What is X?

 

IoT is the killer application for blockchain technology...

 

But what is blockchain?

We are sure you have heard this word thrown around like the hot new thing it is. Starting with Bitcoin, blockchain technology has served as the basis for a whole ecosystem of decentralized and digitized value or data transfer. 

In a nutshell, the blockchain system is the grouping of events into blocks of time and relating them to the previous set of events in order to make a traceable chain of events. 

 

This is easiest described with transactions as is the case in Bitcoin. 

 

The blockchain in this case is a record of all transactions which build up to a state of now which is "who owns what" , going back to the beginning of Bitcoin. As Bitcoin is being sent from here to there, all the transactions are being recorded. After 10 minutes, the system looks at the history of who-owns-what and makes sure everyone is able to send what they tried to send. It then throws out the ones that don't work (as not valid transactions) and "blocks" the ones that do. In this block, at the top, is a reference to the previous block, therefore saying "this block of transactions is a valid set of transactions according to this history". This is really no different than what the banks do today. The difference and beauty, is that Bitcoin distributes this "ledger", blockchain, or history of transactions, to many people so that everyone can verify for themselves that what happens is valid and fair. There doesn't have to be any trust in a central entity (decentralization).


What does "decentralized" mean?

Decentralization really just means that it is not controlled by, or completely located in, a single entity or place. In this space it is concerned most with the governance, trust and fragility of data and bookkeeping. If a website is only hosted on one centralized server and that server goes down, we can no longer access that website. If our money is controlled and stored with one bank, we have to trust that the bank will not take our money or refuse to let us use it. These two situations are core to the ethos of the cryptocurrency movement. 


What is blockchain's role in IoT?

Blockchain technology provides two of the core needs of an IoT ecosystem, public and free data with a distributed and decentralized ledger. This allows data to be free to use and exchange in a network that is tamper proof and resilient to downtime or attack. Along with privacy centric cryptography and smart contracts, blockchain technology will provide a ripe foundation for the explosive growth of a successful IoT ecosystem. 

 


What are smart contracts?

Smart contracts are contracts which rely on verifiable data to fulfill the conditions of the contract. These have a wide variety of uses from automating the transfer of one token upon the receipt of another, to more complex, many variable contracts that become more like an application. Smart contracts, pioneered by Nick Szabo, are the core of cryptocurrencies like Ethereum and Neo and are a necessity in the proper functionality of IoT. 


What is crytography?

Cryptography, in the applications used in blockchain, are complex mathematical operations done to data that enable the unbreakable linking of data, the trustless verification of events, the immutability of history, the guaranteed ownership of addresses and absolute certainty to privacy. It is at the very core, what enables all of this to work. 


What is a node?

A node is a computer or server (from a simplified device such as a Raspberry Pi, to a cloud based server) that acts as one point in a decentralized web and serves as a storage place for data and a verifier of transactions. These can act as miners, validators or simple data repositories in a larger network of nodes. 

 
 
 
 
 

To read more about IoT and the technology involved, make sure to take a look at our Medium and Twitter: