Blockchain: Why IoT needs distributed ledger technology

The advances in blockchain and distributed ledger technology promise a world where people can take control of their personal information, become less reliant on centralized systems, and receive payment for services or products through immutable recordkeeping. This revolution is disrupting traditional business by creating trustless environments. This in turn expands the global economy, as more people have access to secure micropayment systems and are incentivized to participate in the exchange of information. Economies can replace systems of barter with cryptocurrency that is accepted universally.

The Internet of Things is a significant factor in how people will work and innovate in the future. IoT is expected to be a $15 trillion market by 2030, and companies are taking advantage of the efficiency and capacity that smart devices and wearables provide. The downside of this evolution is that due to the sectors rapid growth, individuals' privacy and personal information are being compromised at a staggering rate.

Blockchain technology provides the capability to decentralize IoT device management. With distributed ledger technology, individuals and enterprise alike can safely control transmitted information while still benefiting from unprecedented levels of data and insights garnered from their devices.

The basic premise is that distributed ledgers can allow businesses or individuals to control multiple, disparate devices efficiently without sacrificing security in data. Distributed ledgers can act as a software layer that in the past would have resided on the device, just over the operating system. Signed by the keys of the device, code can allow for virtually full control of devices from one portal.

Within enterprises, IT administrators can add users, WiFi credentials, policies around usage, location-based actions, and much more. Distributed ledger technology can make device management interoperable. Enterprises can control devices through data flow and by assigning tokens to authenticate devices based on trustless validation. This opens the ability to seamlessly control the tens of thousands of devices that are coming on the market every year.

On a more individual level, the gig economy has given rise to a new type of workforce. Remote employees and freelancers work from all over the globe, relying on devices not necessarily controlled by a single employer. Distributed ledger technology allows people to bring their data and preferences anywhere without having to store them on a device, so you can plug into a co-working space or corporate office and immediately get to work. These preferences can be updated in real time, replicating preferences across geographies using location-based services. This technology can even allow for automated usage-based billing or payments.

In the next few years, there will be 50+ billion IoT devices on the market, and managing device security in a scalable model will be important for both enterprises and individuals. The sheer volume of devices will create serious threats to entire industries until we take a more holistic approach. Until now, there's never been the type of device management to meet the rapidly growing needs of an increasingly connected world. Blockchain technology can enable a single system of interconnected components using distributed ledgers interoperable with traditional security.

About the author:

Pete Wassell, CEO of Augmate. He is an IBM alumni with over 20 years of experience in the IT industry.