The Key Challenges for IoT and Blockchain Ecosystems Participants

Blockchain is poised to transform practices in a number of IoT sectors, including:

The supply chain: Tracking the location of goods as they are shipped, and ensuring that they stay within specified conditions.

Asset tracking: Monitoring assets and machinery to record activity and output as an alternative to cloud solutions.

Health care: Enabling logging and sharing of medical data between numerous stakeholders with versatile permissioning, directly holding some data while offering encrypted links to other information

As Internet of Things applications are by definition distributed it’s only normal that the distributed ledger technology, which blockchain is, will play a role in how devices will communicate directly between each other (keeping a ledger and thus trail of not just devices but also how they interact and, potentially, in which state they are and how they are ‘handled’ in the case of tagged goods). “Disentangle Hype From Reality: Blockchain’s Potential For IoT Solutions“ - Co-Authors, Dan Bieler & Martha Bennett

Blockchain is designed as a basis for applications that involve transaction and interactions. These can include smart contracts (smart contracts are automatically carried out when a specific condition is met, for instance regarding the conditions of goods or environmental conditions) or other smart applications that support specific Internet of Things processes. This way blockchain technology can improve not just compliance in the IoT but also IoT features and cost-efficiency, see graphic below.

Bennett defines three categories of challenges that Internet of Things and blockchain ecosystems participants must address.

Technology, whereby mainly security comes in the picture. In an Internet of Things context where security is already a challenge, it’s clear that security needs to be even more looked at. It is important to note though that blockchain is also seen as a way to secure the Internet of Things and, as mentioned, security overall but that is another discussion with several opinions and aspects to cover.

Operational challenges: the business model and the practical aspects as this requires many agreements and of course many actors too in a broad ecosystem. Just think about that IBM logistics example of complex trade lanes and logistics whereby smart contracts can follow (and via blockchain technology register), everything that has happened to individual items and packages. The benefits: audit trails, accountability, new forms of contracts and speed, to name a few.

Legal and compliance issues. Bennet among others refers to responsibility issues in case of actions that are taken by devices, based on a rule that is automatically executed by a blockchain-based application, triggered by another blockchain-based application (you see the complexity). And then there is the mentioned example of smart contracts. As you know contracts are far from easy, even outside this IoT and blockchain context

Ultimately it will be the combination of artificial intelligence, IoT and blockchain that will prove most interesting across industries and in myriad possible IoT applications

To illustrate the benefits of blockchain and Internet of Things convergence, IBM gives the example of complex trade lanes and logistics whereby smart contracts can follow (and via blockchain technology register), everything that has happened to individual items and packages. The benefits: audit trails, accountability, new forms of contracts and speed, to name a few.

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