Using Blockchain to support reliable transactions on IoT

Recent developments in the IT sector are paving the way for demonstrations of how blockchain can help transform Internet of Things networks into reliable environments.

Marginal trade is coming rapidly in our lives. Whenever we adopt a new, intelligent and connected product and use it to buy and sell material on the Internet, we are moving more intimately towards the limit.

The colloquial trade, in Alexa style, is the forerunner of the most pervasive future of the marginal trade that awaits us all. As each new Internet of Things device arrives online and expands its automation capabilities, our personal on-board nodes will be at the center of our lives. Smart devices will acquire, configure, restore, update, optimize, repair and otherwise manage every material and virtual aspect of our lives. They will also become fundamental to the way we monetize each of our assets, in particular the data, processing, storage and other resources that make up the lifeblood of this new connected economy.

Image: Pixabay / Geralt

Image: Pixabay / Geralt

In essence, IoT is becoming the world's most pervasive transactional platform. However, it can not fulfill this promise if it can not rely on a radically distributed, federated and omnipresent trust infrastructure. Confidence is in short supply in today's handyman IoT. This is because, more often than not, peripheral devices communicate with other devices belonging to several parties, without any relationship of trust established between them. In these circumstances, concerns about privacy, privacy, malware and intellectual property protection come to the fore. Likewise, the lack of robust protections such as two-phase commit, high availability, fault tolerance and congestion management introduce risks into unregulated marginal trade applications.

Blockchain is a missing piece in today's IoT transactional puzzle. When implemented in edge commerce environments, blockchains can facilitate reliable transactions between IoT nodes on different levels:

Discovery: If used to maintain business partner profiles, blockchain can reduce the costs of discovering, hiring and managing buyer / seller relationships in edge-commerce environments. In this way, blockchain can facilitate the creation, maintenance and application of smart contracts for the sharing of information and commercial transactions between different parts mediated by the IoT through one or more federated edge-commerce networks.

Protection: When applied to IoT devices and gateways, blockchain technology can protect acquired, stored and processed data at the node level. It does this by ensuring that all onboard data is cryptographically verified and tampered with in a distributed hyperledger that is shared by all edge-commerce participants. It can validate the integrity of the edge-commerce transactions before accepting them. In addition, it can optionally support encryption of the transactional edge-commerce payload data.

predictability: When implemented in cloud-to-edge environments, blockchain can support the automation of complex transactions through intelligent contracts embedded in intelligent agents deployed on each node. Smart contracts are self-executable programs that reside in the blockchain and are protected by cryptographic techniques applied to all persistent content. They encapsulate the business logic and the conditions that determine when a contract will be executed, thus allowing the transactional behavior of buying and selling IoT devices to be concluded at a good level.

elasticity: When used in conjunction with distributed IoT clouds, blockchain can provide the resiliency needed to prevent transaction failure even when individual edge and gateway nodes are no longer available. Blockchain's peer-to-peer topology provides end-to-end error tolerance over data, smart contracts, device metadata, machine learning models, and other logical elements and artifacts on which edge-commerce transactions depend.

In a distributed blockchain IoT network, the intelligent contract agents installed on each node may be able to perform transactions in mesh configurations without a central server, thus adding an additional layer of resilience and defense against cyber attacks. The decentralized Blockchain fabric also allows a lighter, faster, more reliable and safer internode communication to speed up transactions between on-board fabrics.

Governance: When integrated into edge commerce, blockchains maintain an indelible, immutable and shared record of all transactions. This provides the reliable audit trail necessary for companies and individuals to buy, sell, broker and otherwise engage in transactions of all kinds. It can also provide a shared transactional record to enforce contractual obligations between the parties performing transactions on edge-commerce networks. It can provide a permanent record to ensure compliance with EU, sectoral and government mandates. Once embedded in each IoT device, the intelligent contract software may be able to record which specific actions are taken at the node level under various conditions, thus providing further evidence of compliance.

monetization: If used as a basis for cryptocurrencies, blockchains can provide the liquidity necessary to accelerate transactions between buyers and sellers who maintain positions in such currencies. In this way, blockchain can increase the ability of IoT-equipped parties to monetize their transactions across edge-network environments.

Online markets will emerge that exploit the power of trusted blockchains in the marginal economy. An open ecosystem will emerge where device manufacturers and service providers take advantage of IoTs, blockchains, smart contracts, artificial intelligence, streaming and cloud computing to automate 24×7 commerce between peripheral devices operating on behalf of consumers. Many of the cases of use for these blockchain-based edge commerce environments may include chatbots and other conversational front-end device interfaces, but many will incorporate peripheral devices that are partially or entirely autonomous.

In this regard, it is worth noting a new industry initiative. Recently, European and South Korean research programs have announced a joint three-year project, DECENTER, which is integrating IoT, artificial intelligence, smart contracts and blockchain to support on-demand transactional computing in cloud-to-edge environments. The main features of the DECENTER project, which will be demonstrated in smart-city and smart-home initiatives in various countries, include:

  • Incorporation of artificial intelligence algorithms into distributed on-board devices;
  • Use of device-based and cloud-based AI to guide the orchestration and provisioning of real-time edge processing applications and resources in federated environments spanning multiple clouds and supporting multi-protocol IoT communications;
  • Incorporation of blockchains and smart contracts to ensure secure processing, automated operation and low-latency edge-to-edge interactions;
  • Use of distributed sensing and implementation resources by a blockchain-based resource orchestrator to ensure the integrity of smart-contract edge-based transactions;
  • Provisioning on-demand access to real-time data for online analysis;
  • Application of smart contracts as enabled through registration, monitoring and incentive mechanisms based on secure blockchains.

In the IoT industry, concept block tests are starting to come to market for business-to-business digital commerce. Here are some recent examples worthy of note:

  • SAP worked with IBM to demonstrate how IoT and blockchain could automate a pharmaceutical supply chain for both monitoring and reporting purposes. By combining SAP's Leonardo IoT software platform with IBM's blockchain cloud service, they have created a system to track and manage pharmaceutical supply chains using intelligent contract rules.
  • Recently AT & T launched edge-to-edge blockchain e-commerce solutions for IoT. Presented a suite of AT & T blockchain services that enable the company and its partners to provide industry-specific IoT solutions that use blockchain technology from IBM and Microsoft. Leveraging AT & T's global network and IoT capability, the new blockchain suite enables automation and monitoring of e-business transactions, while providing transparency and additional responsibilities to complex supply chains. Initially intended for sectors such as healthcare, retail and production, it supports processes such as supply chain, origin and logistics.

Clearly, the on board trade facilitated by the blockchain is still immature. It will take at least 2-3 years for all the technological, commercial, regulatory and other standard practices required to merge into a new transactional backplane for any-to-any digital commerce.

As the recent industry announcements discussed above indicate, it is likely that established enterprise IT solution providers will make the first move in this new arena, leveraging their IoT, blockchain, streaming and cloud computing solutions to build industry-specific edge-commerce platforms and provide templates for their professional service and partner teams to meet specific customer needs.

What is certain is that the role of blockchain as a trusted edge-to-edge IoT infrastructure will continue to expand into digital commerce.

Jim is the Lead Analyst of Wikibon for Data Science, Deep Learning and Application Development. Previously, Jim was the evangelist of IBM's data science. He managed the thought leadership, IBM's social marketing and influencing programs aimed at developers of big data analytics, machine … View Full Bio

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