Bitcoin has become one of the most interesting technologies of the past few years. The magic behind bitcoin is powered by an equally exciting technology known as the blockchain. While the Bitcoin is certainly the most famous application of the blockchain, it is far from being the only one. The decentralized, trustless and secured capabilities of the blockchain have the potential of redefining many traditional business solutions including those powering the enterprise Internet of Things (IoT).

The blockchain explained

The blockchain is Bitcoin’s public ledger. From a functional standpoint, the blockchain provides a decentralized, time stamped, ordered record of all transactions in a Bitcoin network that can be verified at any time. These simple capabilities represent the first practical answer to profound computer science problems based on the trust of nodes in a decentralized network. One of the most popular and ancient problems that can be solved by the blockchain is the "the Byzantine Generals’ Problem.” To quote from the original paper defining the B.G.P.:

“[Imagine] a group of generals of the Byzantine army camped with their troops around an enemy city. Communicating only by messenger, the generals must agree upon a common battle plan. However, one or more of them may be traitors who will try to confuse the others. The problem is to find an algorithm to ensure that the loyal generals will reach agreement.”

The blockchain can solve the B.G.P. because it provides, for the first time, the infrastructure for a user to directly transfer a piece of property (ex: money), to another user in a secure and safe way in which everyone in the network knows about the transfer and yet nobody can challenge its legitimacy.

The blockchain and industrial IoT

The decentralized, autonomous, and trustless capabilities of the blockchain make it an ideal component to become a foundational element of industrial IoT solutions. It is not a surprise that enterprise IoT technologies have quickly become one of the early adopters of blockchain technologies.

In an IoT network, the blockchain can keep an immutable record of the history of smart devices. This feature enables the autonomous functioning of smart devices without the need for centralized authority. As a result, the blockchain opens the door to a series of IoT scenarios that were remarkably difficult, or even impossible to implement without it.

Trustless peer-to-peer messaging

By leveraging the blockchain, industrial IoT solutions can enable secure, trustless messaging between devices in an IoT network. In this model, the blockchain will treat message exchanges between devices similar to financial transactions in a bitcoin network. To enable message exchanges, devices will leverage smart contracts which then model the agreement between the two parties.

In this scenario, we can sensor from afar, communicating directly with the irrigation system in order to control the flow of water based on conditions detected on the crops. Similarly, smart devices in an oil platform can exchange data to adjust functioning based on weather conditions.

Autonomous smart devices

Using the blockchain will enable true autonomous smart devices that can exchange data, or even execute financial transactions, without the need of a centralized broker. This type of autonomy is possible because the nodes in the blockchain network will verify the validity of the transaction without relying on a centralized authority.

In this scenario, we can envision smart devices in a manufacturing plant that can place orders for repairing some of its parts without the need of human or centralized intervention. Similarly, smart vehicles in a truck fleet will be able to provide a complete report of the most important parts needing replacement after arriving at a workshop.

Fully auditable, secured device ledger

One of the most exciting capabilities of the blockchain is the ability to maintain a duly decentralized, trusted ledger of all transactions occurring in a network. This capability is essential to enable the many compliance and regulatory requirements of industrial IoT applications without the need to rely on a centralized model.

It’s happening already

The promise of the blockchain in IoT solutions is far from just a theoretical exercise. From incumbents to startups, new IoT technologies are leveraging the capabilities of the blockchain to disrupt traditional centralized IoT scenarios. Let’s look at a few examples:

Last year, IBM and Samsung announced a collaboration to build decentralized IoT solutions by leveraging the blockchain. IBM documented some of the learnings from the initial pilot in a very thoughtful paper that is one of the first documented architecture references for using the blockchain in IoT scenarios.

Filament is startup that develops ad-hoc mesh networks of smart sensors for industrial applications, operating on the blockchain. Filament’s wireless sensor devices, or Taps, can cover industrial areas with low-power autonomous mesh networks for data collection and asset monitoring. By leveraging the blockchain, devices in a network can accept bitcoin payments to enable access to specific data.

Blockchain platform leader Ethereum, recently hosted a hackathon to build IoT solutions powered by the blockchain. The solutions produced by this exercise clearly highlight the disruptive nature of the blockchain in IoT solutions.

These are just some of the examples of IoT solutions that are starting to leverage the capabilities of the blockchain. While we are still in the early stages of the evolution of the blockchain technologies, the possibilities in the IoT space are nothing short of remarkable. Exciting times indeed.