In the months to come, expect to hear a lot of conversations about the melding of blockchain technology and the Internet of Things (IoT). While blockchain technology is largely thought of as the driver of cryptocurrency transactions, it has the potential to radically reshape the way business is done across the globe. As a data management system that is both distributed and tamper-proof, it creates activity records that are real-time, easily accessible, trackable, yet secure.
IoT refers to an ongoing process through which common, everyday items have become “wired.” That is to say, they serve data-driven and accumulating processes to make life easier and more interconnected. Think wearable smart devices, like Fitbit, which monitor biometric conditions and track exercise routines, connecting this data with other devices, websites and even medical offices. Or smart appliances for the home, like Amazon’s Alexa technology, through which disparate applications such as music playlist choices, lighting systems and home media appliances can be controlled by one’s voice.
The Internet of Things Is Here to Stay
These two applications just scratch the surface of where IoT is headed. We are already seeing cities where traffic patterns, parking spaces, lighting and energy usage are tracked and disseminated to the populace in real-time. This is reducing the time it takes to drive from point-to-point, reducing previously wasted energy, reducing taxes and making cities more comfortable at lower costs.
The IoT is not going to go away, but it is not without risks.
While smart cities and similar applications will lead to greater efficiency in all manner of activities, there are problems. First and foremost, any application that is on and driven by the Internet is vulnerable to hacking and other security risks. Secure protocols are endangered from the moment they are first placed on the Web.
This is where these two seemingly disparate technologies will join, leading to truly great things.
When Blockchain Technology Crosses with the Internet of Things
Using blockchain technology to underpin IoT will solve many of the security issues that come with networked technologies. As an autonomous, ledgering system that cannot be falsely manipulated, it would bring built in trust to the IoT. Blockchain code runs smart contracts, which expedite the transfer of data in the forms of currency, property, or other items of value. These smart contracts cannot be destroyed, lost or hijacked because they are part of the blockchain system, leading to perfect, secure inventories.
Furthermore, blockchain technology can increase productivity and adaptability in ways never possible. It can run and maintain decentralized applications, or Dapps, to make use of empty or unoccupied inventory. Dapps were first used to run cryptocurrencies like Bitcoin and Ethereum. But, we’ve reached a point where the products generated by the code are finding ways to use it unique ways. Ethereum is working blockchain technology, Ethereum is designing code that can be used to run these same decentralized applications at a deeper level.
So how would this all work?
An example of possible future Dapps include car rental agencies using to track their fleet and use unreserved cars in a fashion like Uber or Lyft. Not only would the company increase its income, but it could use the cars to capture and run “Big Data,” informing the fleet what the best traffic routes are in real-time, and where groups of customers are waiting. The rest of the fleet could already be in action before they are contacted, decreasing driving time and customer waiting time. Should a car be reserved, one could be pulled back to headquarters.
Think of how well this will work when self-driving cars are released.
This is just a single example of how the marriage of these two technologies will lead to greater security, increased efficiency, and augmented profits that provide value for company and customer alike.
Have we piqued your interest? Read five other ways blockchain can affect you in everyday life.