The buzz surrounding the Internet of Things (IoT) has been on for a while. And with good reason — the IoT’s promising ability to impact all aspects of life.
Connecting physical objects to the Internet is probably the next big thing that will define the next century of human civilization. From communicating with objects to controlling the way they operate remotely — either at the touch of a button or in an autonomous fashion — IoT is raising the standard of modern living in a multitude of ways.
Although the IoT has opened up enormous opportunities, security has been a major cause for concern, rendering many people and industry stakeholders sceptical about the adoption of the technology. However, with blockchain and cryptocurrencies gaining centre stage, there is now a renewed interest in IoT due to the former’s acclaimed security feature.
Blockchain is being perceived as a solution that can secure IoT networks in a decentralised manner, while at the same time not compromising on the scalability that IoT affords. Blockchain essentially provides a way to securely track and keep a record of data of any kind, with added features like “smart contracts”, also called self-executing contracts, blockchain contracts, or digital contracts.
Smart contracts, essentially, are pieces of code that allow for an action to take place once a specific condition is met. They enable people to exchange money, property, shares, or anything of value in a transparent, conflict-free manner while avoiding the services of a middleman. For instance, if a pipe sensor detects an anomaly such as a leakage, a smart contract can be configured in such a way that on anomaly detection, the system either shuts off the pipe or immediately sends a report to notify the leakage.
As IoT processes largely involve capturing data and taking actions in accordance with it, smart contracts are very relevant to the technology. Essentially, through decentralisation and a distributed database, blockchain eliminates intermediaries, thereby making it a peer-to-peer transaction that allows for faster data transmission and reduced hardware cost while ensuring trust, necessary for cooperation.