When this was tweeted by Andrew Miller in 2015, it rapidly became the go-to meme for anyone slightly cynical about the genuine use cases for blockchain within the Internet of Things.
The idea of a self-actualized toaster with its own digital identity, probably provided by 21 Inc, became as much part of blockchain popular culture as BitFury's bitcoin-mining light bulb that never was or Slock.it's self-hiring bicycle.
If we are most likely to understand the Internet of Things (IoT) by describing how it relates to objects we use every day, such as toaster or bicycles, we miss the big picture: a futuristic global network of connected devices, transforming industrial and business processes in a way that we cannot yet comprehend.
The intersection between IoT and Blockchain is a fascinating area. Gartner has predicted there will be 20.4 bln connected devices by 2020 with smaller, more efficient sensors and microprocessors offering the potential for use cases of which we can barely dream today. Decentralized architectures mitigate against single points of failure while providing standard protocols for devices to discover each other and communicate.
For example, imagine a smart device connected to an oil pipeline. With access to historical and current data, smart contracts could be executed which could adjust the flow of oil according to up-to-the-minute global demand or reroute the oil to areas where adverse weather may be about to stimulate a sudden spike in usage.
In order to do this, the pipeline must be able to consume data from many different sources and to trust this data. Oil companies would rapidly go out of business if the supply was shut off at the wrong time, or diverted to areas of high demand. This interoperability and trust are key to many IoT interactions.
Take, for example, traffic management systems of the future where autonomous vehicles manufactured by different automotive companies may need to share not only their position but also telemetric data such as energy efficiency or the number of passengers in the car with other vehicles or with third-party monitoring systems.
Blockchain or in looser terms, distributed ledger tech has been touted as the solution to these challenges. It is important to make this distinction between true Blockchains and other types of public or private distributed ledgers, as apart from some services that are being developed using the bitcoin, ethereum or other public Blockchains. Many of these new industrial networks or supply-chain products use technologies whose architecture has only loose similarities with Blockchain as we know it.
Four of the most interesting areas where Blockchain technology could be useful for the IoT’s are supply-chain management, devices selling capacity (or other services) to other devices, devices selling services to humans in the shared economy, and devices sharing data with each other or with third parties.
Let's look at each in turn.
When people talk or write about the IoT, we tend to talk about devices that are permanently connected. Yet the term IoT theoretically covers any product that can be assigned a digital identity and can be tracked and verified, which could be anything from a sneaker to a tuna (real-life proofs-of-concept by Chronicled and Provenance, respectively).
While the contract that ensures the provenance of a product may be tamper-proof when written to the Blockchain, the same may not be entirely true of the mechanism that is used to link the contract to the real-world object. NFC or BLE chips can be destroyed or removed and there may need to be some kind of dependency on a centralized authority to verify authenticity at the point of origin thus removing some of the trust advantages of Blockchains.
However interesting this data may be for consumers, it is when these supply chain solutions are scaled to industrial levels that they become truly interesting and time-saving.
