Blockchain Smart Contracts: Mutually Reinforcing Power

Smart Business

Blockchain Smart Contracts: Mutually Reinforcing Power

Two young technologies are poised to remake business processes around the globe. Ubiquitous data access and control technologies (IoT) are now being combined with the “guarantee” of distributed ledger (aka blockchain) to produce startling new business opportunities – Blockchain Smart Contracts.

by Alan Earls

Blockchain, also known as distributed ledger technology (DLT), and the Internet of Things entered the popular lexicon at roughly the same time, and they have both been advancing rapidly from bleeding-edge, experimental concepts to broad, mainstream implementations.
Insurance organizations, for instance, have found in blockchain a basis for an entirely new approach to their business and risk model. And organizations ranging from consumer goods retailers to large industrial concerns have found IoT devices can provide real-time intelligence that has never before been available. The combination of IoT and blockchain, by comparison, is still in its infancy but pioneers across the continent and beyond have been changing all that. For example, in Paris, public infrastructure is tracked and managed using embedded IoT sensors while blockchain makes possible a transmission network that keeps the data “honest” and immutable.

No technology is perfect. the goal is to find tools that address one another’s shortcomings.
Monica Eaton-Cardon, COO Chargebacks911
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For IoT technology to work, it demands access to a substantial amount of data. “Managing that data via a blockchain system makes for not only more secure processing, but also faster, more efficient, and more accurate recall of data,” says Monica Eaton-Cardone, cofounder and chief operating officer of the global fraud prevention and chargeback mitigation company Chargebacks911, based in London. “The fact of the matter is that no technology is perfect; there will always be certain vulnerabilities,” she adds. The goal is to find tools that are complementary, and which address one another’s shortcomings, and blockchain technology and IoT fit this description.

Blockchain Smart Contracts - Disappearing Benches

Disappearing Benches: Park benches which were designed back in 1850 are a fxture of Parisian life and are often stolen. Today, they are being equipped with data beacons and Bluetooth to keep track of their whereabouts.

According to Eaton-Cardone, the two concepts are complementary in two ways: blockchain secures data, while IoT technologies enable smooth, seamless connection between data points. For instance, you can store customer information, tracking data, and order histories using a blockchain system. This data can then be recallable using an IoT-enabled system to facilitate improved and less error-prone tracking of items from one point in the process to the next.

Blockchain Smart Contracts: Smart Benches

In the case of Paris, the approach is even more leading edge, with something very old and very new. The old part is the historic Parisian park bench which was first introduced in 1850. The design has long been a fixture of Parisian life, nearly as iconic as the red telephone booths that served the UK for so long. Today, IoT and networking company Nodle and manufacturer Groupe Saint Léonard are building on the iconic design with data-transmitting beacons that will effectively assist city managers in tracking these historic assets. The result of their efforts was designs for “smart” benches and other urban elements for public use, each equipped with Bluetooth Low Energy technology to allow transmission of real-time data to city officials about bench locations and possible movement of benches between parks over time. Nodle has worked to deploy 3,000 of the smart benches and other public infrastructure in parks as well as in 68 Métro stations.
What is particularly unusual about the whole project is how blockchain takes Low Power Bluetooth and gives it range. The secret is Nodle’s Citizen Network – the willing provision of data collection and transmission services by mobile device owners who join in voluntarily. How does that work? Self-interest. According to company founder Micha Benoliel, who got his start in France but is now based in Silicon Valley, the secret is the company’s Nodl coins, built on distributed ledger technology, that pay participants a nominal sum for participating, eventually earning the right to modest but worthwhile rewards. He explains that with this simple concept the Nodle network is able to dramatically reduce the costs of providing IoT device communications.
Present in some 50 countries, the company has built a network for connecting and collecting data via hundreds of thousands of devices and smartphones collaborating to provide Internet access. The same NODL coin mechanism also provides an incentive for app developers to monetize their work via the Nodle Software Development Kit (SDK) and earn NODL coins as a reward for helping the network to grow.

Reinventing Commerce

Beyond Paris and the current technology deployed by Nodle, blockchain/DLTs and the Internet of Things are highly intertwined, says Michele Nati, a lead technology analyst with the Iota Foundation, which is developing an open-source distributed ledger for IOT. He believes that DLT and IoT can work together to deliver a new form of commerce. Blockchain can already address some of the problems that are currently affecting IoT, in particular in the consumer market, he says.

