Why blockchain (might be) coming to an IoT implementation near you

Companies have found that IoT partners well with a host of other popular enterprise computing technologies of late, and blockchain – the innovative system of distributed trust most famous for underpinning cryptocurrencies – is no exception. Yet while the two phenomena can be complementary in certain circumstances, those expecting an explosion of blockchain-enabled IoT technologies probably shouldn’t hold their breath.

Blockchain technology can be counter-intuitive to understand at a basic level, but it’s probably best thought of as a sort of distributed ledger keeping track of various transactions. Every “block” on the chain contains transactional records or other data to be secured against tampering, and is linked to the previous one by a cryptographic hash, which means that any tampering with the block will invalidate that connection. The nodes – which can be largely anything with a CPU in it – communicate via a decentralized, peer-to-peer network to share data and ensure the validity of the data in the chain.

The system works because all the blocks have to agree with each other on the specifics of the data that they’re safeguarding, according to Nir Kshetri, a professor of management at the University of North Carolina – Greensboro. If someone attempts to alter a previous transaction on a given node, the rest of the data on the network pushes back. “The old record of the data is still there,” said Kshetri.

That’s a powerful security technique – absent a bad actor successfully controlling all of the nodes on a given blockchain (the famous “51% attack”), the data protected by that blockchain can’t be falsified or otherwise fiddled with. So it should be no surprise that the use of blockchain is an attractive option to companies in some corners of the IoT world.

Part of the reason for that, over and above the bare fact of blockchain’s ability to securely distribute trusted information across a network, is its place in the technology stack, according to Jay Fallah, CTO and co-founder of NXMLabs, an IoT security startup.

“Blockchain stands at a very interesting intersection. Computing has accelerated in the last 15 years [in terms of] storage, CPU, etc, but networking hasn’t changed that much until recently,” he said. “[Blockchain]’s not a network technology, it’s not a data technology, it’s both.”

Where blockchain makes sense as a part of the IoT world depends on who you speak to and what they are selling, but the closest thing to a general summation may have come from Allison Clift-Jenning, CEO of enterprise blockchain vendor Filament.

“Anywhere where you’ve got people who are kind of wanting to trust each other, and have very archaic ways of doing it, that is usually a good place to start with use cases,” she said.

One example, culled directly from Filament’s own customer base, is used car sales.