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Blockchain Applications – Using Blockchain for Public Data

Blockchain Applications - Using Blockchain for Public Data
Neil Stevens Illustraion

Everyday we unknowingly rely on open data. From checking the weather to finding direction via GPS, we make some of our most basic decisions using this freely available data. But what happens when they’re suddenly gone? If the government decides to stop releasing open data, like President Trump did in early February, or a company decides to manipulate data on its products, like Airbnb did with its New York listings, what then?

Brian Forde wrote on Harvard Business Review that blockchain applications not only include financial transactions (like Bitcoin) but also public data. Mr. Forde suggests that public blockchains will enforce the validity of the data as time-stamps and signatures can then be compared against multiple entities, thereby decentralizing data control. If you need a quick refresher on how blockchain works, see “Understanding Blockchain.”

Blockchain Benefits for Governments, Companies, and Consumers

In his article, Mr. Forde uses ride-sharing companies as an example to illustrate how blockchain applications can benefit governments, companies, and consumers.

By submitting data into a secure blockchain with appropriate access levels, the government can monitor and regulate companies in real-time. Also, if a ride-sharing driver takes a longer route than necessary, this data can be made immediately available to the consumer and the local agency to improve safety and better protect the rights of everyone involved, instead of resorting to the company’s legal and customer support team. And on the company side, they can more efficiently comply with the law by using a digital, adaptable system, instead of a paper and person-based incumbent, outdated system.

While this sounds wonderful, how much of it is in the realm of reality versus fiction?

Are Blockchain Applications for Public Data Actually Realistic?

As of today, the open database that Mr. Forde is suggesting simply does not exist. But many organizations, such as the IPDB Foundation, are working to achieve serverless decentralization of data. The current challenge is to address the security challenges and merge theory with reality.

Take BigchainDB for example, which is the backbone of IPDB’s architecture. As BigchainDB connects to a single RethinkDB (a distributed NoSQL databse) cluster, engineering work is required to address a potentially fatal attack that could bring down the entire blockchain. This work is on the BigchainDB 2017 roadmap along with other core/security topics. Also, while an ideal blockchain would be fully Byzantine tolerant, for scalability reasons, Trent McConaghy, founder and CTO BigchainDB, argues that “theoretical BFT is not a prerequisite to decentralization; practical security is.”

This brings me to an interesting article I read by Jamie Burke, “99% of Blockchain Startups Are Bullshit.” His fantastic take on blockchain can be summed up in why he invests in blockchain+ companies and not in the blockchain infrastructure:

Now IMHO one of the ways these [blockchain] startups can become commercially sustainable and avoid this downward pressure is if they can successfully leverage machine learning somehow. It’s this combination of technologies that I like most because guess what: machine learning likes big standardised data sets and ultimately I believe this is the main promise of ‘blockchain’.

But blockchain in and of itself cannot be the solution. We need a blockchain+ solution: a combination of new technologies that keeps our public data open and sustainably so.

Blockchain Explained – The Basics of Blockchain and How it Might Affect IoT

AT&T, IBM, Nokia, Palo Alto Networks, Symantec, and Trustonic formed an IoT Cybersecurity Alliance earlier this week, seeking to research security challenges and influence security standards and policies. Whenever a conversation about security surfaces, the idea of applying blockchain inevitably appears.

Now, you’ve probably heard of Bitcoin and blockchain, but if you are like most people, you might not really understand how it works.

In order to understand how blockchain might affect IoT in the future, it’s critical to have a basic understanding of what blockchain is. To explain blockchain, we’ll refer to Anders Brownworth’s excellent video and interactive demo on his website.

Summary of the Video – Blockchain Explained

Mr. Brownworth starts with hashes and adds onto that concept to explain a distributed peer-to-peer network:

  • Hash: Some data is mapped to a seemingly random string for basic encryption.
  • Block: A block adds a nonce field to the hashed data to introduce a concept of “signed” or “valid” hashes (in his example, the hash must start with 4 zeros).
  • Blockchain: As the name suggests, a blockchain is a chain of blocks. A change in a block higher up the chain affects all of its trailing blocks.
  • Distributed Blockchain: Copies of each blockchain are stored by multiple peers. Any changes in the chain is broadcast to everyone in the network, and the change must be approved by the network.
  • Tokens & Coinbases: For a practical example, let’s see how cryptocurrency (Bitcoin) works with blockchain. When A wants to send money to B, a block is created to represent that transaction. This new change is broadcast to all the peers in the network, and if approved by the peers, the new block is added to the chain, completing the transaction. The popularity and the controversy surrounding Bitcoin skewed the general perception of blockchain as a technology limited to cryptocurrency application.

blockchain explained
Image Credit: Financial Times

So What Does this Mean for IoT?

Blockchain has other uses outside of Bitcoin and financial transactions because it can act as a ledger for any kind of digital exchange. Dubbed “altchains,” new applications such as Namecoin, which keeps a record of DNS namespace, and Datacoin, which stores data in the blockchain, have sprung up using the underlying Bitcoin software.

As the IoT ecosystem continues to grow, data exchanges and security of those data points will become increasingly important. Perhaps blockchain technology could track data exchanges between sensors/devices to other devices, gateways, or end-users.

The automatic nature of blockchain then could enable even smarter machines. Right now, we have dash buttons to automate our ecommerce experience. But imagine a smart washing machine that can keep a history of its own stock, compare the prices of new detergent from multiple vendors, and pay for the delivery of the detergent on its own.

Or a smart home that keeps a history of all the data flows between the dishwasher, vacuum system, HVAC, and solar panels to optimize for electricity usage and cost.

Finally, blockchain can also push predictive maintenance to the next level, where now the computer not only determines when its parts might fail, but can also schedule and pay for that maintenance automatically.

Blockchain frees up centralized systems that are bottlenecked by trusted and centralized human authorities. Each device can act as an independent agent to create a distributed IoT blockchain. According to IBM Institute for Business Value, blockchain or any decentralized IoT solution, can support three foundational types of transactions:

  • Trustless peer-to-peer messaging
  • Secure distributed data sharing
  • A robust and scalable form of device coordination

blockchain explained for IoT
Image Credit: IBM

Blockchain and a Distributed Future

Blockchain, with all of its controversies, has barely scraped the surface of its possible use. As blockchain begins to bleed into new verticals and industries, we may see a huge improvement in how IoT networks communicate currently.

It’s still early days in the application of blockchain to IoT, but there’s certainly some promise and if it works, it could be a disruptive force that finally solves the security issues that are hampering IoT growth.