Blockchain is used in numerous areas of human life, including financial markets, gaming, government, health, etc. Blockchain-based apps are combined with the Internet of Things (IoT), Big Data, Artificial intelligence (AI), and other emerging technologies. What are the opportunities and obstacles for the growth of IoT and blockchain?
What is the Internet of Things?
IoT is a class of digital devices that can interact and monitor the environment, report status, receive instructions, and act on the information received. IoT technology is the interconnected network of physical devices, objects, and sensors (for example, thermostats, heart-rate monitors, and home security systems) that communicate with computers and other devices through the Internet. IoT devices not only bind to users but with each other. An example of an IoT is farm support systems that collect soil data using sensors and compare it with historical details, weather, and other data. This system offers guidance on when to plant, fertilize and harvest, etc. There are also related examples of the use of IoT. Very commonly, IoT technology is implemented in products and services aimed at protecting the environment, saving energy, increasing efficiency in manufacturing, logistics, agriculture, enhancing health care, etc.
History of the IoT
For the first time, IoT technologies were tried at the Massachusetts Institute of Technology (MIT) - students used cheap sensors to monitor and replenish the Coca-Cola supply. In 1994, Reza Raji’s magazine article proposed the idea of transferring data packages for business automatization and smart-houses. Microsoft, along with a number of other companies, began the first development in the mid-1990s. The number of digital devices connected to the Internet exceeded the number of people in 2008.
IoT and blockchain
The use of blockchain in the Internet of Things is related to protection and data integrity, but the possibilities are much deeper and wider. The synthesis of these technologies is of great potential. There are several areas where blockchain can contribute to the growth and development of IoT: fraud prevention, identity management, verification of various systems status, data integrity assurance, etc
When IoT expands, a lot of routine processes are being automated. Blockchain and IoT technologies ensure the rapid interaction of economic agents, but they pose legal and financial concerns and the need to control relationships through the establishment of an agreement between the consumer and the service provider. It is necessary to create a document that can be recorded on the blockchain, containing a description of the service, the rights and responsibilities of the parties, the quality requirements, and other details. The use of smart contracts allows the system to collect data in compliance with the terms and conditions. In addition, it provides for the creation of benefits or penalties for contract participants. Blockchain optimizes working processes and creates a modern trust-based system.
IoT Usage in real life
IoT for personal use
Smart-houses where sensors track the status and allow people to control lights, air conditioners, heaters, security systems, etc., are an example of the use of such innovations in daily life. Devices can be connected to smartwatches, smartphones, or smart hubs that connect other items, such as smart TVs, refrigerators, etc. Such technology will enhance the quality of life of elderly people or people with disabilities, for example, sensors give the ability to alert family members of their relative heart rate in real-time. Bracelets and medallions are also used to capture and analyze vital signs and to recognize conditions where the device owner needs help.
IoT for industrial
Businesses can use sensors to track environmental conditions such as temperature, humidity, air pressure, and it’s quality. IoT devices can be used by farmers to monitor the amount of water and food, or by manufacturers to find out how quickly an essential ingredient may run out. Blockchain and IoT are used to operate large industrial systems and increase efficiency in the mining industry and the agricultural sector. Solutions are also being established to identify devices and ensure data integrity, opening broad opportunities for transparent auditing of business processes and financial services, recording property rights, ensuring the accuracy and reliability of medical records, etc. Companies specialized in the field of Internet of Everything (IoE) use blockchain and IoT technologies to fight piracy, protect brands, and build long-term relationships with customers, etc. In addition, these technologies can be used in supply chain management to improve the efficiency and transparency
IoT and Cryptocurrencies
Most IoT systems based on microtransactions between digital devices need the so-called “machine-to-machine” (M2M) economy. Blockchain and cryptocurrencies are well suited for micropayments, but for these purposes, IoT projects require a blockchain that has no bandwidth limitations. Currently, several blockchain developers are focusing on scalability solutions. IOTA (Internet of Things Application) is the most popular project. This is entirely focused on solutions based on IoT technologies and aims to become the backbone of the M2M economy. IOTA is an open-source distributed ledger protocol that does not require miners to validate transactions. It’s a stream of interconnected transactions called “tangle”. Tangle is a network in which transactions can be verified directly by the users who request them if they have already carried out two other transactions. The amount of transactions per second that can be processed is directly related to the number of users on the network.
IOTA is the only one to use the “tangle” architecture. This approach is experimental and has yet to be proved to be efficient. When developers manage to solve possible limitations, it may be an acceptable solution for the IoT and M2M economy.
The Internet of Things (IoT) enables the automating, tracking, and managing of devices on a large scale, leading to improvements in human everyday life and increasing the efficiency of various industries. Сryptocurrencies are expected to be part of the IoT revolution, serving as digital money for microtransactions and the M2M economy. There are only a few crypto projects targeting the IoT industry, but growth is advancing at a rapid pace.