoT is that a central authority is still needed to verify the authenticity and accuracy of data emitted from one device to another. This makes it hard to scale, constricting the functionality of a network that centers around devices that “talk” to each other. A universal, trustless blockchain model that incorporates different devices is a great way for them to all to cooperate and send each other messages or prompts while trusting that the information is both accurate and organized.
This provides opportunities for greater autonomy, which leads to the “pipedream” IoT projects only spoken about on TED Talks and message boards—safer autonomous cars that can announce their presence to others on the road, fill themselves up with gas, or send a signal to nearby garages if a critical part breaks, for example. This idea isn’t possible today because even though a car might be able to stream data, this data is limited by the scaling conundrum and the fragmented IoT network. Computers still need to verify that any single car’s speed is actually what it says it is, and who’s to say that the car’s system is compatible with the gas station’s?
Monetizing IoT device data will be the first step on the path for blockchain serving as the crux of a mainstream revolution, as it will help incentivize more devices to join the same blockchain, making data more accurate and therefore justifying its value. IOTW and others like Logz.io are working to incentivize more IoT device owners to add their devices to the blockchain, in an attempt to weave the young network together using real data. IOTW focuses on helping users onboard common IoT-enabled devices to their blockchain, which can begin “mining” (sharing their data with the network) and generating token returns. Logz.io is a similar idea for business, allowing businesses to analyze their IoT devices and establish leaner data pipelines.
Even IBM has entered the blockchain IoT space, which isn’t a surprise given the opportunity presented. The company’s IoT Blockchain Service supports companies which want to employ the blockchain across their IoT devices by helping them determine if the conditions and other actionable criteria built into any proprietary IoT blockchain are in the best shape possible.
Upgrading the Internet of Things
If the idea of earning money just for volunteering one’s device data to a decentralized network doesn’t catch mainstream appeal, the results of this trend absolutely will. As device owners monetize their device’s data, this helps device networks become more effective. Sharing data makes relevant devices on the Internet of Things smarter, helping ideas that were once deemed harebrained gather momentum. It is these ideas that will likely catch fire in terms of mainstream appeal more than any other, but there is still much work to be done.