How blockchain can make Internet of Things payments mainstream
Blockchain may have received its most exposure as the distributed ledger technology at the foundation of cryptocurrency exchanges, but its use cases are advancing into other data-driven or supply-chain industries pursuing the Internet of Things.
It's why a blockchain provider like Ripple recently dedicated $50 million to the Blockchain Research Initiative in an attempt to accelerate the progress of streamlining existing bank payments infrastructure and automating regulation and compliance for use of cryptocurrency.
"Banks are interested in this because if the technology was proven to work, it would disrupt the financial services industry," said Joe Renz, president of New Mobility Lab. "There are very different approaches, and some companies are using distributed ledger technology because they can do things very differently from the traditional player."
Data can easily be monetized by combining it with other technology through blockchain. This will draw the attention of traditional financial and payments providers, Renz added during the annual IoT Summit.
The growing number of companies creating and issuing their own currency using blockchain has resulted in a lot of volatility on the market. It makes it hard for traditional financial services players to look past that and make the leap to blockchain.
Canadian bankers involved in the Jasper Project to determine blockchain's potential and the return on investment vs. using current legacy systems have advised financial institutions to proceed cautiously with a switch to distributed ledger.
"Stability from a business standpoint means you need to know what something is going to cost," said Jeff Weitzman, vice president of commercial strategy for IoT at Nokia.
In terms of transparency, blockchain can record IoT data for any number of uses, including knowing how much it costs to use light bulbs and other services in a meeting room to help to accurately determine what it should cost to rent that room.
Much of the financial and business world is based on bottom line results, and the blockchain can provide transparency and stability, Weitzman added.
A true machine-to-machine economy calls for two machines that have never interacted previously to somehow communicate with one another and possibly consummate transactions, said Mike Mackey, chief technology officer at Centri Technology.
Common examples include refrigerators that can monitor the need for certain items and order them for the owner, or autonomous cars that can make payments to any number of machines, including parking meters, gas pumps or service needs.
"We will get to the point where one machine may be trying to buy something from another machine — and many organizations are looking at these options," Mackey said.
In pointing out that many aspects of IoT and its marriage to blockchain need to be ironed out, Mackey cited an example in his hometown of Seattle, in which a car is possibly automated to make a payment to a computer in a parking garage and does so with the same amount on a regular basis.
"But what if suddenly there is an NFL football game nearby one night, and the price of the parking goes up to $60 for that event," Mackey said. "I am not sure I want my car making that decision for me to pay the extra money. So that presents an IoT challenge."