We get excited about technologies like automation, artificial intelligence (AI), and the Internet of Things (IoT), but the reality is billions of transactions happen across systems that are still not well integrated.
The saga of silos continues. If you’re using AI within your organization, you may only be using it to optimize customer service. Or maybe you’re only applying IoT to your operations and not your marketing.
My point is this: all this cool technology creates a need for better infrastructure. We need a better connective tissue that can bring all the transactions together onto a shared, trusted network across business units and industries. We need a solution that can connect multiple technologies to improve business operations, cut costs, and boost our bottom line — enter blockchain technology.
The main purpose of IoT is to link the physical world with the digital world. Here’s the exciting part: it connects not only devices but devices to people as well. IoT creates a human-to-machine connection where humans benefit from the perks. For example, imagine your refrigerator could know when the fridge light was broken and order a new one — IoT is the technology that makes this type of scenario possible.
Now let’s discuss the value of IoT in the context of blockchain solutions. Cost of verification and cost of networking are important benefits of blockchain technology. The cost of verification relates to the capability of blockchain networks to verify transactions in a cost-effective way due to the decentralized validation consensus approach. The cost of networking is related to the ability to create and manage or disrupt a new marketplace without the need for a traditional intermediary. Reducing the need for intermediaries like financial institutions, for instance, can cause the reduction of their market power — hence a reduced cost of networking.
When a transaction happens in a particular industry, like in supply chain for instance, it can involve different parties and intermediaries for conflict resolution and application of eventual penalties, which can be a complex and lengthy process. It would be a lot simpler with the costless verification process on a blockchain. This type of validation is happening with data inside the blockchain. However, in many industries, the need to address validation outside blockchain is commonly referred to as the “last mile problem.”
For example, if you need to have temperature data in the blockchain for time- and temperature-sensitive goods like pharmaceutical products in a cargo, or if you need to validate the authenticity of a job candidate’s college diploma there may be systems in place to bridge the gap between the physical and digital world so organizations can collect and validate the information via trusted processes or entities before adding information to a blockchain. Information systems are only as good as the quality of their data.
