The Next Big Thing

Written by Kyle Qian, '21
Edited by Ashwin Palaniappan

Some of the biggest current trends in the tech world are blockchain and the internet of things -- they are the backbone of products for emerging startups and established tech giants alike. While the hype surrounding these areas is a bit excessive, much of it is warranted. Blockchain is essentially a distributed database of records. Simply put, it allows us to keep track of information in a secure, yet transparent fashion and is pretty groundbreaking in the sense that it is pretty much impossible to forge/hack the data. Meanwhile, the internet of things is the idea of connecting all things in the world to the internet, so that these things may freely exchange data. For instance, imagine smart homes, where all appliances and utilities could be controlled through your phone. The analyst firm Gartner predicts that by 2020, there will be more 26 billion such connected devices powering IoT. Separately, these revolutionary technologies are already serving different needs across industries. Jointly, they could greatly improve the quality of life -- secure data transmissions is positioned to impact everyone’s life at some point-- and raise the bar for technological development.

Upon first glance, there seems to be no apparent connection between blockchain and IoT. However, blockchain is a powerful way to bring scalable, decentralized security and trust to IoT devices, applications and platforms, which are similarly distributed and decentralized. Some current issues with IoT include security, privacy, and lack of confidence -- it is really easy to hack into these systems and gain access to sensitive information. Blockchain answers the challenge of scalability, single point of failure, time stamping, record, privacy, trust and reliability in a very consistent way. Recently, IBM spotlighted this potential intersection of tech trends and lists an example that goes to exhibit the effectiveness. Moving freight is a complex process involving different parties with different priorities. An IoT-enabled blockchain can store the temperatures, position, arrival times, and status of shipping containers as they move through the system. Transparent blockchain transactions ensure that all parties can trust the data and take action to move the product quickly and efficiently. The three main benefits to this are: trust, reduced costs, and accelerated transactions applied to a wide range of devices connected by IoT. Imagine for any transaction, being able to cut out the middleman and any costs involved -- the whole purpose of platforms like Uber, Amazon. That is why blockchain-IoT is so powerful. So far, blockchain has been applied to finance, authorship/ownership, commodities, authentication, e-voting, real estate, ride-sharing. So why not IoT?

Of course, there are many disadvantages and risks to consider. Blockchain and IoT may work for certain situations, but that does not mean it is applicable to all. There are currently physical and technological issues that limit the effectiveness of this combination. Blockchain eliminates the need for a centralized authority by making all transactions stored publicly, but this just means that the data has to be stored by the individual items themselves, and this data will increase in size as time passes. That is beyond the capabilities of a wide range of smart devices such as sensors, which have very low storage capacity. Additionally, there are vendor risks involved. Practically speaking, most present organizations (including IoT businesses), looking to deploy blockchain-based applications, lack the required technical skills and expertise to design and deploy a blockchain based system and implement smart contracts completely in-house. If they incorrectly design these systems, it would be no better than having no blockchain at all. The larger theme at play here is that technology is only as powerful as how it is used.

From a practical standpoint, we are still a ways away from achieving this high-powered super combo. But, research and recent trends have shown that it is not far out of reach. It is not hard to envision our world soon being transformed into a more efficient, yet secure place.

Sources: 

[1] Crosby, Michael, Pradan Pattanayak, and Sanjeev Verma. "BlockChain Technology: Beyond Bitcoin." Applied Innovation Review, June 2016.

[2] Lemieux, Victoria Louise. "Trusting Records: Is Blockchain Technology the Answer?" Records Management Journal 26, no. 2 (2016): 110-39. doi:10.1108/rmj-12-2015-0042.