Why do experts believe the IOT needs Blockchain?
Blockchain is essentially a continuously growing record or ledger of digital events that is shared among many different parties. It can only be updated by a consensus of the majority of the participants in the system and cannot be altered or erased once entered. In essence, Blockchain is a permanent record that cannot be corrupted. Blockchain removes the need for trust in any third party, as every device involved in the public ledger must work to reach a consensus.
How does Blockchain impact cyber security?
Without Blockchain, storing, sharing and disseminating data and information is always a risk. Every interaction that every single person does online relies on some trusted centralized authority, and no matter what action you are completing online, you are putting your trust in someone else or some other source to be reliable and trustworthy. Until the advent of Blockchain, society depended on the "trusted hub" to have processes in place to prevent hacking, manipulation and breach.
An example of this would be how banks collect, store and disseminate data to individual customers. You receive your account statement online or are able to do things like make transfers, get your balance, etc. But what's to stop your banking institution from making a mistake, providing false information or simply not providing the level of security needed to prevent personal data from being leaked?
Unlike other currencies and payment networks, Blockchain is not controlled by a bank or the government. On the contrary, thousands and thousands of computers around the world independently verify encrypted transactions and manage a decentralized ledger of every transfer on the network. This ledger can be accessed online by anyone. But the key element with Blockchain is that while records can be added to the ledger, no existing transactions can be changed or removed.
How will Blockchain affect the Internet of Things (IOT)?
According to an article on ZDNet, IBM and Samsung are hoping that Blockchain will revolutionize the IOT in the near future. The goal is to have Blockchain serve as a record keeper for many billions of transactions that the IOT will continually generate. With that in mind, Blockchain seems to offer a solution to many issues that we will face in the near future that relate to the IOT -- including the need to successfully scale from billions to hundreds of billions of devices.
Let's look at network traffic, for example. Right now, for every transaction that's made, an update takes place and is recorded in the cloud. It doesn't matter how trivial or small the transaction is; they are all recorded in a centralized cloud-based data center.
Imagine what happens when you scale that up to 50 billion devices, each doing their transactions daily -- an unmanageable amount of chatter is produced, something the network was not designed to withstand. With Blockchain decentralizing the data, the network chatter is reduced and the IOT can be optimized to its full capabilities.
According to a recent report, by creating and matching the supply and demand for physical assets in real time, the IOT will create new marketplaces. And the benefits of Blockchain to the IOT don't stop there. Here are some other reasons that experts think the IOT needs Blockchain:
Today's IOT is NOT:
· Cost effective: Right now we employ costly centralized clouds and server farms
· Built for future upgrades: Technology continually becomes obsolete, which creates the need for ongoing software and hardware updates
· Functional value: Internet connection doesn't automatically imply more functional value (ie: automobiles with internet capabilities don't "drive better")
Blockchain presents myriad possibilities in relation to cyber security and the IOT. With devices becoming less expensive, computing power is becoming greater every day. Blockchain offers an opportunity to establish a trustless system, that enables peer-to-peer messaging protocols (highly encrypted), secured distributed data sharing and a way to coordinate all devices that allows them to validate every transaction. All signs point to a future where Blockchain plays a major role in the IOT.