Cheat sheet: What has blockchain to do with the IoT?

By | 3 minute read | December 14, 2017

Welcome to this week’s cheat sheet, your guide to the murky mysteries of IoT-related technologies. Our last installment explored the basics of blockchain: a digital ledger where transactions and contracts can be securely recorded and distributed. But what has blockchain to do with the IoT, and how does one help the other? Let’s find out.

A common use case: instrumenting the supply chain

To understand the convergence points between the IoT and blockchain, it might help to take a closer look at one of blockchain’s most common use cases: the supply chain.

Let’s remind ourselves of the steps a carton of milk might take on its journey from dairy farm to table:

  1. The dairy farm: milking and initial storage
  2. Processing: transportation to a dairy processor for testing, pasteurizing and packaging
  3. Transportation: shipping in refrigerated trucks to retailers like supermarkets or convenience stores
  4. Retail: storage in a refrigerated display unit
  5. Consumption: customer purchase and consumption.

In this example, the transport of perishable food stuffs (such as milk) is regulated by specific conditions that ensure it arrives at the point of purchase safely. To keep it safe for consumption, the milk must be chilled. If it rises above a certain temperature, it could be spoiled, and unsafe to drink.

Milk is a great example of the benefits of blockchain; knowing that milk stays at the right temperature helps ensure food safety.

So how can we make sure milk stays the right temperature in transit? One option is to hire a minion to sit with it in the lorry, thermometer in hand, and ring them every ten minutes for temperature updates. Obviously, that isn’t practical. It wouldn’t be much fun for the minion, or for the person paying them, for one thing.

Luckily, the IoT provides an alternative. Lightweight, connected sensors can do both the job of data collection and transmission, and they won’t mind getting cold.

Connected sensors for data transmission

Here’s how it works:

  • Individual packages containing milk are instrumented with an IoT-enabled temperature sensor
  • The sensor stores temperature data locally and sends it via the Watson IoT Platform to the blockchain
  • The blockchain stores the temperature data, where it can be viewed by each party to the transaction

Essentially, the connected sensors collect irrefutable evidence as to how the milk has been handled at each stage in its journey. Because the sensors automatically collect and transmit data to the blockchain, there’s no chance of recording incorrect data. Instead, the information is accurate, timely, and non-partisan.

This protects each business partner by ensuring accountability. For instance, if one of the vehicles transporting the milk is inadequately refrigerated, the milk temperature will exceed recommended limits. This will be picked up by the sensor and transmitted to the blockchain. It will be immediately obvious when, where and why this happened, and who should bear the responsibility.

The video below demonstrates this clearly:

Automated contracts

Another point of convergence between the IoT and blockchain is the fulfillment of smart contracts. Business contracts stored on the blockchain could specify certain conditions that must be met. Controlled temperature might be one of these. When the data from connected temperature sensors reflects that this particular condition has been met, the blockchain can automatically record that this part of the contract has been successfully completed.

The end point: a happy customer

In the end, IoT with blockchain can help businesses keep tabs on the health of their products at every stage of their journey. That means increased trust between business partners and their customers, reduced costs due to food spoilage, and accelerated transactions. The result is a happy customer, and empowered businesses.

To learn more about blockchain, visit the IBM website for videos, tutorials, blogs and more to support you in your transformation journey.