Blockchain’s encounters with IoT go way beyond bitcoin

Blockchain technology increasingly resonates in the boardrooms of the IoT community. Internet of Things (IoT) deployments bring with them several benefits, however, they also encounter several challenges, primarily in the areas of security, data access, ownership and privacy. In principle, blockchain technology seems to be a candidate for solving those problems yet there is still not enough evidence about the effectiveness of blockchain in solving some critical problems of the IoT. The IoT community is exploring the role of blockchain for smart products and connected solutions and in this interview, Prasad Kandikonda, the vice president of software engineering at MultiTech, tells Padraig Scully, the chief research officer of research and analysis firm IoT Analytics that, the company has firmly embraced that exploration

Padraig Scully: Digital ledger technologies (DLTs) such as blockchain are not an easy topic to absorb. To start, can you provide a simple explanation of what DLTs such as blockchain are?

Prasad Kandikonda: DLTs and blockchain have become buzzwords in the last few years primarily due to the popularity of bitcoin. If you really take a close look at these technologies, many of the core concepts have been in use for many years originating from distributed databases and cryptography. At the heart of DLT and blockchain, the fundamental thing they are addressing is the removal of any middle man involvement and building trust in the overall transaction irrespective of where you do it from and how you do it, removing the geographical boundaries and legal barriers. Simply put, anybody producing a product, wherever in the world they may be, can transact with another party, known or unknown, from anywhere in the world and trust that the transaction has taken place securely and the authentic produce has been delivered to the rightful entity. It is as simple as that, remove the middle man, remove double accounting and provide a clean transaction as fast as possible.

PS: There are several approaches to blockchain in the marketplace such as public and private, permission-less and permissioned and others. Can you clarify those concepts?

PK: If you look at the overall blockchain market, there are primarily two kinds. One is basically open, public and permission-less and the other is closed, private and permissioned. The prime example is bitcoin, which is open, public and permission-less. Anyone with a computer and access to internet, can join the bitcoin network, create their account and participate in the overall transaction process. You really don’t need anything else. With other networks like OpenChain or MultiChain, which are more enterprise-wide networks, services are privately deployed for only users with permissions and authentication. These type of private networks are used by enterprises to solve a particular vertical problem or integrate some of their business and manufacturing processes across various suppliers and consumers. A typical example would be a supply-chain management solution that connects all the parties involved in the operations of an enterprise.

Prasad Kandikonda,

PS: There are some well-known blockchain issues such as scalability and energy consumption. Some responses are emerging such as digital acyclic graph (DAG) and Layer 2 solutions. Can you detail these?

PK: DAG is gaining lot of attention from the blockchain community because of its speed of operation and lesser dependency on blocks. DAG uses the concept that at least two of the previous transactions have been approved before inserting the third transaction into the network. So, there is never a single chain of all the block of transactions that all nodes are syncing up. Instead, you have a graph of nodes using a protocol called Tangle which is different from Proof of Work (PoW) used by blockchain. It is still to be proven if DAG will gain the popularity over other blockchain. Two drawbacks cited for DAG are that is presents a single point of failure and that some of the security algorithms have not gone through a full community review. Layer 2 can be considered as the next generation of blockchain technologies, which is being pioneered by Massachusetts Institute of Technology (MIT). It is built on top of existing blockchain technologies to make them scalable and interoperable. The major idea is to take away the computing load of individual transactions or smart contracts off the chain. By removing the load of computation on all the nodes, you are conserving energy and trying to get the best of both worlds. By doing this, we again do not want to go back and depend on one or two super computers to do all the transactions, but it is trying to find the best of both worlds by retaining the trust in the chain, but addressing some of the existing drawbacks. However, as of today there is still a lot of resistance from miners, as it takes away their incentive.

PS: Looking at the evolution of the IoT, why is it important to look at DLTs and blockchain technologies? Which issues affecting IoT development can be addressed by blockchain?

PK: With the enormous growth and the billions of IoT devices that are going to pop up over the next few years, it is not going to be possible for one company or organisation to handle all these devices in terms of their authenticity, validity and security. Any kind of compromise or malfunction can effectively bring the entire internet down. So, there is a need for a common platform that can validate and on-board these devices securely onto the networks. On the other hand, it is also equally important to decommission them and inform every other entity on the network as soon as you detect the situation. For both these cases, blockchain seem to be a good fit as it can cross the boundaries and is also becoming a viable standard means for IoT devices to participate and behave securely and sanely.

PS: If the blockchain is relevant for the IoT, how do you advise navigating the blockchain landscape? Which are the essential elements for starting a blockchain-IoT project?

PK: As you have noticed, it is a complex situation to figure out and identify which blockchain technology to use and what is the kind of use case you want to target it for. Some of the key aspects to consider before jumping on the blockchain bandwagon are as below:

  1. Look closely at the existing practices and chain of operations. Is the IoT device going through multiple integration points before it is being deployed? What kind of security practices are in place and how can the security of the device be guaranteed before it is commissioned on the network?
  2.  Are the various integration points internal or external? In either case, assess how the transactions are handled, both commercially and from a trust point of view.
  3. Take a closer look at the speed of transactions. How quickly does one need the round trip response to be?
  4. What is the size of the project? How many IoT devices are going to be using this network? Is there enough willingness and commitment among all the parties involved in this project?
  5. The transactions in blockchain are immutable. Do you ever see any need to either edit the transaction or delete the transaction?

Once you answer these questions, it starts to become clear if blockchain is fit for your application and if so what type of blockchain to use.

PS: In which sectors do you see great impact of the combination blockchain-IoT?

PK: Transportation and logistics is strongly exploring the combination of blockchain technology and the IoT. However, there are also other areas of strong interest. The pharmaceutical industry is interested in the topic to optimise medicines and equipment supply chain and controlling medicine expiry dates. The energy sector is working around the definition of decentralised energy market, but, there is a strong interest around metering systems for any type of utilities. On demand manufacturing can benefit from the blockchain in order to identify the accuracy and quality of the component. There are then applications in smart tourism, such as with the AirBnb type of renting, smart governments, for online voting and citizen identity related applications, and, finally, in the healthcare sector regarding medical records and data exchange between healthcare delivery organisations.

PS: How do you foresee MultiTech evolving its understanding and approach to blockchain in the coming years?

PK: MultiTech will be playing and experimenting with some of the open source blockchain projects like Ethereum or HyperLedger in the coming years. We are going to closely work with our vendors, customers and distribution partners to fully understand their needs for securely deploying IoT networks and understand how blockchain can fulfil their expectations. Once we figure out the sweet spot, we would want to experiment by developing a small scale private blockchain network and learn from our network of partners. As years pass by, and as technology matures, we will use the learning to build our offering to our partners. As it stands today, I can envision MultiTech working towards a private enterprise kind of blockchain solution before we embark on major deployments.

Blockchain is at the door of the IoT offering a way of solving several IoT deployment issues. But, the matter requires research and attention of the IoT community. MultiTech is doing its homework; collaboration with vendors, customers, and distribution partners to understand the best way of making the encounter between blockchain and IoT powerful for the IoT ecosystem.


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