Blockchain and IoT
Blockchain

Why Blockchain and IoT Make a Powerful Pair

The Internet of Things (IoT) is giving businesses competitive edges that didn't exist earlier this century. Businesses that find IoT data leaks a reason to avoid investing in a digital infrastructure with IoT sensors, should consider blockchain as a superior cybersecurity layer.

Here's a look at how combining blockchain and IoT can empower your business to make dramatic system improvements.


How Blockchain Protects IoT

A central reason why blockchain and IoT go together well is that both are developments that promote sustainability through data collection. They've evolved together in the same era in which businesses have sought innovative solutions to serious internet issues such as data protection. Using blockchain as a security layer with IoT sensors can streamline a business in multiple ways. It can simplify production processes, increase company transparency and create better customer experiences.

Once you create a blockchain of interconnected blocks of data on a computer network, it can be accessed only by members with a special encryption key. Regardless of who accesses the data at that point, they cannot change any of it. Ultimately, this dynamic makes blockchain more secure than a centrally-controlled database. A hacker can gain a wealth of information by breaching a database but will run into endless walls and speed bumps when trying to access blockchain content.


Blockchain Needs to Be Standardized

Although blockchain is not yet the standard form of cybersecurity for IoT devices, it's poised to advance in that direction. One of the main concerns about using IoT is that when it distributes data through wireless transmission, the data can be intercepted by cybercriminals.

Blockchain technology provides a digital time stamp of when stored data is accessed, leaving a "digital paper trail" that tracks wallet addresses. While cybercriminals have tried to use crypto to hide their identities, blockchain is not an anonymous system, particularly when someone tries to trade crypto for cash through an exchange-registered digital wallet address.


Ways that Blockchain Adds Trust to AI and IoT

Think of a computer without any data protection as similar to a home full of open doors and windows, in which any strangers without being identified can walk in and out as they please. By contrast, a computing device with security layers like firewalls, antivirus software, encryption and 24/7 monitoring software is like a home with deadbolt locks and a burglar alarm system.

Now think of a big box store divided into hundreds of rooms with brick or concrete walls and steel doors surrounded by steel gates and video cameras. That's what blockchain is like by comparison. Another analogy is that while a database is like keeping secret documents in a filing cabinet in a locked room, a blockchain is like storing that same sensitive information spread out among many locked rooms.

Many cybersecurity experts consider blockchain to be a superior form of data protection, as it's based on data encryption. A blockchain, as the name suggests, is a series of interconnected digital blocks that store information. A hacker would have to crack complex encryption code for multiple blocks in order to compromise the data. Unlike other forms of communication, blockchain messages are nearly impossible to intercept.

How blockchain encrypts and stores data makes it a secure solution for IoT devices. It keeps a record of its activity on a public ledger that cannot be altered, so that community members can verify events that occur on the network.


Concerns About Trust in Decision-making Algorithms

The three main components of artificial intelligence are data, models and analytics. While many businesses trust centralized database systems, all it takes for a hacker to compromise massive amounts of data is to gain access to the database. In a decentralized system such as blockchain, most hackers don't know where to start, making it safe to store massive AI data.

The reason why blockchain works well with artificial intelligence applications is that AI involves decision-making processes based on "if/then" principles. The reason for a machine learning program arriving at a decision can be expressed in detailed data stored in multiple blocks. The fact that blockchain allows for securely storing a wealth of AI data on a network adds to its trust level.


AI Regulations in the EU

Despite the fact the business world is becoming increasingly automated, AI decisions must still be verified by humans to ensure accuracy. It's particularly important for businesses in the European Union to understand how their algorithms work due to new laws affecting AI. The EU General Data Protection Regulation (GDPR), which was implemented in 2018, requires owners of AI technology to explain upon request how their algorithms make decisions or face legal penalties. In this regard, blockchain simplifies audits with comprehensive reports, further elevating its trust level.


