How blockchain meets IoT at the data

The best lens through which to view emerging technologies and their intersections is often data. Where does the data come from? Where is it stored? How is the data turned into real-time actions? Or, alternatively, how is the data transformed into knowledge and insights, whether directly through algorithms or by combining it with other data and insights? Consider how IoT and blockchain intersect.

The IoT and blockchain example

For our purposes here, I’ll focus on how IoT provides a means for the digital world of computer systems and networks to interact with the physical world of food, trains, roads and other things that we see and touch. An interaction can be telling physical machinery to do something, like stop a train. Or it can mean providing computer programs with the data to understand what’s happening in the “real” world.

Blockchain can likewise be approached in a number of different ways. In the context of IoT, it’s most useful to focus on distributed ledger technology (DLT), which allows participants in a business network to record their transactions on a shared distributed ledger. While there are similarities to a distributed database, DLTs avoid a single point of control, enable smart contracts to take actions, such as transferring money in response to transactions, and use cryptography to ensure that any tampering with recorded transactions is obvious.

Outside of the financial industry — which has a great deal of interest in using blockchain to eliminate expensive or inefficient middlemen — there’s a lot of interest in blockchain for applications where it’s useful to have a shared source of truth when transactions pass through many hands. Think of goods being turned from raw materials to a final consumer product. Or food that begins life on a farm and eventually ends up in a restaurant or home kitchen. In the event of problems, such as contaminated food, you need to be able to quickly figure out where the contamination came from — whether a particular farm or some other link in the supply chain.

The map is not the territory

Blockchains are computer systems. But supply chains and provenance tracking inevitably involve the physical world. Indeed, IBM General Manager for Blockchain, Marie Wieck, described at Think 2019 the promise of blockchain as bringing together networks that, today, operate largely in silos. For example, physical goods are often not tightly coupled to either the data about those goods nor the financial transactions that need to take place as those goods move around.

Goods can’t be fully represented in digital form. The map is not the territory as the saying goes. This is perhaps especially true when we’re most concerned with goods that differ from the expected in some way. They’re spoiled. They’ve been dropped. They’re mislabeled.

Furthermore, goods may be deliberately misrepresented. The mislabeling may have been done on purpose. Or they’re marked as inspected when, in fact, they were passed right through without a glance.

We say that blockchain is a shared source of truth. But that’s not quite right. It’s a source of “truth” in so far as the physical world as represented to the blockchain is a reasonable facsimile of reality.

Enter IoT

There’s no magic bullet to ensure that a blockchain accurately represents the state of the world. This is especially true when there are questions about the degree to which participants in the network can be trusted, a complicated topic by itself. However, the more resistant we can make the system to both accidental and deliberate errors or omissions, the better.

Which brings us back to IoT.

IoT sensors can provide detailed data about goods, for example, the temperature at which they’ve been transported. Such data could potentially be stored and added to a blockchain as part of a logistics system that provides accurate, current tracking that would be hard to game.

Frequency of data collection, aggregation and filtering of data, and transmission of data are just a few of the details that need to be considered for a specific situation. Nonetheless, sensors in concert with blockchain can represent the state of physical objects in ways that are more complete, more automatic, more timely and more resistant to deliberate falsification than is often the norm.

This would potentially enable more rapid response across an entire supply chain to actions or environmental variables that aren’t as expected. IoT may not be able to create a Digital twin with perfect fidelity that can then be securely appended to a blockchain. But it can help us get closer.

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