Blockchain and smart contracts for IoT? Now, that’s something new. Isn’t it? Before we move on to relating the fascinating concept between blockchain-smart contracts and IoT. Let us start with a short story.
S from Alabama is a seller and wants to sell his product XYZ worth $60,000. B is from Arizona and a buyer. S and B do not know each other as they live in different states. How can they establish a contract if they are strangers to each other? Is it suggested to perform a transaction of $60,000 with some random person? The solution lies here in the form of a smart contract.
S and B have their unique blockchain address or a public key. The product XYZ is locked with a smart lock (as per smart contract terms) and lies safely at a particular place with its blockchain address or public key. The smart lock acts as an IoT device here.
S, will specify the terms of smart contract with his private key. The contract terms can be “ownership of XYZ and access to smart lock will be granted to the buyer only when $60,000 is credited in his (S) account number 12345.
B found the ad on the internet and is interested in buying XYZ. He will sign the smart contract prepared by S with his private key. Now, from his blockchain address or public key, he will transfer $60,000 to S’s blockchain address.
As soon as S gets the amount in his account, the smart contract starts getting verified through every node in this blockchain transaction. So, is S the real owner of XYZ? Does B have enough money in his account for the transaction? All other relevant details pertinent to the contract have been cross-checked too. Once everything goes well as per contractual terms, B will get access to the smart lock. Blockchain will entitle B as the new owner of XYZ. B can unlock the smart lock through his private key, and XYZ now belongs to B. The transaction will end on a triumphant note.
The IT sector has enjoyed enough hype about “smart contracts.” The focus has now significantly tilted towards the execution of blockchain and smart contracts for IoT.
Blockchain, Smart contracts, and IoT altogether can radically transform the economy and lead us towards the path of an awe-inspiring digital era. A smart contract is a computer-based predefined procedure aimed to encourage, verify, or enforce contracts digitally. You can also read more about IoT on 3 Best IoT Frameworks for Beginners if you are a newbie to the realm of IoT.
You can seamlessly do credible transactions without involving any third party or intervention in between. It is not a platform specific technology, and it can be executed anytime, anywhere. As per the stats, the volume of IoT connected devices will reach around 75 billion by 2025.
Vending machines being the pioneer, can be considered as the oldest technological implication of smart contracts and IoT. You can get your desired snack or beverage anytime by inserting the specified amount into the machine. The machine will analyze as per the smart contractual terms. Moreover, you will get the desired product once you put in the correct amount.
By 2022, Gartner has predicted that the application and execution of smart contracts will increase by 25% among all the companies globally. The use of blockchain and smart contracts is like an asset for the IoT domain. Not only it formalizes the relationships through predefined rules, but its deployment also results in cost savings and efficient compliance mechanisms with no manipulation. Impressive indeed.
Just like we humans are legally bound to legal norms under a physical contract, so are the things, devices, and humans under a smart contract. It is taken care of in advance that the breaching device or party has to bear the consequences attached to it. IoT is all about choosing the right actions at the right time. However, smart contracts still have to unravel a long journey with IoT to reach the destination.
How you can leverage a real sense of automation with ensured security through blockchain, smart contracts for IoT in your daily lives? Here are a few scenarios you can imagine.
Imagine a scenario where you are getting “your type of coffee at your desired time” even when you did not ask for it? It is not a shocker, IoT can do this for you. The particulars related to the quantity of sugar, milk, and coffee have been pre-judged and decided from your past behavior.
Your home is calling the mechanic on its own if any crisis or need arises. IoT can do a lot in automating homes to make our lives more convenient, comfortable and cushy, as all the physical devices are connected in a “smart home.”
A taxi is waiting for you at your doorstep concurrent to your office timings. You don’t need to book a cab every day, IoT can make the bookings for you. A dedicated taxi every day will automatically come for pickup and drop. Both the parties will be knowing about the fare, distance, traffic, route, and timings in advance.
A room is automatically adjusting its temperature that you wish for by assessing the weather outside. Your behavior at different time slots of the day, during different seasons, climate and the temperature outside, will altogether help your AC to make smart decisions for you, without you even touching the remote.
From your food preferences and choices, you will get suggestions and recommendations for the type of cuisine you usually look out for. Breakfast, lunch or brunch, dinner, snacks suggestions are offered as per the routine and diet that you follow.
While checking into hotels, you will get the room as per your requirements and comfort, without deliberately informing the hotel staff about it. Your past bookings can let the hotel staff know about your preferences in advance. Even unlocking the hotel rooms can be possible with mobiles. Hence you don’t need to carry the troublesome keys anymore.
If you talk about supply chain function then, “orders” have been automatically taken care of by the IoT system. Procurement from suppliers, dispatching to the respective customers, to decide on when to place an order, inventory already lying at warehouses or at the retail outlet, buffer stock to be kept as per seasons, and demand-supply mechanisms, all can be successfully ascertained with IoT. Resources can be used optimally by keeping costs under control. The blockchain is an essential technology that makes tracking and traceability hasslefree.
Fuel requirements for cars predominantly rely on right time and right quantity. When you consider a car and a fuel pump as an IoT, you can establish a smart contract between them. Algorithms are prepared, and information particulars have been extracted from the car and fuel pump on quantity, price, deposits in the account, etc. When everything is checked, the desired quantity of fuel is automatically filled in the car, and the equivalent amount gets transferred to the account of the gas station.
Legal transactions are always associated with a lot of paperwork, signs, and hassles. Now, it can quickly get sorted with smart contracts. There is no need to do physical notarization anymore. Also, automation is guaranteed along with efficient cost solutions.
As have seen in the paragraphs mentioned above, from our day to day lives to almost in any industry, we can deploy these technologies to gain the most out of it. The scope is not confined to any specific domain. End number of possibilities can be possible with the amalgamation of the blockchain and smart contract based IoT. Be it a single simple transaction of selling a car, to a deal which is worth a million dollar. The trio is here to our rescue.
Blockchain, smart contract, and IoT can do miracles in all the industries namely healthcare, finance, manufacturing, logistics, hospitality, corporate sector and even at household levels. The list is indeed incessant, and the scope is extensive. Though they all are in the emerging phase, a long journey is yet to cover and rediscover.
With the characteristics of a smart contract, the transactions on blockchain are backed with safety. It is true that blockchain based IoT can ensure security and privacy.
If we talk about 2018 stats, IBM has invested around $200 million in the blockchain-powered IOT. Microsoft has poured $5 billion into the IoT technology.
Google Invested $3.2 Billion in the IoT. So you can imagine the potential of blockchain and IoT. These technologies are on the verge of becoming a trillion dollar industry by 2020, for which efforts have already started in 2019.
With the introduction of any new facet among any of those three, the quest for “digital transformation” continuous to intensify.
Read more about Blockchain Technology and the reliability of businesses on it and get a thorough understanding of the true essence of blockchain technology and its efficacy over businesses.
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