The rapidly scaling future of IoT requires a decentralized model.
The Internet of Things (IoT) has become ubiquitous in recent years, impacting business models and automating processes across industries in the process. As more devices come online, the constant and universal connectivity of tools, appliances, and everyday necessities has helped automate sectors that may not seem to fit naturally with a traditional understanding of digital evolution.
But in order for the IoT to successfully scale from billions of connected devices to hundreds of billions of devices in the coming decades, “executives need to rethink the technology, strategy, business models and design principles at its foundation,” according to IBM, which teamed up with Samsung last year to build decentralized IoT solutions by leveraging blockchain technology. Companies must facilitate the emergence of a “low-cost, private-by-design ‘democracy of devices’” that will enable new digital economies and create new value, while offering consumers and enterprises fundamentally better products and user experiences.”
The Problem with the Centralized Model
Current IoT ecosystems rely, as TechCrunch puts it, on “brokered communication models, otherwise known as the server/client paradigm.” All devices are connected through cloud servers with huge processing and storage capacities, and connection between devices must go through the internet (even if the devices in question are right next to each other). This existing system will not be able to accommodate the massive, rapidly scaling future of IoT, and is riddled with inefficiencies and security concerns.
Disrupting the Current Model
Blockchain presents a compelling solution to these problems of scale and security. Best known as the popular cryptocurrency behind Bitcoin, TechCrunch defines blockchain as “a technology that allows the creation of a distributed digital ledger of transactions that is shared among the nodes of a network instead of being stored on a central server.” Cryptography is used to verify transactions and keep information and consumer data on the blockchain private. According to CIO: “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.”
Blockchain technology’s unique capabilities allow not only for the tracking of billions of connected devices, but also for the processing of transactions and coordination between devices — capabilities that may lead to significant savings for IoT manufacturers producing smart appliances, connected vehicles, supply chain censors, and more. This decentralized approach has the potential to create more resilient IoT ecosystems and eliminate single points of failure.
Much remains to be discovered about the future capabilities of IoT, and whether blockchain will be the definitive solution to the problems it currently faces. If you’re interested in learning more, join L&T on September 15th for “Beyond Blockchain: The Future of the Internet,” a panel discussion moderated by Arthur Falls of the Ether Review and featuring Consensys’s Jesse Grushack, Deloitte’s Eric Piscini, and Jock Percy, Founder and CEO of Perseus.