The Byzantine generals ruling the IoT Sunday, 10 April 2016

News article written by Corbett Communications. The statements made or opinions expressed do not necessarily reflect the views of Engineers Australia.

As the use of blockchain technology expands it has several important implications for the Internet of Things (IoT) due to its decentralised, “trustless” and secured capabilities. Put simply, blockchains (also known as altchains), which underpin the technology behind the likes of Bitcoin have the ability to catapult the IoT into reality, and soon.

Blockchains explained

The Wall Street Journal describes a blockchain as: “A data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority.”

Blockchain technology works across peer-to-peer networks like the cryptocurrency of Bitcoin, that is, money which can be securely transferred with privacy, automatically and is fully auditable. This is what is meant by “trustless” - a system where no one needs to put their faith in anyone else. An encrypted record is sent out to all other nodes in the network and the other nodes verify the transaction by performing complex cryptographic data calculations. When the majority of the nodes agree that a ‘block’ of transactions is legitimate, it is added to the ledger and the updated version is used for verifying future transactions. The democracy blockchain keeps a fair and accurate record of what belongs to whom (solving what is known as the Byzantine Generals Problem) and builds up over time and becomes even more secure with more peers using it.

Both start-ups and corporate tech giants alike have jumped on the blockchain wagon and are disrupting traditional digital scenarios. In 2015, IBM and Samsung began collaborating to build IoT solutions using the blockchain. IBM’s Device Democracy paper, refers to the blockchain as “a very elegant solution” and “revolutionary as a transaction processing tool”, renaming the IoT the “Internet of Decentralised, Autonomous Things”.

“In this democracy of hundreds of billions, users bind with devices using secure identification and authentication. Users dynamically create and maintain rules of engagement with other devices. These rules provide a powerful mechanism to define relationships between and permissions for devices based on user-defined proximity: physical, social or temporal,” IBM stated.

The company suggested rules could also be defined by 51% consensus, as in the case of devices agreeing on the safety of peer downloadable software updates or the ban on a misbehaving participant.

“User creation and execution of digital checklists based on a pre-defined set of rules aims to help ensure that the autonomously functioning devices do not fail,” according to IBM.

Devices could be enabled to autonomously execute digital contracts such as payments and agreements with peer devices by searching their own software updates, verifying trustworthiness with other devices, and paying for and exchanging resources and services. This allows devices to autonomously function with self-maintenance and self-service.

As blockchains (and sidechains, iterations of parent blockchains) proliferate, IEEE in the US advised of several important implications for the IoT and the development of smart systems. It said blockchain technology could provide a way to track the unique history of individual devices, by recording a ledger of data exchanges between it and other devices, web services and human users.

Blockchains could also enable smart devices to become independent agents, autonomously conducting a variety of transactions. In this way a vending machine could monitor and report on its own stock and ask for bids from distributors as well as pay for the delivery of new items itself based on the purchase history of customers. Likewise a group of smart home appliances could negotiate priority so that the washing machine, dishwasher and robo-vacuum all run at different times to minimise the cost of electricity against the current grid prices.

“At a more abstract level, blockchain networks themselves also have the potential to become independent agents, what some have referred to as ‘Distributed Autonomous Corporations’,” IEEE said.

“These would supplant systems like banking and arbitration, which have traditionally relied on trusted and centralised human authorities, with trustless and decentralised networks.”

However, ITEE chair Geoff Sizer said we should step cautiously into the future with the use of blockchains.

"Blockchain technology offers potential solutions to a number of problems which must be solved for the IoT to proliferate,” he explained.

“But as with any disruptive technology, there are risks which need to be addressed, particularly in the areas of fundamental security and the quality of the underlying software implementation. We would be wise to proceed with caution."