Blockchain, the technology that made Bitcoin possible, has been getting a lot of attention in the IoT world, often because of its role in security. However, experts and practitioners said the potential of blockchain for IoT is deeper and broader than just keeping the bad guys out.
Ian Hughes, analyst of IoT at 451 Research, sees a role for blockchain that goes deeper, enabling authentication of devices — especially when they are connected infrequently, as the case might be with, say, agricultural systems that may shut down for large parts of the year. Having a blockchain distributed ledger can provide a tidy way to account for and recognize the return of long-lost network participants as trusted members. Similarly, Hughes explained, blockchain can make possible micro-transactions for various kinds of billing within and across an IoT ecosystem.
Equally upbeat, John Wilmes, director of IoT projects at TM Forum, a member association for digital business based in Morristown, N.J., said that the organization’s communities have identified a number of areas where blockchain can support the growth and development of IoT, including fraud management, identity management, authentication, authorization, settlements and audits.
Wilmes explained that the sheer scale of IoT creates management problems that have never been faced with existing systems. “Automation of many, if not all, aspects of operations will be essential, and blockchain is well-positioned to fill critical roles,” he said. For example, many IoT use cases involve the rapid establishment of relationships between multiple business entities. Those connections must include legal and financial ramifications and often service-level agreements (SLAs). Blockchain can provide the foundation for a trust-based relationship by preventing fraud and preserving identity, he said. Furthermore, Wilmes added, by using smart contracts over the blockchain, triggered by trusted sources that provide objective information, “participants in a business relationship or ecosystem can be assured that SLAs are continuously monitored and that rewards and penalties are immediately and fairly applied.”
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