Convenience for IoT devices often comes at the price of security risks.
Michele Nati, IOTA Fundation
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Convenience for IoT devices, especially in smart home and other consumer sectors, often comes at the price of security risks and privacy threats, says Nati. Denial-of-service attacks initiated by IoT devices are on the rise. Nati claims that most of them are the result of those “unaware and uneducated to cybersecurity best practices,” noting that most of the consumer devices are used with their default password and do not receive regular firmware updates. Blockchain should limit the risk of poorly maintained IoT devices becoming security and privacy threats, he maintains. Further down the road, building IoT devices with decentralized identity linked to their owners’ identities will allow IoT devices to transact on behalf of their users, he adds. The recently demonstrated Iota and Jaguar Land Rover partnership has proved how IoT-enabled devices can become much more powerful when enabled with a verified digital identity, thus enabling them to generate money on behalf of their owners and users, he says (see below).

Cross-Border Tracking

The Iota Foundation is currently investing efforts and resources in collaboration with international organizations to test how its new IoT and DLT-enabled approaches to global trading can improve cross-border management, track consignments, and manage trade certifications between governments and customs points. More immediately, the organization has set up a program with Jaguar Land Rover through which drivers will be able to earn cryptocurrency and make payments on the move using innovative connected car services and by using its Smart Wallet. According to Michele Nati, a technology analyst with Iota, owners can earn credits by enabling their cars to report useful road condition data and then redeem the rewards for payment of tolls, electric car charging, or other goods. The technology has been undergoing trials at the Jaguar Land Rover software engineering base in Shannon, Republic of Ireland.

Microsoft study looks at AI Adoption in Europe


The broader implications of blockchain and IoT may also become quite profound in regard to the operation of supply chains, according to Paris-based JBoss creator Marc Fleury. Fleury is an advisor to Michael Yuan, CEO of OpenBay, a decentralized global marketplace. He is also an investor in Second State, which developed the middleware for smart contracts used to operate OpenBay. “Blockchain in supply chain management can increase transparency and verify authentication, which can limit fraud [such as counterfeit goods],” he says.

Enhancing Capabilities

Online marketplaces, the primary type of multichannel e-commerce systems, are ripe for streamlining, he believes. In addition to enhancing capabilities like ordering and auctioning, blockchain technology can better enable customer transactions to be processed by the marketplace operator or administrator and then be delivered and fulfilled by the participating retailers or wholesalers, he says. “Given that mobile and IoT devices are now ubiquitous, the future of e-commerce depends on safe, robust, and fast mobile applications,” says Fleury.

Blockchain in supply chains can increase transparency.
Marc Fleury, CEO OpenBay
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Moreover, by linking IoT data and blockchain technology, it can add value to businesses through legal contracts, with blockchain providing authentication. Furthermore, notes Ruslan Gavrilyuk, cofounder and president of TeqAtlas, based in Zug, Switzerland, using IoT devices, paired with Blockchain for supply chain, can also help businesses to track and report the conditions of goods. Companies operating within the food industry, for example, can benefit from reduced wastage since they can identify perished goods or those on the verge of rotting. Smart sensors that provide real-time visibility of resources and products across the entire supply journey reduce the need for buffer stock, Gavrilyuk says.

Food companies can identify perished goods and thus reduce wastage.
Ruslan Gavrilyuk, CEO TeqAtlas
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Blockchain Smart Contracts: Proving your Case

Product condition and other metrics can then be visible in real time to all vested parties. “By incorporating blockchain into the process, proving and paying out claims and refunds is simplifed,” says Gavrilyuk. In short, the IoT–blockchain combination means fraud claims can be eliminated and accountability ensured through data record time-stamping and unique hashing, he adds.

Blockchain Smart Contracts - Current Chargeback Rates

Countering the Chargeback: Threat Credit card chargebacks represent a real and growing fnancial threat to merchants, costing them both merchandise and revenue. Using a blockchain system, Chargebacks911 stores customer information, tracking data, and order histories and uses an IoT-enabled system to facilitate improved and less error-prone tracking of items from one point in the process to the next.

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