Trust in Crypto Transactions

Blockchain technology has proven to be a reliable cybersecurity solution for online transactions, particularly using cryptocurrencies such as Bitcoin. Automated transaction details can be stored in IoT devices that are accessed by different suppliers throughout a supply chain. Since there is no bank serving as a mediator, smart contracts cut costs on transactions. The combination of blockchain's encryption, communication process, lower costs and accurate tracking build a high level of trust among its participants.

A digital wallet developer that facilitates using blockchain is GridPlus, which manufactures a wallet-sized hardware device called Lattice1. Its user-friendly display portal makes it easy to read, reject or approve a smart contract with a third party. The device can be used to access any supported software wallet to make transactions with cryptocurrencies. It can also be used to store up to 64 GB of data. Its Wi-Fi antenna provides internet connectivity while its ZigBee antenna allows the device to connect with other IoT devices.


Turning to Zero Trust Principles

The security strategy known as "zero trust" in network computing is based on the "verify, then trust" notion. Websites, apps and IoT devices can use this strategy to shut out unwanted users from accessing data. The verification process for granting access to a digital network typically involves a username and password. Stronger security is achieved by adding multi-factor authentication.

In a zero trust environment, no access is given to anyone until their identity is authenticated. This strict policy can also be viewed as a "never trust, always verify" concept. Not all IoT devices that share data have built-in zero trust mechanisms, but they should, especially if the data is valuable or confidential.

Keep in mind that any electronic device connected to your network can potentially be vulnerable to a cyberattack, even with the most state-of-the-art data protection. So, it only makes sense to use a zero-trust strategy for all your network devices, including routers and IoT sensors.


Trusted Brands

Companies currently exploring AI development include tech giants Apple, Google, Amazon and Facebook owner Meta. These firms have gained enormous trust with the public over the years as far as designing technology for AI, IoT and the cloud.


IoT-based Blockchain Use Cases

Some of the most important applications for blockchain in the business world include smart contracts and recordkeeping. Here are some of the ways in which blockchain pioneers are currently using the technology:


Transactional Applications

As indicated earlier, blockchain is ideal for applications designed to make financial transactions. Smart contracts can execute either cash or crypto transactions upon completion of the terms. Blockchain is built on zero trust principles, as only authorized members of its community are allowed access via an encryption key.


Back-up Energy

Industry 4.0 firms have deployed digital infrastructure that allows for using smart contracts. A power generation company, for example, might use smart contracts to purchase alternative energy to account for mainline system glitches or shortages. Utility companies that partner with alternative energy companies to tap backup resources should consider smart contracts.


Logistics

Blockchain is also ideal for the logistics industry since it deploys a high volume of IoT devices to track shipping and handling. These devices track specific products shipped to specific parties, which requires a zero trust strategy. Since blockchain maintains data integrity, it's a system that can be trusted and secure by supply chain members.


Healthcare Wearables

The healthcare industry must take a zero trust approach to digital technology or face heavy fines due to HIPAA regulations involving patient privacy. As medical professionals extract streamed patient data from wearable connected devices, these IoT devices must adhere to zero trust principles. Again, blockchain can maximize privacy for wearables.


Conclusion

In order for businesses to widely adopt blockchain and IoT, trust in the technology is a major factor. Once businesses become more comfortable with the security and precise tracking that blockchain provides with IoT integration, they will become less hesitant to implement it, as the world goes more digital. Smart contracts are helping lead the way toward trust in blockchain technology.


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Blockchain Technology
Blockchain

How Blockchain-as-a-Service Will Transform Business in 2022 and Beyond

A Transforming Financial and Technological World

Blockchain technology has taken the world by storm. It started out as, primarily, a means by which digital currencies could be protected in a decentralized way that allowed for reliable international use.

Now, blockchain tech is everywhere, and familiarity with it will be absolutely necessary for many businesses in 2022. Following, we’ll explore a few key ways you can expect blockchain tech to transform business in 2022, and after. Consider the following:


The BaaS Angle

Blockchain as a Service, or BaaS, is a third-party application of the tech distributed through cloud networks. Big players in BaaS tech include R3, Amazon, and Microsoft. Hosts can be built up based on the cloud, enabling operation of related secure functionality as regards blockchain applications.

