Technology is changing at an incredible pace and the advent of nascent technologies will radically shape the future. Technological innovations that emerge every year have the potential to change people’s outlook and lives. One recent technology which is likely to have a great impact in our daily lives is Blockchain. As most of the countries are working on the Blockchain projects, the technology is slowly catching up over the past few years. A Blockchain is considered to be an ingenious invention.
What is Blockchain?
We share information across the Internet every day but when it comes to assets like money, stocks, property etc. we depend on intermediaries called middlemen like banks, government, social media etc. These intermediaries perform business transactions which are centralized and can be hacked.
So, what if there is an Internet of value, like a distributed ledger across the Internet where we can manage, exchange, store and track our assets without any powerful intermediaries. Yes, it is called Blockchain.
The Blockchain is an underlying technology behind Bitcoin where all digital transactions are recorded as ‘blocks’ by Bitcoin miners in the network who have massive computing skills. It is decentralized and the blocks are time-stamped and no central authority is involved. In simple terms, it is a distributed database which has all records of the transactions in a network which cannot be tampered.
How does it work?
When a transaction has to be added in a Blockchain, it is posted globally across the network and all participants in the network have to validate it (arrive at a consensus). A set of all verified transactions are put together in a block and is sent to all nodes in the network. (These nodes have a copy of the entire Blockchain network.)
Here, the miners will validate the block applying some algorithm and the first one to solve the problem is rewarded by a digital currency (Bitcoin). Once they validate the block, it is linked to the previous block and each successive block will have a hash of the previous block.
When someone wants to hack a block they have to hack all the blocks in the Blockchain network which is extremely difficult with the highest level of cryptography used.
Advantages of Blockchain
The main two advantages of Blockchain are:
- Decentralized: Blockchain keeps Bitcoin transactions in the network immutable and secure without the need of a central authority.
- Non-Expensive: Blockchain may be difficult to understand but the infrastructure and system maintenance costs are less.
Over Coming the Challenges in IoT
As much as we talk about the world of connected devices, there are some complexities associated with the deployment of secured IoT model.
Few challenges in IoT are:
- Centralized model – server/client paradigm: all devices have to be connected to cloud servers with huge storage capacities.
- Managing and protecting the data throughout the entire lifecycle is daunting and expensive.
- Implementation of IoT includes integration of various enterprise systems connected to a cloud server and any malfunction at one point will disrupt the whole network.
- There are not enough security technologies for growing needs of huge IoT ecosystem in the future.
- All physical assets will be turned from offline to online assets opening more space for cyber-attacks.
Secured IoT using Blockchain
The Blockchain is believed to settle the security and privacy issues in the Internet of Things. Cryptography used behind Bitcoin transactions will ensure the privacy in maintaining the consumer data. IOT devices can be embedded with digital identities and digital signatures where the devices will have a unique id.
Blockchain will enable the smart devices to function autonomously (exchange data or financial transactions) and the history of devices will be stored as an immutable record in a Blockchain.
In financial and banking industry, Blockchain will allow peer-to-peer transaction of money without any third parties involved.
For example, a truck fleet with sensors carrying a frozen ice-cream can identify the temperature fluctuation and the information is posted on the fleet provider Blockchain immediately. An alert will be sent to all the stakeholders involved (driver, supplier, fleet provider). The driver can immediately take an action to fix the problem.
Future of Blockchain
While many leading IT companies like Microsoft, IBM, Infosys etc. are investing and experimenting ways to adopt Blockchain technology, there are several startups keen to scout out across the world. Some of them include Abra, Filament, Blockstream and Bitnation.
This revolutionary technology will establish a ‘trust protocol’ to protect our identity, ownership, and representation. Thus, the disruptors in the industry could be disrupted.
Will Financial Institutions and Government see this as a threat or embrace Blockchain? Will it bring a shared economy and prosperity?
Well, it’s time for us to start exploring the possibilities and applications of the technology in real-time and create a whole new era of the Internet.
Business Development Associate, RapidValue