The Internet of Things has faced serious criticisms in terms of security and sustainability. Blockchain seems to offer the best solution so far.

The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it.

Thus opens Mark Weiser’s iconic paper The Computer for the 21st Century published in the Scientific American on 1 September 1991.

While the term “Internet of Things” was first coined by the British entrepreneur Kevin Ashton in 1999, it is Weiser’s publication that in a way started it all. Writing in 1991, Weiser advocated for rethinking the idea of the computer so as to integrate it into the natural human environment and to make it ubiquitous. He wrote about “computers in light switches, thermostats, stereos and ovens” which “will be interconnected in a ubiquitous network” and thus, essentially described in layman terms the Internet of Things (IoT), as we know it today.   

IoT: Opportunities and challenges

The Internet of Things (IoT), according to IDC, can be described as “a network of networks of uniquely identifiable end point (or “things”) that communicate without human interaction using IP connectivity – whether locally or globally.”

In 2014, IDC forecasted that by 2020 there will be 28.1 billion IoT units installed, as opposed to 9.1 billion in 2013, and that the IoT market revenue would be $7.1 trillion. During the following year, Gartner predicted a slightly lower figure for connected IoT devices in 2020, namely 20.8 billion while McKinsey argued for the IoT market producing annually up to $11.1 trillion in economic value by 2025.

IoT has attracted interest and investments of quite a number of leading global companies, such as Apple, AT&T, Bosch, Cisco, Eaton, Emerson, Ericsson, Fujitsu, GE, Google, Hewlett-Packard, Hitachi, Honeywell, IBM, Intel, Johnson Controls, Lantiq, Microsoft, NEC, Oracle, Phillips, PTC, Qualcomm, Rockwell, Schlumberger, Schneider Electric, Siemens, Texas Instruments, Tyco and Verizon, as pointed out by George Deeb. Most recently, however, despite the initial hype, IoT has attracted a fair amount of criticism as well, leading to statements such as the Joon Ian Wong’s who blatantly pronounced it dead. 

While on 26 April 2016 Nokia spent €170 million ($191 million) to acquire the French wearables and IoT company Withings, thus becoming one of the major players in the IoT industry, only a couple of weeks earlier Nest announced shutting down of Revolv on 15 May 2016, thus provoking Aaron Tilley to comment that “the incident underscores a major challenge for the “Internet of Things” and suggests that without a better business model the industry will struggle to take off.”

The permanent disabling of the smart home hub Revolv was brought to the attention of the larger public only after Arlo Gilbert, the Texas-based CEO at mobile healthcare application company Televero, wrote on Medium:

On May 15th a critical Nest product will go dark. I’m shocked this isn’t bigger news. I don’t mean that the Nest product will reach end-of-life for support and updates. No, I mean that on May 15th they will actually turn off the device and disable your ability to use the hardware that you paid for. Google/Nest’s decision raises an interesting question. When software and hardware are intertwined, does a warranty mean you stop supporting the hardware or does it mean that the manufacturer can intentionally disable it without consequence? …Is the era of IoT bringing an end to the concept of ownership? Are we just buying intentionally temporary hardware? It feels like it.

The ultimate dependence of any smart device on its connection to the internet and the support of the respective company-provided software, as illustrated by Revolv’s case, raises the question of the IoT’s sustainability. The continuous use and long-term implementation of the technology are not only a matter of its proper performance but also of market dynamics and financial outcomes which much predate the very idea of smart homes or smart cities. In other words, it is about innovation and progress, but it is also about profit. Hence, the Joon Ian Wong’s prediction of IoT’s passing points to another dimension of the problem, or as he put it:

Just as Nokia and Microsoft are linked by a disastrous smartphone deal (Microsoft acquired Nokia’s phone-making business in 2014), they’re now both betting that constantly connected devices will take off, whether in factories or in homes. And that’s looking like an increasingly tough sell, for companies or households.

IoT and blockchain

The idea of applying the blockchain technology to the IoT domain has been around for a while. In fact, blockchain seems to be a suitable solution in at least three aspects of the IoT: Big Data management, security and transparency, as well as facilitation of micro-transactions based on the exchange of services between interconnected smart devices.  

Big Data and record keeping

IoT is intrinsically connected to Big Data. As the number of installed IoT units increases, the opportunities for collecting data about, say, consumer habits and patterns of behaviour multiply as well. Collected data grows proportionately and its sheer bulk raises the question of how we are supposed to handle it. In this context it has been argued that “using the blockchain is inevitable for the Internet of Things.”

Not only does blockchain offer a suitable solution for recording the data received from all IoT units, but it also guarantees that once recorded, the information cannot be further tampered with. Hence, Alex Tapscott, a co-author of BLOCKCHAIN REVOLUTION: How the Technology Behind Bitcoin is Changing Money, Business, and the World together with his father Don Tapscott stated that “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,” as quoted by Amy Cortese.

Security

Blockchain can be further implemented to solve security and identity issues related to IoT. This is precisely the aim of the newly-established Chain of Things think tank and industry consortium. As Security Ledger noted recently, “one of the biggest challenges if we want to secure the Internet of Things centers on identity. Specifically: how will we go about getting billions or hundreds of billions of intelligent devices to connect and communicate with each other securely?” It seems that blockchain may be the answer.

According to their website, the Chain of Things (CoT) is trying to answer one critical question, namely “can Blockchain essentially save IoT? Yes or no?” As part of the process, the CoT is performing a series of case studies which “will document practical, real world implementations of secure blockchain based IoT stacks with specific emphasis on key security layers.”

The first CoT case study is conducted in the solar energy sector. It aims at securely recording solar energy production data in distributed ledgers. The results of this initial experiment will be presented on 1 June 2016 during the Chain of Things Inaugural conference.   

IoT for microbusiness

Amy Cortese has pointed out that “every blockchain-enabled device could function as its own microbusiness” and this statement seems to hold particularly true in the energy sector.

Solar energy production is not only the topic of the first CoT case study but also the first energy market to witness a peer-to-peer product transaction. On 11 April 2016, the Park Slope social justice activist Eric Frumin sold excess renewable energy to ex ENERGY STAR National Director Bob Sauchelli. The transaction was inaugural for The TransActive Grid, a New York-based peer-to-peer energy transaction platform powered by Ethereum.

The platform will support the so-called Brooklyn Microgrid, the latter being able to connect local green energy providers and customers and the blockchain-based smart-contracts platform Ethereum while using existing power lines.

Lawrence Orsini, founder of Lo3 Energy, the company behind the TransActive Grid, described to Motherboard how Brooklyn Microgrid functions and what potential it has to empower the local community:

Nothing changes on the utility grid side. No new wires, no new pipes. This is a financial transaction between people for the thing they want to see happen in their community… Where do I want my dollars to go to in my community? Will it go to my neighbor? That’s hyper-local. Or can I give a portion of my electrons away to fight local energy poverty—for folks who can’t afford to pay their own energy bill? At some point you’ll be able to do that.

Blockchain has the potential to enable and improve the IoT in terms of security, transparency and Big Data management and successful examples, such as Filament’s hardware and software IoT solutions, are growing in number. To be truly successful, however, the IoT needs to become ubiquitous, to such an extent that, as Weiser put it, people would “cease to be aware of it.”

Diana Bogdan