By Corin Faife,

The Internet of Things (IoT) – the vast web of connected devices which is becoming a fundamental part of the technological infrastructure that surrounds us – brings both huge potential and great risk.

On the plus side, the transition from ‘dumb’ to ‘smart’ devices represents a sea change in the way we think about automation and responsiveness in the products around us: cars which drive themselves, apartments which become self-regulating environments, and appliances which optimise automatically for each user’s unique preferences.

But as a consequence, every connected device is another attack surface for a hacker to target, and significant concerns have been expressed about the growing number of IoT devices which have been weaponised into botnets or used as surveillance tools.

Evidence of these high-profile breaches means that attempts to increase trust and security between IoT devices are crucial – so it’s big news that a group of Fortune 500 companies from the hardware and software industries is joining with a team of blockchain startups to develop a protocol that will connect the dots between IoT devices and blockchain technology.

The initiative was born out of the New Horizons: Blockchain x IoT Summit in Berkeley, California, in December 2016 – a meeting that brought together startups Ambisafe, BitSE, Chronicled, ConsenSys, Distributed, Filament, Hashed Health, Ledger, Skuchain and Slock.it, and major corporations BNY Mellon, Bosch, Cisco, Gemalto and Foxconn.

Discussed at the event were the challenges facing blockchain and IoT innovation, and the potential for a collective effort to address them.

Many of the larger corporations have already expressed strong interest in Internet of Things technology. For example, Bosch’s most recent annual report, the 2015 review titled Simply.Connected, set out a vision to be “one of the world’s leading IoT companies” by focusing on sensor technology, software and services, while Cisco, known for making networking equipment, has a clear interest in being at the forefront of embedded networking.

But the interest in blockchain represents a more recent direction: electronics manufacturers like Foxconn, for example, have not historically been associated with this field. So what are the challenges and opportunities that have led them to team up with blockchain startups?

The need for trust

In the manufacturing space, big business has already shown interest in using blockchain technology in supply chain logistics, where cryptographic signatures can be used to assure the identity of items at each stage of transit and after sale (Chronicled, a member of the consortium, has compiled a list of case studies of this kind).

For Internet-enabled devices, identity verification becomes even more important for manufacturers, since they will be sending and receiving data across a larger network. Even when devices are trusted, the integrity of data sent between them still needs to be validated; hence the gains that can be made by signing and confirming data at each stage of the way.

One of the larger companies involved, digital security provider Gemalto, has worked on secure machine-to-machine (M2M) communication for the past 10 years, and is now applying this experience to the newer field of blockchain technology.

Joe Pindar, director of product strategy and CTO at Gemalto, told CoinDesk that the intention is to build an abstraction layer such that a handful of core functions that IoT vendors might need – for example, registering new devices or changing ownership – can be implemented in such a way that the code can be used with different blockchains.

“It means that a new IoT startup can concentrate on building their app and getting the core value of the integrity that blockchain delivers, but at some point in the future if they decide that their first choice, say bitcoin, wasn’t the right way to go, they can switch to ethereum and it doesn’t hurt them,” Pindar said.

The upshot of this is that once the protocol is released, new startups will be able to build products around it in a standardised way without needing to put time and resources into developing bespoke solutions each time.

Beyond the barcode

According to Ryan Orr, CEO of Chronicled, the development of the blockchain/IoT protocol can be seen as the next phase in a technological pathway that started with the barcode, the original digital product identifier.

“The barcode was a simple and unique system that led to huge improvements in the retail industry,” Orr said. “Unfortunately the system was not secure, so you have trillions of dollars of counterfeiting today … Once we have a secure system of identity that’s open and interoperable, I think the implications will be as big as the barcode over 10 to 20 years.”

Besides product identifiers, the consortium also sees big potential in a protocol that will connect the IoT with the functionality of smart contracts.

Slock.it, another consortium member and developer of the much discussed DAO, focuses on use cases meant to facilitate sharing economy services without needing a middleman: for example, using smart contracts and an Internet-enabled lock to let guests into an apartment in an Airbnb-style rental.

In a statement, Dirk Slama, chief alliance officer at Bosch Software Innovations, said:

“We are seeing tremendous potential for the application of blockchain in industrial use cases. Being able to create a tamperproof history of how products are manufactured, moved and maintained in complex value networks with many stakeholders is a critical capability. This must be supported by a shared blockchain infrastructure and an integrated Internet of Things protocol.”