This reduces associated technical issues. Overhead is cut back. If you go with BaaS, you can “outsource” the tech, rather than hosting and managing it internally. Many new cryptocurrencies are taking advantage of BaaS options.


NFTs and IoT Applications of Blockchain Tech

NFT stands for “Non-Fungible Token”. NFTs are kind of like unique digital memorabilia. NFTs have grown expansively, and the only way to track who owns what NFT with reliability that’s internationally secure is through blockchain technology.

Just to be clear: blockchain tech is essentially a non-alterable record of transactions, thus its security. With NFTs, there needs to be an apparatus like blockchain in place to facilitate their profitability.

As yet, total regulation and intervention protocols haven’t been outlined in a legal sense internationally.  NFTs represent a huge potential financial actor in the global economy, and took the world by storm at the start of 2021. Today, everybody knows about NFTs; but the details of what they are tend to be a bit more complicated. As the metaverse develops, digital assets of the NFT variety will likely be even more numerous.

Similarly, IoT has a lot of blockchain crossover owing to varying records and interactions created digitally and remotely, which require the creation of a digital “paper trail”, if you will. For example, imagine payment transfer between machines. Without blockchain tech, it’s hard if not impossible to determine what went where, and actual associated value. After all, a dollar today won’t be the same value as a dollar tomorrow. Imagine an NFT that’s a video of a linebacker making a famous tackle. Now imagine transferring that NFT from one device to another. IoT defines the device and transferral capability, blockchain tech assures the NFT is securely transferred in a way that’s legally recognizable.


An Extension of the “Boom” in the DeFi Market

De-Fi stands for “Decentralized Finance”. In the next ten years, you might do the totality of your banking from your computer or smartphone. DeFi makes that possible. Prior to blockchain, banks just updated records regarding digital transactions where physical currency had no need of physical exchange.

Blockchain kind of developed from this banking practice. As 2022 continues, this De-Fi mode of financial management will become more integral, and accordingly, blockchain technology will as well.


IoT, 5G, and Integration of Blockchain Tech

5G stands for “fifth generation” wireless technology. 5G refers to 5 Gigahertz WiFi tech; blockchain is involved in both. Because IoT is in drastic expansion, things like blockchain become essential to maintain records and ensure fewer issues define market shifts.

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Blockchain reduces a lot of 5G IoT difficulties, meaning it will be used to solve problems in 2022 as regards security going forward. Keep your “ear to the ground”, as the saying goes, regarding the implications and applications of blockchain and next-generation wireless tech.


Blockchain Innovation: 3rd and 4th Generation Features

Aion, EOS, and Cardano are examples of 3rd generation blockchain tech. New additions to blockchain functionality include tackle scaling and sharding. These reduce the cost of transactions and play into varying speed issues. New platforms utilizing blockchain will collaterally increase associated capabilities of the innovation. That’s on the “3rd generation” side of things.

When you get to “4th generation” blockchain tech, easier-to-consume options become available. Expedited formation, reconfiguration, and operation of business networks as regards blockchain implementation become possible. Onboarding becomes less difficult. A few fourth-generation blockchain platforms include Aergo and Insolar.

One of the most notable applications of 4th-generation blockchain tech is interfaces oriented to business needs, reducing the appearance of complexity defining this continuously developing tech.


Interoperability and Standardization of Blockchain Tech

Interoperability refers to multiple blockchains being able to communicate. Definitely, new blockchains are being developed with regularity. A lot of them operate in an isolated domain owing to unique needs of the platform their developers put together. Interoperational ability becomes increasingly necessary as a result.

Also, standardization becomes a concern. Transferring blockchain ledger entries requires a quick, reliable, secure interface between blockchains. Getting involved in standardization solutions as a business represents a strong move in the near future, if you can get the angle right. Just check out all the cryptocurrencies on Uphold or Coinbase for an idea of how many of these digital coins exist. New ones develop almost daily.


