What blockchain means for you, and the Internet of Things

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Why is everyone so interested in blockchain, and what does that interest mean for the Internet of Things? Blockchain is beginning to play a major part in the Internet of Things by enhancing security, enabling inclusion of low-value devices to be increasingly viable and making managing a device easier for decades to come.

Blockchain builds trust with accountability and transparency

Blockchain is a peer to peer distributed ledger technology for a new generation of transactional applications which maintains a continuously growing list of cryptographically secured data records hardened against tampering and revision. It can help establish trust, accountability and transparency while streamlining business processes.

With blockchain, we can reimagine the world’s most fundamental business interactions and open the door to invent new styles of digital interactions. This technology has the potential to vastly reduce the cost and complexity of operating businesses. The distributed ledger makes it easier to create cost-efficient business networks where virtually anything of value can be tracked and traded, without requiring a central point of control. The application of this emerging technology is showing great promise in the enterprise.

The next generation of transaction systems

IBM sees blockchain as the next generation of transaction systems. IBM Watson IoT blockchain offerings enables IoT devices to participate in transactions. Leveraging the Watson IoT Platform, we’re making it possible for information from devices such as RFID-based locations, barcode-scan events, or device-reported data to be used with IBM Blockchain. Devices will be able to communicate to blockchain-based ledgers to update or validate smart contracts. For example, as an IoT-connected package moves along multiple distribution points, the package location and temperature information could be updated on a blockchain. This allows all parties to share information and status of the package as it moves among multiple parties to ensure the terms of a contract are met.

There are 3 major value propositions for enterprises to take advantage of:

  1. Build trust –  between the people and parties that transact together. Watson IoT blockchain enables devices to participate in transactions as a trusted party.  While Person A may not know device B and may not trust it implicitly, the indelible record of transactions and data from devices stored on the blockchain provide proof and command the necessary trust for businesses and people to cooperate.
  2. Reduce costs – enable participants to reduce monetary and time commitment costs by ultimately removing the ‘middle man’ from the process. Transactions and device data are now exhibited on a peer to peer basis, removing most legal or contractual costs.
  3. Accelerate transactions – enable more transactions overall because the ‘middle man’ is removed from the process. Smart contracts allow for organizations to reduce time needed for completing legal or contractual commitments.

Blockchain for IoT can transform the way business transactions are conducted globally through a trustworthy environment to automate and encode business transactions while preserving enterprise level privacy and security for all parties in the transaction. IBM Watson IoT blockchain service offerings utilize smart contracts and enables information from IoT devices to be used in IBM Blockchain transactions. This allows IoT devices to be used in building solutions to help organizations improve operational efficiency, transform customer experience, and adopt new business models in a secure, private, and decentralized manner, so all participating organizations gain value.

Eliminating network failure points

Let’s take a look at a couple use cases that demonstrate the power of blockchain. Blockchain for IoT can optimize supply chains by tracking objects as they traverse the export/import supply chain while enforcing shipping and line of credit contracts and expediting incremental payments. Blockchain technology enables secure traceability of certifications and other salient information in supply chains. Provenance enables every physical product to come with a digital passport that proves authenticity and origin, creating an auditable record of the journey behind all physical products. Blockchain can also help with compliance by allowing companies to track equipment or process history in an indelible record and enable easy sharing of this information with regulatory agencies or insurers.

IoT and Blockchain are not limited to these industries or use cases, almost any business with a network and IoT devices can reduce costs, improve business efficiency, and remove single points of failure in business networks by implementing this new technology. I encourage you to dive in and find out how you can use blockchain for IoT in your business.

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XP Chen

Very exciting service offering. It opens the door to fundamentally change and improve the business model. We are ready to explore with the clients and take the advantage of this disruptive capability.


Nitin Gupta

Great article! However, I have a counter view. More rhan 90% of the sensor data is unintelligent by itself and the cost of storing that on cloud or blockchain would be too big. Edge computing would ensure that only the processed data needs to get into rule systems. Thus the value proposition should be based on what part of data goes where and not on using the Watson Blockchain for enatire set.


[…] blockchain. The extension of blockchain into cognitive IoT gives us a different way to think about business transactions of the future. It can give business networks transparency and inherent trust while reducing their costs by […]


Jai S. Arun

You have described very elegantly the critical value propositions of Blockchain for IoT.

I see many potential use cases for the combination of IoT + Blockchain including self-driving cars, robots, drones, smart homes, buildings, utilities where an ecosystem of business network and transactions needs trust and transparency with agility and reduced cost.


Steve Wilson

Please explain how anything (like an IoT device) gets into the blockchain? It needs to be registered with some authority mapping device serial numbers or similar into blockchain tokens. And each device needs a private key which is also needs to be properly (not self) registered. The third parties needed for these processes are anathema to the blockchain with its ruthless decentralization.


    Siegfried Genreith

    I’m a bit reluctant about solving the existing issues about blockchain. Creating trust among untrusted members is not a trivial thing and may turn out to be a show stopper at the end. As far as I know, our lab in Rüschlikon/CH is going to publish a research paper on that facet within the next months (modified PBFT protocol). On the other hand if you can fade out the trust issue, then blockchain is a straight forward business already now.

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