Blockchain's next phase requires comfort with 'smart' contracts and robotics
People often ask about the future of blockchain. My answer: using robots, out on the edge, in the real world where the information is being created.
This next iteration focuses on integrating the Internet of Things (IoT), artificial intelligence (AI) and robotics with blockchain.
Smart contracts, which automatically trigger automated actions such as transactions, are part of that trend. The term “smart contract,” which drives many blockchain payment initiatives, is a bit of a misnomer, because it’s not an actual legal contract (at least not yet), but rather, the terms of an agreement are put into computer code, which sits on a server.
The key to a smart contract is that it runs autonomously; when the terms of the contract are met, the code executes and fulfills the agreement. The contract is based on the terms with no ability to make changes to it after the fact.
For example, many people don’t buy flight insurance today because there is confusion over the contract and what constitutes an allowable claim. It also takes a long time to get paid, because there are many people and intermediaries involved in processing a claim.
If the insurance company instead uses blockchain for a smart contract, along with a cryptocurrency for example, when a flight is canceled you get paid immediately. The smart contract uses blockchain to verify your identity — meaning that you have paid for a flight on the airline and a data source called an “oracle” to validate that the flight has been canceled. The policy then immediately pays you the amount agreed upon in the contract.
Products can be turned into services using smart contracts. This concept can be used to turn many types of products, cars, servers, washing machines, etc., into services. Instead of people purchasing a car, server, washing machine, etc., they purchase a service for which they pay only for what they use. Smart contracts can help accelerate an entirely new category of innovation with the servicization of products.
Security is also a major part of the next phase of blockchain. Humans have a hard time wrapping their heads around the fact that robots can have identities and conduct transactions. For this model to work, we need to validate the identity of the robots, the data they gather and the commands they receive.
Many of these robots operate in the real world, outside of data centers and firewalls. Security is a top concern; robots are increasing in number and are in the public domain, which increases the risk of hacking and manipulation. Blockchain enables the trust in the robots' ledgers and identity.