The Increasingly Present Metaverse and Blockchain Tech

Facebook has rebranded to “Meta”, and the implications of that are staggering. Beyond social media, the “metaverse”, composed of Augmented Reality (AR) and Virtual Reality (VR) is becoming its own “animal”. To formalize metaverse applications, blockchain technology will be fundamentally necessary in 2022 and after.

Existing and new social media networks will be able to secure user information and initiate a safer interface experience. Just think about trading NFTs via VR. Blockchain is the only way to make something like that work in a viable way.


An Increased Demand for Industry-Related Crypto and Blockchain Abilities

As new cryptocurrencies develop in conjunction with NFTs and the metaverse, many different blockchains–some through BaaS options, others managed internally–will hit the market.

Enterprise use of blockchain will increase, as will SMB use of the tech for competitive viability. Being skilled in blockchain will represent a key factor in business hiring decisions in 2022 and beyond.


Familiarity with Advantages of 2022 Blockchain Tech Helps Businesses Benefit

BaaS applications have a lot of surprising potential. NFTs are a big mover and shaker in today’s currency economy, and IoT tech is similarly transforming the world; blockchain is increasingly core to either area of business.

Expect the DeFi market to see an extended boom, an increase in blockchain as regards 5G wireless tech, new features with subsequent blockchain generations, standardization of the tech, interoperability, unexpected metaverse applications, and a heightened demand for crypto and other industry-related blockchain applications.

If you have yet to properly explore how your business could make the best use of blockchain tech, it may be worthwhile to consult with the experts to see what potential there is for your operation.


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DeFi Industry Report Primer
Fintech

A Beginner’s Guide to Decentralized Finance (DeFi)

Keeping up-to-date is a good way to explore the cryptocurrency market and consider options. A new realm of technology to consider is decentralized finance (DeFi).

DeFi is technology that merges blockchain, digital assets, and financial services. The market for DeFi started growing rapidly from $1 billion in 2019 to over $15 billion by the end of 2020.

Here’s a deeper look at how DeFi covers a wide range of business interactions.


What are Smart Contracts?

A smart contract is a blockchain-based software code that executes, controls and documents contractual business agreements when predetermined conditions are met. Smart contracts, which are based on the “if/then” principle, have been used for various business interactions, including regulating workflows and issuing automated payments when an assignment is completed.

Smart Contract Example:

Jen is a photographer who does remote freelance high-resolution photography for client websites. She agrees to a smart contract that will issue her payment once she completes the assignment. Jen is to upload a series of pictures to her client’s website. The smart contract only executes when all conditions are met, such as submitting the photos by a deadline.

She is paid for her services in cryptocurrency that transfers to her digital wallet and she is issued a virtual receipt. She can access these digital items with any computing device using an encryption key, which is a complex scrambled code generated by an algorithm.

Once the conditions are met according to the predetermined rules, the smart contract expires. Everyone in the network can verify from the blockchain ledger. Jen can trade her cryptocurrency for cash through a crypto exchange.


How DeFi Differs from Traditional Finance

While blockchain is a decentralized mechanism for financial processes, traditional financial institutions connect with the central banking system. Unlike conventional financial services, decentralized finance doesn’t require a bank as a mediator to monitor transactions.

Here are some key advantages to DeFi that differentiates it from regular financial services:

  • Autonomous transactions don’t require permissions
  • Deals can be arranged or completed without a waiting period
  • No hidden fees
  • Trust in blockchain as secure technology for transactions
  • Cryptocurrency transactions are facilitated
  • Digital cash is held in a digital wallet instead of a third-party bank
  • Public blockchain ledger allows for transparency
  • More seamless integration of services via a blockchain

One thing that makes traditional finance and DeFi similar is they are both vulnerable to cybersecurity breaches. Blockchain is considered to provide strong security through encryption, but nothing is bulletproof for the most sophisticated hackers.


DeFi Building Blocks

Main Components

The three main building blocks of DeFi are blockchain, digital assets, and digital wallets. Smart contracts connect all these components together. Other important DeFi terms to remember are stablecoins (digital assets), exchanges, and derivatives. More familiar financial terms such as credit, insurance, and asset management are also part of the DeFi lexicon.

