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Smart contracts on the ambitious market of the internet of things

Smart contracts on the ambitious market of the internet of things

Articles / 2019-12-16 16:58 PM

By the end of 2018, the analytical company International Data Corporation (IDC) estimated the volume of the global market of the Internet of Things up to $646 billion. Experts predict that global IoT expenditures will increase by 15.4% and will reach $745 billion and in the following years will rise double-digit and finally will exceed $1 trillion in 2022.

The Internet of Things is being implemented in all the spheres - in the state bodies and our ordinary life. More often, we see the data created by the connected devices helping companies to work more efficiently, to get a better impression about business processes, and to take decisions in real time. For consumers access to the data modifies the way they receive the information on the state of households, vehicles, and family members, as well as on their own health and physical state. The new era for the IoT just begins. We see the transition from the digitalization providing physical abilities for automation and expansion of the human experience in the connected world.

This is all about being ‘smart’. But how is it possible to be smart without ‘smart contracts’? No way.

The blockchain technology has the potential to solve a number of problems connected with intelligence, automaton, confidentiality, funds transfer and others – all the issues designers and engineers are so much concerned about. There a few of early consumer IoT devices that turned out to be practically useful. The IoT networks have to interact to be completely implemented.

Smart contracts are the computer programs providing the execution of the contracts between organizations, persons, and things. The very term ‘smart contract’ was introduced by Nick Szabo in 1994 when the idea couldn’t find the proper implementation. The blockchain has dramatically changed the situation. It let writing programs that are mandatory to be performed. The transactions can be conducted on the decentralized technological platform with the built-in settlement scheme. It means, that when you obtain share or make investments into the mutual fund you see the result of the transaction at once without any necessity to wait for the middlemen to do their job. And this is really cool.

The blockchain lets perform complex smart contracts requiring approve of the transactions by several people by means of the multi-signature protocol. It can be imagined as a lock that needs several keys to be opened. Each participant has a key or a signature. The multi-signature can be used to settle disputes or at the remote meetings of stakeholders to determine the strategy of the company. Several smart contracts can be combined into the so-called decentralized applications (dApps) to conduct complex transactions.

4 ways to apply the blockchain in the IoT

Actually, vendors have long been working on the building of a connection between the IoT network devices on the blockchain basis.

1. Trust building.

2. Cost reducing.

3. Data exchange speeding-up.

4. Security scalability.

The blockchain tech can provide a simple infrastructure for two devices to transfer a part of the assets (information, money) directly and securely.

Actual Application

The blockchain network of the IoT devices can be a good basis for intelligent automated systems for households and other private and public spaces. If the connected device works badly, consumes more data or electricity than the smart contract prescribes then the network can reset it or even shut it down. The devices may be equipped with the software with the built-in metadata allowing other devices to identify them and to delegate tasks to them. The software will turn on the smart contracts prescribed by a producer or in some cases by a user. These smart contracts can initiate such events as the software update, maintenance, and technical support, submission of notifications to the local state bodies in case of emergency, etc.

And now just imagine the entire company working on the blockchain network without interference human intervention. It is the Sacred Grail of what the blockchain can propose and we call the distributed autonomous enterprise (DAE). The blockchain really makes sci-fi movies possible, giving people free time to do some other (hopefully better) things.

The blockchain implementation in the sphere of the IoT domain cannot be called fast. Most technical characteristics of the blockchain remain no so much known and the integration with the cryptographic distributed ledgers still remains complicated from a technical point of view. However, numerous scientific and practical start-ups give a reason to believe that the blockchain application in the IoT domain expects fast growth in the nearest future.