Mention blockchain to your average Joe, and odds are that it evokes notions of cryptocurrencies, like Bitcoin, and covert financial transactions. But in the enterprise world, blockchain is much more than an ultra-secure, digital financial ledger or another “over-hyped” new technology.
When combined with the Internet of Things (IoT), blockchain enables new value propositions and new business models, while solving transparency, complexity and security challenges in transactions involving multiple parties and large amounts of data, or records of value. In many ways, blockchain is the “missing link” that enables IoT deployments to achieve their full potential.
Before diving into this subject in more detail, let’s clear up some of the misconceptions and misunderstandings surrounding blockchain. In a basic sense, blockchain is core technology serving as a decentralized ledger that allows a shared set of computing systems to agree that a transaction between parties is authentic. These outcomes are recorded in a cryptographically secured database structure – the blockchain itself. It is impossible to manipulate information within the blockchain, so all parties are able to agree on a single version of the truth in a transaction. Easy enough, right?
So, how does blockchain relate to IoT? In the enterprise, the real value of IoT comes from the data that connected devices generate. This data can be analyzed to identify areas for business improvements and opportunities for new value propositions and markets. For example, manufacturers can analyze the IoT data streams from connected machines on their plant floor to enable predictive maintenance, and therefore, reduce downtime.
In many use cases, such IoT data traverses across organizational boundaries, and even across multiple enterprises – giving practitioners a “big picture” view of operations. The challenge is ensuring this data is accurate, trustworthy and most importantly, secure. Further, reconciling the data is a time-consuming process, especially when done manually, involving data sets from disparate sources that often do not match.
Here’s where blockchain can help. Blockchain technology facilitates the seamless, permanent and decentralized recording of IoT data transactions across entire organizations and even across devices. There is no need for an intermediary to reconcile that data – everyone knows they are looking at a single version of the truth, which establishes trust among all parties. With these benefits, blockchain makes IoT deployments much more efficient and powerful. Let’s explore a couple of use cases.
Providing a single source of the truth and instantaneous transaction reconciliation, blockchain technology fits right at home in decentralized computing environments like supply chains. Specifically, blockchain can alleviate many track-and-trace challenges, helping minimize the impacts of counterfeiting, product recalls and foodborne illnesses.
For example, counterfeiting is a massive problem in the semiconductor industry, costing U.S.-based chip manufacturers $7.
