The Internet of Things (IoT) is a network of devices that are connected together in a way that allows them to exchange data with one another.
The number of IoT-connected devices is increasing rapidly each year. In 2015 there were approximately 15.41 billion connected devices installed worldwide. By 2025, it is predicted that there will be over 75 billion connected devices.
Some people are even comparing the growth of the IoT industry and the increasing number of connected machines and objects in factories to a ‘fourth industrial revolution’.
Similarly, Analysts at Gartner have predicted that by 2020, more than half of all major new business processes and systems will incorporate some element of the IoT.
What’s So Exciting About the Internet of Things (IoT)?
The IoT offers many benefits both for businesses and consumers.
For businesses, the widespread use of IoT technology will make processes faster, cheaper, and more efficient.
For instance, manufacturers can add components into their products that give them feedback on how well they are performing, so they can improve products in the future. They will even be able to tell when specific components are about to fail and replace them before any damage is done.
One industry where this could be particularly useful is the healthcare industry, where patients rely on pacemakers, and it is vital that they are fully functioning.
For consumers, the growth of IoT will make their homes, offices, and vehicles more responsive.
For example, imagine smart thermostats can ensure that our home is the right temperature ready for them returning from work, smart light bulbs can make it look like we’re home even when we’re on vacation, and smart cars could help us optimize our driving conditions and gas consumption.
Where Does Blockchain Fit Into this?
Blockchain technology complements IoT remarkably well. In fact, IDC has predicted that by as soon as 2019, 20% of all IoT deployments will have basic levels of blockchain services enabled.
There are several major benefits of using blockchain for IoT.
First of all, it increases the level of trust between parties and devices. The blockchain is an immutable, trustless ledger, which means it reduces the risk of collusion and tampering.
Secondly, it cuts out the middlemen and third parties from the process, making transactions significantly cheaper.
Finally, one of the biggest benefits of combining blockchain technology with the IoT is that it accelerates transactions, drastically reducing settlement times from days to making them almost instantaneous.
What Are the Current Limitations – and How Can We Fix Them?
Right now, one of the biggest issues with blockchain technology is that it is still very difficult for the average user to grasp due to the fact that it is a very new ecosystem and requires users to be relatively tech savvy to participate beyond simply investing in tokens.
However, the biggest reason that there have been no proper applications of blockchain technology to IoT devices is that the IoT devices can’t currently support the current blockchain model without experiencing significant reductions in both power and memory. This results in higher costs due to more electricity being used, and lower performance due to putting a significant strain on the memory of the device.
One of the biggest reasons for this drop in performance is because the most popular algorithms in the crypto industry right now – known as ‘Proof of Work’ (PoW) and ‘Proof of Stake’ (PoS) are highly unsuitable for use in IoT devices.
However, there is one lesser known algorithm – known as Proof of Assignment (PoA) – that is suitable for IoT devices. This algorithm powers the IOTW cryptocurrency.
IOTW is a new disruptive blockchain technology that aims to bring blockchain technology within reach of the average household by implementing micro-mining functionality into IoT devices – without additional hardware costs.
The IOTW blockchain will collect big data, allowing global, city-wide and district-wide energy saving optimization. The rewards will be distributed amongst the users instead of going to large professional mining farms.
IOTW will also have an AI implementation designed to optimize household comfort and reduce energy bills for users.
Unlike both PoS and PoW, both the computation power and power consumption required when using the PoA algorithm are extremely low. This drastically improves functionality and also has the benefit of being a significantly greener, more environmentally friendly option.
The PoA protocol can now perform thousands of transactions every second and is aiming to be able to process more than Visa within the near future.
The Future of Blockchain and the IoT
As time – and technology – progresses, it will be exciting to watch how the blockchain and the IoT industry come together – as they undoubtedly, inevitably will.
Both of these technologies are still very new, and there are understandably many roadblocks that currently stand in the way of a blockchain-powered IoT ecosystem. However, full integration might be much closer than we currently think.