Blockchain and IoT: Why They Depend on Each Other


The other week, I posted a message on LinkedIn to call out Dell Technologies on its recent, high-profile announcement of an Internet of Things (IoT) initiative.

The tech giant plans to invest $1 billion in IoT developments over the next three years, CEO Michael Dell told an audience at a corporate event in New York City. But it seems that none of that money will go toward blockchain initiatives, as the technology was never mentioned during any of the presentations.

Somewhat to my surprise, a number of people pushed back on my snarky message with the view that blockchains and IoT have nothing to do with one another. That made me smile a bit, not least since a few days later I hosted Zaki Manian, executive director of the Trusted IoT Alliance at a meetup in Austin, Texas. The fact is, blockchain and IoT technologies have much to align and relate them.

To set the scene, the Trusted IoT Alliance - which began informally late in 2016 before its official launch in September 2017 - has a mission to secure IoT devices using standard cryptographic techniques and to "enable trust in the data produced by IoT systems in a distributed ledger/blockchain agnostic fashion." An additional goal is to create a standard smart contract interface between IoT devices and different blockchain implementations.

The founding members of the Trusted IoT Alliance include networking giant Cisco Systems, leading IoT sensor vendor Bosch and security expert Gemalto. Other founders include supply chain-oriented blockchain startups Chronicled and Skuchain (which is where Manian worked as the CTO before taking on his current role); ConsenSys (because it tends to be everywhere that Ethereum is); and IOTA, which is building a blockchain platform specifically to connect IoT devices.

One early project involving blockchains and IoT technology points not only to the promise of uniting these technologies, but also illustrates the technical challenges involved and how they can be overcome. It involves startup Factom , which has built a blockchain overlay network for securing large amounts of data and its customer, the U.S. Department of Homeland Security (DHS).

The DHS application involves cameras placed along the U.S. borders with Canada and Mexico. Data retrieved and streamed from these devices - including device identity and video footage - is captured by Factom's network which, through a hierarchical hashing process called a "Merkle tree," condenses it into a single hash that can be stored on the Bitcoin blockchain.

Bitcoin's function - since the global public network is virtually tamper proof - is to anchor the data collected so that if it is later modified, any such change can be readily detected. As such, hacker attacks on cameras and altering of video can be detected. On top of the added security, the integrity of the camera network and the video it generates is provable in any later legal proceedings.

The use of Factom's overlay network technology is notable, since it solves a technology challenge that is well understood in blockchain circles. IoT devices can generate lots of data and generate it at a fast rate, so simply storing that data directly on the Bitcoin (or Ethereum) blockchain would overwhelm it quickly.

Factom's network acts as a middleware component to stage masses of data from input devices and store hashes of it periodically on a secure blockchain. Other technologies, such as messaging middleware and stream processing applications, from the likes of IBM, SAP and TIBCO Software, might also be architected to ease the integration of IoT and blockchain technology.

In addition to the Factom and DHS pilot, the marriage of IoT devices and blockchains is being trialed by a number of vendors focused on various aspects of supply chain automation.

One early example was demonstrated by Skuchain , a Silicon Valley startup involved in the financing of trade. In October 2016, it was involved in a pilot involving the shipment of bales of cotton from the U.S. to China. Both the Commonwealth Bank of Australia and Wells Fargo were involved in the financing, which saw payments being initiated via an Ethereum smart contract based on data from a GPS-enabled sensor that issued an alert when the cotton reached China.

Meanwhile, Chronicled , another West Coast startup, has created a solution for monitoring so-called cold chains - essentially temperature-controlled transportation, which is used to ship fresh foods and pharmaceuticals. The Chronicled's solution combines a low-cost temperature sensor that can be read via near-field communication technology by a smartphone with data being stored on a blockchain (such as Ethereum, Quorum or Hyperledger Fabric).

Across the pond, the Swiss-based Ambrosus is developing a blockchain-based tracking and community ecosphere for the food and pharmaceutical industries. It is also marrying Ethereum blockchain and smart contract technologies with IoT devices that determine location and measure temperature, as outlined in a recent blog post .

Beyond these early examples, there's little doubt that major IT players like IBM, Oracle and SAP are also actively working on the marriage of IoT and blockchain technologies. Dell, though, seems pretty much in the dark when it comes to blockchains.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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