By David Miracle on The Capital
Distributed ledgers technology is evolving rapidly, driven by internal forces aimed at correcting some of the technology’s limitations, with easy-to-use alternatives like Ethereum and other disruptive technologies that are shaping the Fourth Industrial Revolution.
The combination of these innovative forces, including cognitive computing, robotics, the Internet of Things, and advanced analytics, will combine to create ideal conditions for altering the current economic infrastructure.
With the advent of Ethereum, the “smart contract” concept was introduced, embodying a second-generation blockchain platform dissociating the digital representation of assets on the chain from digital currencies such as bitcoin.
In addition to the speed and efficiency achieved through distributed ledger technology, smart contracts provide the ability to execute more complex and sophisticated tasks among parties.
Unlike traditional contracts, smart contracts are embedded in code and can receive information and take actions based on predefined rules.
They can be used in numerous scenarios, including the transfer of property titles, settlement of financial derivatives, and royalty payments for artists. The biggest impact is anticipated to be a combination of smart contracts and the Internet of Things.
Internet of Things (IoT)
Internet of Things platforms tends to have a centralized model in which a broker or hub controls interactions between devices, an arrangement that can be expensive and impractical.
Blockchain can alter that by decentralizing secured and trusted data exchanges and record-keeping on IoT platforms, serving as a general ledger that maintains a trusted record of all messages exchanged between smart devices.
It thus provides transactional capability for both person-to-person and machine-to-machine transactions in an increasingly interconnected world of multiple, enabled devices such as sensors and smart devices.
This transactional capability among intelligent devices can facilitate the emergence of new business models.
For instance, devices could also be used as miners, earning cryptocurrency rewards for the blockchain verification process. By dedicating computing cycles during idle time to securing a digital ledger, a cellular phone plan, for example, could be partially subsidized through its mining chip.
A blockchain-enabled Internet of Things can be applied to various scenarios, from industry to government, energy, agriculture, health, science, education, and the arts. IBM makes a compelling case in its report, Device Democracy: Saving the Future of Internet of Things, in favor of blockchain as the catalyst for rebooting the Internet of Things.
It describes blockchain as “the framework for facilitating transaction processing and coordination among interacting devices. …Devices are empowered to autonomously execute digital contracts allowing them to function as self-maintaining, self-servicing devices.”
In collaboration with Samsung, IBM revealed a successful proof of concept in 2015, combining the Internet of Things with blockchain to develop the Autonomous Decentralized Peer-to-Peer Telemetry, a distributed IoT network that aims to provide a low-cost, secure way for devices to interact.