Five industries that are being transformed by blockchain | Expert panel

Five industries that are being transformed by blockchain | Expert panel

ANALYSIS: How will blockchain impact health, manufacturing, the supply chain, energy, and the financial sector? Kate O’Flaherty compares the reality with the hype.

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It is the distributed ledger system that enables cryptocurrencies, but blockchain technology offers use new cases across multiple vertical industries.

Within the Internet of Things (IoT), blockchain’s applications go beyond security and authentication to asset tracking and the exchange of smart contracts, which give devices a way of handshaking and exchanging information according to mutually agreed rules.

Indeed, the claimed potential of the technology to boost efficiency in supply chains, for example, has resulted in a number of projects and pilot programmes that focus on the IoT.

The Trusted IoT Alliance – a consortium of companies that includes Bosch, Cisco, Gemalto, and Skuchain – was formed in September 2017 to focus on how blockchain and the IoT can intersect for business advantage.

Recently, AI and blockchain technologies have been combined to create autonomous ledgers that can act as smart agents on behalf of a person, organisation, or technology, as we revealed in this exclusive report.

Yet more than most new technologies, blockchain is surrounded by hype on the one hand and criticism on the other. For every claim that blockchain forms the basis of a new data commons, there is another saying that it is slow and inappropriate for 90 percent of the tasks that it is being proposed for. And for every claim that it forms a new, more secure bedrock for tracking goods and services, there are voices suggesting that it is a flawed technology.

Innovative ventures certainly abound – using blockchain to track and authenticate contracts, for example, and both physical and digital assets – while even some blockchain experts express reservations about the technology and suggest that it urgently needs to evolve.

So, taking all of this into account, what will the real impacts be on five key IoT markets: health, manufacturing, the supply chain, energy, and the financial sector?

Health

As a distributed ledger system, within which each block of data contains a hash of the previous one, blockchain is often thought of as an inviolable system of record. Because each record is linked and secured via cryptography, and so cannot be tampered with (without exposing the alteration), the technology has a reputation for robust security.

This capability may be especially important in healthcare, where a number of IoT products are emerging. For example, blockchain can be used to secure critical data during robotic surgery, says Peter Van Ostaeyen, business consultant and blockchain specialist at SD Worx. “If the data goes via blockchain, it means there is no single point of attack,” he explains.

In addition, AI-based robotic doctors are able take actions enabled by blockchain’s smart contract capabilities. This works by allowing a robot to perform an action automatically when it senses something, says Van Ostaeyen. “For example, if a robot sees someone falling down it will trigger an action, such as the robot then picking the person up.”

Another application that takes advantage of smart contracts is a machine that draws blood using infrared sensors to find a vein. It is then able to analyse the test results on the spot. “It draws blood via a smart contract agreement and, after assessing it, the information is securely sent to the doctor using blockchain,” says Van Ostaeyen.

Meanwhile, another company is using blockchain to enable a smart sensor in shoes worn by the elderly, allowing those with dementia to be tracked. “Blockchain enables this through a direct contract between the sensor and the application,” Van Ostaeyen says.

Finance

Because it enables cryptocurrencies such as Bitcoin, blockchain is already well known in the financial sector. 

Within IoT applications specifically, blockchain will increasingly have a role to play in payments, says Paul Thomalla, SVP global corporate relationships and business development, for ACI Worldwide. “As regulatory understanding matures and blockchain moves beyond the pilot phase, we can expect to see it power a wider variety of payment systems, such as micropayments for the IoT.”

Some early case studies of how blockchain and the IoT can combine with location services to power micropayment systems are explored in this Internet of Business report. Examples include bike-sharing schemes that deduct payments as cycles are ridden around cities, and smart factories that pay workers whenever they are on the factory floor.

This may create smarter environments, but it may also risk creating overly rigid systems that some human beings feel uncomfortable with, or feel compelled to work within – for example a workplace that people are reluctant to leave because their micropayments will stop.

Read more: Uber buys electric bike-share startup JUMP in connected transport deal

Ian Bradbury, Fujitsu.

Ian Bradbury, CTO, financial services at Fujitsu says payments will be “where the IoT and blockchain come together”. Crossing over into transport, he says the UK’s Oyster Card scheme, which enables frictionless urban travel, could also benefit from a blockchain-enabled payment system.

“Currently, you touch in your payment card, but in the future sensors will be able to detect the route you are taking and calculate the fare type for each journey. There are multiple different operators involved, such as stations and train companies, so a ledger operated by someone else where transactions are stored would be a natural progression.”

However, it is in the financial services sector that some of the most vehement criticisms of blockchain have been made – most notably by Bank of England governor, Mark Carney.

In a speech earlier this year, Carney slammed cryptocurrencies as “failing” and rejected suggestions that blockchain could succeed as a mainstream system for authenticating banking transactions.

Carney’s views could be read in two ways: on the one hand, as the spokesman for an industry that feels threatened by a distributed ledger system that, in theory, could disintermediate traditional banks; and on the other, as someone who understands that any system that uses distributed computing resources would be too slow to handle retail banking transactions.

You can find our in-depth ‘big read’ analysis of Carney’s speech and views here.

