Blockchain Solutions for the Internet of Things

A famous Tex Avery cartoon from 1949 depicts ‘The House of Tomorrow”, where autonomous devices anticipate your needs and act on them with preternatural alacrity and competence. But, as in similar satires of the time, the gag ends up being that your so-called futuristic appliances just as often turn on each other and you, leading to domestic chaos.

More than half a century later, the Internet of Things (IoT) has effected this prophecy more accurately than many could have anticipated. While home assistants like Alexa have become an outright fiscal and cultural phenomenon, the other side of the coin isn’t quite so shiny. In 2016, the internet itself was cowed by a bot-network stitched together from thousands of compromised IoT devices. And, if that wasn’t disturbing enough, experts predict another, more powerful, zombie network is on the horizon. The consequences are looking more dire than the rampaging toasters in the old cartoons.

Does this mean we need to implement rigorous security protocols for all internet connected gadgets, even ones as anodyne as your smart hairbrush? Well, perhaps, but there’s another solution already at our fingertips, one that doesn’t involve more government regulation.

A Digital Data Vault

IoT devices can literally save your life – consider a pacemaker that sends data to another device that, at first sign of trouble, dispatches an ambulance automatically to your location. But how to make sure this sensitive data is secure? That’s where the blockchain comes in. Data can be encrypted, preventing any authorized access, and the blockchain’s distributed nature means that any attempt to alter it will meet with failure. Even if one copy of the ledger is tampered with, the blockchain only needs to connect to another copy in order to correct itself. Additionally, an unfathomable amount of computing power is necessary to break into and alter even one ‘link’ on the chain, as it requires changing every previous ‘link’ as well.

Solving for the Future

The benefits of the blockchain extend past data management. During the prototyping period of a new device, the blockchain could store any sensitive IP information, accessible only to those with the necessary clearance, thus preventing IP theft. This is especially valuable when it comes to IoT devices that work with power plants, water treatment facilities, and other areas of national security. This applies to consumer devices as well. Whether accidental or otherwise, alarming security flaws have been discovered in mass-market products. Recently, an Android mobile device was found to be collecting private user information and sending it to third parties without permission. It’s hard to say how common these kinds of events are, but with the blockchain security flaws can be headed off at the pass during the manufacturing process. By fulfilling the terms of smart contracts on a step-by-step basis, a company can prove beyond a shadow of a doubt that their product has met exacting security standards. Not only does this boost consumer and investor confidence, but it streamlines the regulatory process as an added bonus.

There’s no reason we can’t integrate the blockchain into every IoT device – it’s certainly more cost effective than sending reams of data to a centralized server bank, and as the number of nodes continues to grow, it will only become safer. While the benefits are most tangible when it comes to sensitive devices such as those in the medical field, there’s no reason we shouldn’t want our own Houses of Tomorrow to perform flawlessly.

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Will Minor
Will is a writer-at-large for Block Telegraph. A prolific writer and futurist from New York City, he specializes in all things cutting edge. He holds a Masters in the Arts and has taught extensively abroad.

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Advertising and Marketing on the Blockchain

empty billboard awaiting an advertisement

Advertising’s Uncertain Present

Advertising has struggled more than most to adapt to the internet age. The old model was straightforward, simple, perhaps even elegant. Brands would contract agencies to create advertisements for TV, radio, and print. Once the ad was in place the amount of attention it received was easy to determine via Nielsen ratings, Arbitron ratings, and subscription numbers. Of course, there were less tangible vectors such as billboards, but overall a brand had a reliable picture of the relationship between attention and increased sales.

But the rise of the internet has created more intermediaries, enabled widespread fraud, and made consumers feel that their data and privacy are routinely abused. Let’s examine how Blockchain can pull the industry out of its tailspin, and if not return it to simpler times, then reduce the friction of modernity.

Portable people meter
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This flashy number picks up on audio tones to record TV and radio habits. Source: Wikimedia Commons.

Eliminate the Middleman

The internet has destroyed traditional trust models by lowering the bar of entry to all modes of communication. Unless an ad is transmitted through relics of old media like cable television stations or the NYT website, customers are wary of being gulled by deceptive ad campaigns. (As they should be: histrionic clickbait and outright scams run rampant.)

If the advertiser is someone the consumer trusts, all that doubt melts away. If, for example, a traveling gourmand recommends a particular Scottish whiskey, their followers are bound to take the endorsement seriously. The problem begins when, for reasons of time, money, or ignorance, online influencers sign up with an affiliate network which serves as a middleman.

