A few months ago, I wrote a piece dispelling some of the most common misconceptions about the ubiquitous internet of things (IoT). But as I mentioned in the article, IoT by itself is not truly transformational.
To deliver the greatest impacts — creating new business models, markets and value propositions — IoT must be combined with other emerging technologies including artificial intelligence (AI), machine learning, fog computing and, of course, blockchain.
Blockchain is perhaps the most overhyped and perplexing of these interconnected, transformational technologies.
In the simplest terms, blockchain is core technology that serves as a distributed ledger. It allows a shared set of computing systems to agree that a transaction between parties is authentic.
These outcomes are recorded on a cryptographically secured ledger (the blockchain itself). Because it is extremely difficult to alter information within the ledger without affecting other parts of the ledger, all parties can agree on single version of the truth in a transaction.
With this definition in mind, it’s time for a reality check to separate blockchain fact from fiction.
1. Fiction: Blockchain is unrelated to IoT
Fact: Blockchain can serve as the missing link for transformational IoT projects.
Blockchain is one of four technologies that can be combined to create leapfrog business value.
In an enterprise, IoT data often traverses organizational boundaries and partner ecosystems. However, it is challenging to ensure this data is accurate, reliable and secure.
It is even more difficult to reconcile the data, especially if it involves information from disparate sources that do not match.
Using blockchain technology, IoT practitioners can bring transparency and security to these decentralized transactions across operations and even borders. Now, all parties know they are looking at a single source of truth and can make more informed business decisions that ultimately impact their bottom line.
2. Fiction: Blockchain = Bitcoin.
Fact: Blockchain is used in bitcoin’s bookkeeping.
Bitcoin and cryptocurrencies brought blockchain into the mainstream, so it’s no surprise the two are often interlinked and confused.
To clarify, bitcoin (and other cryptocurrencies) is just one of many applications that can run atop a blockchain software platform.
However, there are many other applications for blockchain besides cryptocurrency, including use cases in enterprise supply chains, healthcare and beyond.
3. Fiction: All blockchain networks are public and anonymous.
Fact: Different kinds of blockchain networks exist, including both public and private.
There are two main types of blockchain networks: public and permissionless, and private and permissioned.
Permissionless, public networks, like those used in the cryptocurrency arena, allow individual users to remain anonymous as they track and verify transactions. However, large enterprises are more inclined to use private, permissioned blockchain networks.
Such networks allow known entities, like suppliers, customers and other partners to participate as the company uses protocols to verify and assemble each blockchain.
This article was originally published on CIODive.