The Internet of Things has been looking for a secure method that automates process and real-time data exchange to accelerate transaction execution; in this regard, blockchain technology is expected to be the perfect solution option.
As the number of sensors in vehicles, plant machinery, buildings, and urban infrastructure continues to increase, companies are looking for a secure and automated way to implement transaction processing capabilities in mesh networks. The blockchain seems to have the most potential for development in this regard.
According to the latest data released by Juniper Networks, the total number of IoT sensors and devices is expected to jump from 21 billion this year to 50 billion in 2022.
Juniper Networks pointed out that the significant growth of IoT connectivity devices in the next four years will be driven primarily by edge computing services—that is, moving data from cloud processing closer to the source. By 2023, a significant portion of all 460 industrial and corporate federal equipment is expected to rely on edge computing. Given this vision, addressing the core challenges of standardization and deployment will be critical.
Blockchain is an electronic distributed ledger technology (DLT), which also contains business automation software components (called ‘smart contracts‘ that are automatically executed), which eliminates the need for intermediaries and implements data acceleration exchanges in a standardized way. The process of interaction between networked devices. To explain here, the so-called middleman refers to the central communication server responsible for handling requests and other traffic between IoT devices on the network.
The Institute of Electrical and Electronics Engineers (IEEE) is an authority in the field of technological innovation and currently has more than 500,000 members. Mario MIlicevic, a member of the association, pointed out that “in essence, the basic idea is to cancel the central agent – no additional approvals and verifications are required for each transaction. Instead, the distributed nodes will participate in the various transactions in the network. In the verification."
Push the supply chain to the next level
Milicevic explained that in a traditional supply chain environment, the central server is responsible for verifying that goods and raw materials move from one place to another. In addition, the central agent may decide to stop certain processes based on predetermined rules. In a distributed blockchain IoT network, IoT devices on a peer-to-peer mesh network can verify and execute transactions according to predetermined rules—without resorting to a central server.
Blockchain technology can also introduce scalable distributed security and trust mechanisms into IoT devices, applications, and platforms to increase security levels through distributed interaction and data exchange. The technology utilizes a hashing algorithm to create an unchangeable transaction record that is acceptable for encryption and is only accessible through public and private keys.
The smart contract software can be embedded into the self-executing code on each IoT chip to trigger the corresponding operation when it is determined that the condition is met. These actions are only executed when the incoming transaction is authenticated. “This means that we no longer need a central agent to tell each node what to do when,” Milicevic said.
The emergence of blockchain ledgers shortens the time period required for information exchange and processing of IoT devices.
Milicevic points out, “In the case of an automobile manufacturing plant, when an accessory reaches a specified location, the accessory is captured by the corresponding sensor and the result information is sent to other nodes. After that, each node agrees that the accessory arrives at this. Conclusion and communicate with the entire network, eventually allowing the new node to begin the next step."
According to Juniper‘s research, the rise of edge computing is critical to expanding the scale of technology deployment. Its main advantages include reducing bandwidth requirements, improving application response time, and enhancing data security.
Blockchain experts from IEEE believe that after combining the blockchain with the Internet of Things, it is expected to revolutionize the entire vertical industry.
David Furlonger, vice president and researcher at Gartner, points out that although financial services and insurers are currently at the forefront of blockchain development and deployment, they are highly focused on the core nature of processes, supply chains and logistics efficiency, transportation, government and utilities. The department is now actively participating.
For example, the law requires certain drugs to be transported and stored under specific temperature conditions and to ensure that the data associated with the process meets regulatory requirements. However, the tracking mechanism of the drug transportation process is often too scattered. Many pharmaceutical companies must hire supply chain integrators to collect data to meet regulatory standards.
Last year, SAP and IBM demonstrated how IoT and blockchain technologies can be combined to automate the supply chain to achieve tracking and reporting. SAP combines its Leonardo IoT software platform with IBM‘s blockchain cloud services to create a system working model that uses intelligent contract rules to track and manage the pharmaceutical supply chain.
A major misconception about the blockchain is that it will completely replace traditional systems. “In fact, the blockchain is just a new layer on top of enterprise applications.”
SAP has also recently completed two other blockchain proof-of-concept deployment projects with its customers: one that introduces smart contract technology into the IoT device to provide a small supply of millions of transactions in the Hyperledger blockchain. The chain conducts a test evaluation; the second is to use the open source blockchain software MultiChain to test billions of large-scale transactions of 15 different customers without involving smart contracts.
Gil Perez, head of SAP‘s digital client program, said that the small proof-of-concept project using smart contract technology works well, but because of the need for blockchain developers (currently such talent is extremely scarce) to write code for them, the implementation cost is high .
Perez pointed out that “in a small pilot project, its operating costs and management costs are quite high. Therefore, although the implementation of the function exceeds expectations, it is not realistic from a financial point of view.”
The second proof-of-concept project addresses scalability and cost issues, demonstrating that the blockchain can be extended to the enterprise level without requiring developers to write smart contract code for IoT devices; instead, the business automation solution runs On a separate server separate from the blockchain.
Perez said that the MultiChain proof of concept project is not as efficient as the Hyperledger, but the former is less expensive to implement and more in line with business needs. He also added that small proof-of-concept projects require more complex business logic in the form of smart contract code on IoT devices.
Perez explained that for large proof-of-concept projects, "Running the logic on top of the server does not mean that it can‘t be automated. We have the flexibility to run the logic in different locations. The deployment of business use cases requires not only technology. Capabilities, but also consider the business and business impact they bring."
SAP has been working with about 65 customers to develop blockchain enhancement software - Perez said the results are coming soon.
Perez pointed out that "it has become an integral part of the upgrade cycle and is embedded in standard software provided by SAP. If SAP offers a standard application and we can add extensions or add blockchain applications to it. , then it will definitely help the blockchain to achieve application acceleration."
At the Sapphire conference in May this year, SAP announced its customer-facing blockchain cloud service—a very popular option for companies that don’t want to invest in testing distributed ledger technology. .
IBM also recently launched its IoT-to-blockchain service, which supports existing IoT connectivity services in the form of additional options. This means that IoT devices (such as RFID location chips, barcode scanning or other devices that report data) can upload information to the licensed blockchain on the IBM cloud service. Using this blockchain-based network, the computer business network will be able to verify the source of the information.
Devices that can upload data to the blockchain can also update or verify smart contracts. For example, as goods connected to the Internet of Things move along multiple distribution points, package location and temperature information can be updated on the blockchain. According to IBM, this means that parties can share the status information of the package during the move to ensure that the contract terms are met.