Can Blockchain Technology and Cryptocurrencies save the Internet of Things?

The world of technology and science is mutable and ever-changing. Therefore, businesses and the structure of society adapt to these developments in order to maximise profits: they are closely interconnected. The future of the internet is the Internet of Things (IoT), which is defined as “the interconnection via the internet of computing devices embedded in everyday objects, enabling them to send and receive data.” For instance, smart watches and home assistants such as Alexa are prominent examples of the IoT. Hence, this new development provides new opportunities for profit in the business world, encouraging companies to embed it into their business model. With the increasing demand and development of the IoT, Blockchain Technology, and the cryptocurrencies that are based on it, have been identified as a solution to the current disadvantages of the IoT. Blockchain Technology is characterised by the creation of a digital ledger (record) of transactions that is duplicated and distributed across the entire network of devices on that chain.

The IoT and Blockchain Technology will have a significant impact on the world of business and provide an immeasurable amount of opportunities. Forecasts by Gartner suggest that around 27 billion devices will be connected to the IoT by 2025. The increasing number of devices connected to the IoT increases the necessity for businesses to adapt to it. With increasing globalisation, development, data exchange, and access to the internet, the IoT will become an invaluable asset to companies.

The total market size of the IoT is predicted to be USD 3 trillion in 2025 (according to Gartner). It will revamp the business world and culture of today by greatly increasing the efficiency and rate at which money flows and exchanges are made. Inventory management will be more efficient, remote working enabled, rapid exchange of data and collection facilitated, and, most importantly, money will be able to flow at a faster rate.  The consumer demand will be met perfectly. 

In addition, the IoT will generate over 2 zettabytes (2⁷⁰ bytes) of data by 2025  (according to Gartner). This provides an opportunity for companies and the government to use this Big Data to determine what the population requires, thus increasing productivity and revenue. More significantly, however, the IoT and Blockchain Technology will remove the need for an intermediary (commonly the banking industry). Currently, exchange of money requires bank accounts and messaging through a whole host of different companies, slowing the process of money exchange and incurring costs. The IoT, by removing the intermediary, will lubricate business culture, speed up transactions between businesses and with the consumer whilst removing transactional costs. The consumer’s needs will be met more rapidly and, as the pithy aphorism goes, ‘Time is money.’ The impact of the IoT on the economy and businesses is immense, adding gravitas to the question of cryptocurrencies. 

Although the IoT has been hailed as the ‘holy grail’ that will revolutionise the way in which business is conducted, the existing centralised model of the IoT, whereby the whole IoT network is maintained through a central server, has major flaws; these make it unsuitable for use on a macroscale. Cryptocurrencies that have been created using Blockchain Technology can provide solutions to this issue. 

Topic	Issue of the current IoT	How Blockchain Technology may remedy the issue
Single point of failure	As all operations and communications between devices are regulated through a central server, the whole network fails if the server fails.	Blockchain Technology is decentralised and based on using the processing power of all members of the network, removing the single point of failure.
Security	All operations are managed in one location through a central server, making it susceptible to attacks.	Blockchain is decentralised, making it more difficult to obtain information – this makes data more secure.
Privacy	Different types of personal information, such as passwords and habits, are stored on a central server under the jurisdiction of one third-party service.	Each member of a network has a copy of the ledger of all transactions;  however, the other members’ data is anonymous and unable to be accessed. In addition, data cannot be altered by creating immutable (they cannot be modified) ledgers. This decreases the threat of identity theft and also increases trust and friendliness, as there is no intermediary that could potentially access the data.
Flexibility	The centralised system is very inflexible, as all aspects need to communicate through the central server, creating a huge workload.	Decentralising the system decreases the workload on a single point.
Cost	Expensive hardware and software is required for the central server to handle the extensive workload.	Blockchain Technology uses the processing power of communicating devices, removing the need for an expensive central server.

The IoT also has major benefits on a micro- and macroscale, both benefiting consumers, businesses, and governments. It provides a plethora of opportunities that can be used to increase the quality of life of all involved such as saving time and money through more efficient planning, traffic management, and more efficient use of natural resources. Moreover, it increases the security of aspects such as vehicle safety, emergency response systems, as well as natural disaster warning and monitoring. Lastly, all transactions and daily business endeavours will become easier and more convenient to complete (e.g. through intelligent shopping).

The IoT indubitably provides a myriad of opportunities; however, these opportunities come at an ethical cost. The key issue in regard to the IoT is privacy and security of identity. A world-wide IoT that is eminent in every sector of the world is unimaginable without Blockchain Technology, as otherwise there would be too many threats to the privacy and security of data. However, even with Blockchain Technology, there are physical threats and critiques to the IoT: if it is attacked, it could reveal an unimaginable amount of information about consumers that could be used to terrible effect. Data breaches are a significant threat to consumers and are not at all rare: in the US alone there were 164 million records exposed in 2019. Data breaches also incur costs for companies and businesses, slowing down economic growth: a study by IBM has shown that the average total cost of a data breach is $3.86 million. Owing to the increasing number of devices connected to the IoT, hacking it becomes more attractive, and the security of the data is questionable. Furthermore, awareness of how data is utilised in the IoT is a major issue. Manufacturers and companies, sensing a lucrative business endeavour, do not inform their clients sufficiently about the use of their data. This leads to consumers trading their data for convenience. As the IoT is not overseen by a governmental institution, stealing private data is a serious problem. It is also not clear who should have access to the data – there is an urgent need to exercise control over who can view and use the data. 

Furthermore, it is crucial to consider whether the IoT is ethical and will truly benefit consumers and companies. The branch of ethics concerned with this is ‘data ethics’, which studies the moral problems related to the collection of data. The ambiguity and uncertainty of data access and distribution in the IoT is a significant issue, as data enables companies to learn about the identity of a person without their consent. This can be used to increase advertising but could also lead to serious crimes such as identity theft. It is also a violation of the human right to privacy. Another pertinent issue regarding the IoT is whether, by cutting out the intermediary and being able to do menial tasks, it will cause mass job loss. Estimations show that 47% of total US employment is at risk as a result of computerisation. The computerisation due to the IoT and the Big Data available from it are accelerating this process. As the jobs lost will be low-skilled and with low wages, the income inequality between rich and poor will widen even further, creating a greater divide in the world. 

The IoT is an unprecedented construct that will doubtlessly change the world, perhaps even more so than the invention of the internet itself. The economic and socio-political opportunities are prevalent in all areas of society. However, the issue of privacy and data ethics becomes all the more critical as does Blockchain Technology’s role in safeguarding the data of users. The change brought by the IoT must be sustainable: economic greed must not overcome the desire for individuality and freedom, lest the Internet of Things becomes the Internet of Horrors.