In another recent Internet of Business report, we revealed that the Bitcoin blockchain contains illegal material, and a range of digital junk and coder graffiti, in effect. In theory, any blockchain could contain a range of unrelated data without anyone necessarily being aware of it.

In this sense, the inviolable nature of blockchain technology risks becoming a problem, because sharing illegal data may implicate everyone involved without their knowledge, while removing the offending data would negate the blockchain. In our report, one commentator suggested that this aspect of blockchain replaces trust with slowness and complexity – a “geeky solution”, he said, that cannot be fixed later.

Energy

Sajjad Daya, Sparkster.

In the energy sector, blockchain technology can help facilitate the exchange of ‘spare’ megawatts of power. Sajjad Daya, CEO of Sparkster.me, cites the example of a company called IOTA, which uses blockchain as a payment vehicle to facilitate peer-to-peer energy generation and consumption.

Meanwhile, GE Digital and a start-up called Evolution Energie have developed an app that enables users to track renewable power as it moves through the electrical grid. It provides ‘green certificates’ to vouch for energy sources using blockchain, allowing both people and organisations to sell from their renewable sources without any need for a utility to manage the process.

This use of blockchain to track green energy usage was driven directly by customer demand, says Vincent Champain, general manager of the Foundry, GE Digital’s R&D centre in Europe.

According to Erwin Guizouarn, CEO of Evolution Energie, the system works by embedding blockchain directly in the production asset to ensure that customers know where the green energy they consume has been produced.

In this sense, we can view blockchain as part on an ongoing trend in the energy sector: the breaking apart of monolithic structures and of the simple relationship between provider and customer, and the rise of smart networks, smart buildings, smart cities – and smart customers. In this emerging world, energy consumption becomes more efficient and sustainable, and anyone might be able to buy – or sell – energy according to their needs.

Read more: Smart energy: Why vehicle-to-grid technology is on the move

Transport/Supply Chain

Internet of Business has recently reported on blockchain deployments in the pharmaceutical sector, in software robots, legal contracts, and in a range of other applications, including smart wine and tools.

According to many experts, the supply chain is where blockchain technologies really come into their own. Dr Robert Learney, a CTO specialising in blockchain and distributed ledger technology at R&D specialist Digital Catapult, cites the example of a company called Provenance, which “allows you to create a digital representation of a physical object and trace and verify its origins, attributes, and ownership through blockchain technology”.

In short, a version of digital twin technology combined with a smart ledger system.

Read more: Gartner: Four best practices for managing digital twins

Read more: Edge computing: SWIM launches AI digital twins that can learn

But how does this translate into reality? A recent demonstration saw Provenance using a combination of mobile, blockchain, and smart tagging technologies to track tuna after they were caught in Indonesia. “The tuna was trackable all the way through the supply chain to the Japanese food table, with the goal of providing robust, and digital proof of sustainably sourced products,” Dr Learney says.

Meanwhile in the pork supply chain, Arc-net also connects each step of products’ journeys using blockchain technology. “In one of its demo products, Arc-net encoded the DNA signature of the pig into the blockchain, so it could ensure the same meat was being processed throughout the supply chain,” adds Dr Learney.

At the same time, Graham Richter, managing director at Accenture Technology, says blockchain is being used in the diamond industry to authenticate the origin of each stone from a specific pit in a mine – and trace it all the way to the end customer. “An incorruptible record of where a diamond was sourced, its supply chain and its certification, could eradicate counterfeiting and the proliferation of blood diamonds,” he says.

Manufacturing

There are multiple uses for blockchain in manufacturing. According to Shaan Mulchandani, global security strategy and blockchain leader at Aricent, blockchain-based processes and smart contracts can facilitate automated security and compliance checks as part of the manufacturing/building process.

He says: “IoT networks can leverage blockchain solutions to ensure that only devices with valid configurations – or trusted credentials –  are accepted and perform a limited set of actions.”

In the future, manufacturing will increasingly see the IoT and blockchain intersect, powering robots that are able to teach themselves, says Van Ostaeyen. He cites the example of Sewbot, a robot that makes clothes without human intervention, which could take advantage of blockchain in the future to become fully integrated into the supply chain.

In addition, Van Ostaeyen claims that manufacturing will “become 100 percent transparent through blockchain”. In the future, he predicts: “There will be no tampering, and no fakes or counterfeit goods.”

That claim seems unlikely. However, it is clear that manufacturing is itself slowly transforming from a slow, monolithic process into a smarter, more automated, more localised one, in which smaller facilities that cater to local needs replace offshore outsourcing, which is based on the lowest labour cost. This concept was explored in depth in our recent report on PAL value chains.

Additional reporting: Chris Middleton.

Kate O’Flaherty is a freelance journalist with over a decade’s experience reporting on business and IT. She has held editor and news reporter positions on titles including: The Inquirer, Marketing Week, and Mobile Magazine, and has written articles for The Guardian, the Times, the Economist, SC UK Magazine, Mobile Europe, and Wired UK. She is also a contributing analyst at Current Analysis, covering wholesale telecoms. 

Read more: IoT 101: How blockchain transforms manufacturing, supply chains

Read more: Microservices future of IOT, AI, blockchain says Alfresco CTO

Read more: Cryptocurrencies failing, claims Bank of England. But is it right?


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