The network is beholden to no one but themselves for their data. They can give false data about clickthroughs, underpay the influencer, or leverage their power to take advantage wherever possible without adding any value to the mix.

The Blockchain can eliminate such intermediaries in one fell swoop. Brands can work directly with influencers through smart contract technology and web platform interfaces designed by third parties who issue only small transaction fees.

Ad Fraud

Without reliable tracking systems like Nielsen ratings for the internet, ad fraud continues to be a significant thorn in the side of brands and agencies. It’s estimated that $19 billion will be lost to fraud in 2018.

Viewability is almost impossible to confirm. Websites can use bots to inflate numbers artificially, and brands may have little recourse to prove their claims wrong. These bot driven ads often never reach the public at all.

Blockchain in combination with other technologies can limit fraud. Bots can be detected by analyzing characteristics of traffic on a site, and if found, such data can trigger a clause in a smart contract held between brand, agency, and website, that immediately cancels the ad buy and refunds all parties at the expense of the guilty. An industry-wide reputation system connected to the blockchain can record instances of fraud, helping brands and agencies avoid bad actors in the future.

Give the Customer Control over Their Data

While customers have tacitly agreed to lose control over their data via terms of service agreements, they are far from comfortable with their browsing lives being chopped up and sold to the highest bidder. The Cambridge Analytics scandal may have made the headlines for political reasons, but it was indistinguishable from the business models of Facebook, Google, Twitter, etc., have been plying for years now.

It may be an excellent idea to destroy this business model in favor of something entirely different, but until that comes to pass, blockchain based companies like Kind Ads can entice customers by offering control over their own digital lives. Wine connoisseurs, for example, can sell information about their age, income, location, social media presence, and eating habits to wine companies on an open marketplace. In return, the wine companies offer them personalized ads as well as special offers, discounts, or rebates. Payment is made through the platform’s cryptocurrency which can be exchanged for fiat or directly for the products advertised.

Advertising already senses the potential, and we’ve seen blockchain grow by 400 percent the past year. As major companies like IBM create their blockchains and build partnerships, mass adoption won’t be far behind.

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European Union Unlikely to Regulate Crypto Market Anytime Soon

Flag of the European Union, which is blue with a circle of yellow stars.

Finance Ministers Meeting

At a recent gathering of European Union (EU) finance ministers in Vienna, it became clear that there is unlikely to be any move to regulate at the EU level in the near future. The meeting came roughly 10 years after the collapse of Lehman Brothers on September 15th, 2008, one of a series of events that arguably led to the rise of Bitcoin and suggestions for alternative, more transparent, economic systems.

The finance ministers have re-affirmed the EU’s desire to not rush any cryptocurrency regulation before a thorough analysis has been made. The agreement is the latest indicator that EU looks favorably on blockchain technology and is so far employing a very reasonable approach to regulations.

Danube River in Vienna at night.
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Image Credit: Tookapic via Pexels

The EU has already launched several blockchain initiatives. Apart from investment into blockchain-related research, the commission set up the EU Blockchain Observatory and Forum. This body, led by veteran blockchain company Consensys, has the mission of monitoring blockchain initiatives in Europe, acting as a body of knowledge, and advising the EU on its potential role in Europe. As an example of this, the EU Blockchain Observatory is currently analyzing the impact of the recently-launched EU General Data Protection Regulation (GDPR) on the blockchain industry.

Other investments made by the EU in blockchain technology include the Horizon 2020 Prize “Blockchains for Social Good,” which offers a total of 5 million Euros for blockchain solutions aimed at solving social problems.

These investments, coupled with the finance ministers’ recent announcement, are encouraging for the blockchain industry. While the cautious approach to regulation is very sensible, there have also been calls by some industries to remove regulatory uncertainty. Many companies feel that the current hands-off policy leaves them stuck with outdated regulations and ambiguity about the legality and compliance of their business models.

Small Member States Lead the Way

In the absence of EU-wide policy decisions, some smaller EU member states have taken the matter into their own hands and have created crypto-friendly regulations in their jurisdictions, aimed at attracting blockchain companies. Gibraltar, Estonia, and Malta are examples of countries which have managed to create ecosystems ideal for blockchain companies. Contrary to popular belief, the regulations created by these countries are not particularly lenient or characterized by authorities turning a blind eye. Instead, they provide transparency, security, and up-to-date legal frameworks aimed at protecting consumers while also stimulating industry.

It remains to be seen if the EU maintains its hands-off approach, follows the examples set by its smaller member states, or eventually imposes more restrictive EU-wide regulations. For now, the blockchain industry can take comfort in the fact that the EU is actually trying to understand the technology and its potential before regulating it.

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