Both the securing of the Internet of Things, as well as the monetizing of it, are roles for blockchain technology, experts say.
In one developing case, the Isle of Man, a self-governing British dependency located just off the U.K. mainland, is testing the use of a blockchain prototype to try to preemptively see-off IoT hacking, according to Financial News, which wrote about the island’s efforts.
The island is a financial center and is looking to expand its offerings through fintech. It’s already involved in digital currency.
In another thrust, blockchain could be a way to add security, privacy and micro-payments to sensors and devices, says Craig Bachman of TM Forum’s Open Digital Program, writing in an unrelated blog post.
What is blockchain?
Blockchain, for those who need to get their heads around this revolutionary authentication and transactional system, is a securely managed database—or ledger—that’s distributed by a network.
The network nodes all maintain a copy of the encrypted database, and new records can be added only through complicated hash validation functions. The records are added in blocks that link securely to the previously added block—hence the name.
Each node-held database contains the entire transactional history, so central databases become redundant. The record is supposedly secure in part because no one person can manipulate it—the database is replicated on all the nodes and can’t be changed on all of them without the right cryptographic key.
Perhaps the most important element is that all of the transactions or events are indelibly recorded, making fraud hard to perpetrate—data anomalies are transparent.
Blockchain ledger system for IoT devices
In the Isle of Man project, Blockchain startup Credits, along with the government there, has started to develop its blockchain-based distributed ledger system that assigns and manages unique digital identities for IoT devices, Financial News explains.
The idea behind that system is that “a unique, non-forgeable identity” is assigned to “physical items,” says Credits CEO and co-founder Nick Williamson, “and what the blockchain provides is the way of managing and maintaining an identity.”
In other words, registration of an asset—the IoT device— takes place, then authentication, provided by the blockchain, guarantees it.
Monetization, is another facet. That’s where Bachman is coming from in his blog post.
“The Internet of Things needs a Ledger of Things. It needs a way to score what’s talking to what, who owes who money, and reconcile all of that,” says Alex Tapscott, co-author with Don Tapscott of Blockchain Revolution, in Bachman’s post.
In effect, the IoT’s numerous sensors could monetize through micro-transactions, Bachman says.
Service-level agreements could be one example, say, where the checking and enforcing of contracts takes place as sensors or chips are used.
The IoT genre could conceivably end up in the trillions-of-devices stratosphere, and one could argue that a method needs to be devised to audit potentially trillions of minuscule transactions. Blockchain allows for “recording the data and also ensuring it can’t be changed,” Bachman says. So, it would be a good way to do that, he says.
Provisioning of services, time-stamping and digital assets such as music and other intellectual property, tied in with IoT devices and sensors, might mesh well with blockchain, too.
Interestingly, much time-stamping, including global banking, uses the GPS constellation’s atomic clocks, and GPS isn’t authenticated at the civilian level, so that system could conceivably use the fraud detection inherent in blockchain.
Elections, along with public auditing of ballots, and indeed some saybanking itself, might be ideal for blockchain adoption, too.