Here are other important elements of DeFi:

  • Decentralized apps (Dapps) – Software apps based on smart contracts
  • Governance Systems – Software-based tools for altering smart contracts or blockchain protocols
  • Decentralized Autonomous Organizations (DAOs) – Entities using smart contracts
  • Oracles – Data feeds such as real-time stock price quotes


Why Blockchain is Entering Financial Services

Blockchain, the underlying technology behind Bitcoin and other cryptocurrencies, is gaining favor with FinTech companies for secure digital transactions. It facilitates DeFi in various ways, providing a decentralized environment while permanently documenting transactions.

Both DeFi and blockchain are innovations designed to increase transparency, convenience, efficiency, and accuracy of transactions.

Since both DeFi and blockchain are relatively new developments, they pose risks and unknowns that must be addressed by vendors and end-users. Both have been used for fraud. There are many hurdles and government red tape to overcome before these advancements become mainstream.


DeFi Service Categories

Stablecoins

Stablecoins are one of six key DeFi service categories as they represent risk management for cryptocurrency users. One of the main risks of using bitcoin or other cryptocurrencies is price volatility.

The value of one bitcoin can fluctuate wildly day to day, even within the same day. But the value of a stablecoin is fixed to match the underlying value of an asset such as fiat currency. In other words, stablecoins hold a steady value, unlike bitcoin.

Exchanges

A digital currency exchange (DCE) allows you to trade digital assets, such as buying or selling bitcoin. It also lets you exchange cryptocurrency for fiat currency or trade different types of cryptocurrency (e.g. Etherium and Solana). Current popular DCEs include Coinbase and Binance.

Credit

DeFi allows you to loan or borrow cryptocurrency with others. That’s one of the countless reasons why blockchain-based applications are rising in demand among FinTech companies. Users can also lend or borrow tokens, which are similar to digital coins tied to monetary value.

As with traditional credit, DeFi lenders earn interest from parties that borrow from them. In the DeFi ecosystem, anyone can be a lender, and crypto assets can be used as collateral for crypto loans.

Derivatives

This term rose to notoriety during the financial collapse of 2008. Derivatives are synthetic financial instruments in which the value is tied to how an underlying asset performs in the market. An example would be if an investment firm invests in real estate assets. At the same time, the firm is hedging against them with a derivative that reflects the inverse of the investment.

Derivatives exist in the form of futures and options contracts, credit default swaps, and a long list of specialized financial instruments that deliver value according to an algorithm that tracks market activity.

In the crypto world, various derivatives exist as well. For instance, a 3x BTCUP token. This token reflects three times the percentage gain or loss of Bitcoin in a day. So if Bitcoin goes up 3 percent in a day, the value of your token will increase by nine times.

Many other functions and algorithms exist for crypto derivatives.

Insurance

The age of DeFi insurance is in its infancy, but it’s currently being explored by the insurance industry. Insurers are interested in serving crypto investors due to the risk/reward dynamic. They can sell insurance coverage to crypto investors through risk tokens. These tokens protect against the volatility of crypto assets. Ultimately, DeFi facilitates self-insurance options.

Asset Management

Another way DeFi is disrupting the financial services industry is through active decentralized asset management. Users of DeFi asset management don’t need to open a crypto account. While keeping crypto in a digital wallet does not earn any interest, crypto traders can use wallets, exchanges, and blockchain to manage and grow their assets.

Transparency and decentralization are keys that make DeFi asset management attractive to crypto investors.


Conclusion

The advent of decentralized finance is creating disruptions and innovations in the financial services industry and beyond. In many ways, this wave of blockchain technology and associated applications is redefining how people view money.

DeFi empowers you to make seamless private transactions without conventional institutions looking over your shoulder. Looking forward, the products and tools that emerge from the DeFi ecosystem will help democratize access to financial services. Essentially, by creating new ways to monitor, deploy, and manage capital, individuals will gain more freedom, flexibility, and control over their assets.

Watch the recording of our Smart Money 4.0 webinar to learn more about decentralized finance.


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