The IBM “Device Democracy” paper is another example of how blockchain technologies could have impacts well beyond currency

I recorded an interview for Finextra last year, where I argued that we should view Bitcoin and cryptocurrencies as far more than just currency and payment systems: they’re enablers for whole new classes of innovation.

One of the example I gave was how they could provide an economic underpinning for the Internet of Things (IoT) and pointed out that if devices in your home each had their own Bitcoin wallet, the Internet of Things could rapidly become the Economy of Things

On the blockchain, nobody knows you’re a fridge (Buy it from teespring.com!)

But talk is cheap. Implementation and delivery is what counts.

So I have been enormously privileged to contribute, in a very small way, to a fascinating project being led by Paul Brody, IBM’s Vice President for our Mobile and Internet of Things consulting team. It has been well-covered by CoinDesk, GigaOm and “Two Bit Idiot” but, as Two Bit Idiot observes, I think its true significance has yet to be understood.

Here’s my simplified take on what this project is all about:

Imagine the predictions of the futurists come true and the Internet of Things becomes a reality: wireless locks controlling our houses, wifi-enabled lightbulbs and internet toasters, all that stuff.

Think about the economics from the manufacturer’s perspective.

My elderly iPhone 4 has finally reached end-of-life: it’s getting slow, iOS 8 will not run on it and I can expect apps to start failing one-by-one as their developers stop updating them for iOS 7. And yet the phone is only four years old. Most other phone manufacturers abandon their customers far more quickly, which means Apple’s four-year support for my phone is industry-leading.

My iPhone 4 served me well – even serving as a prototype for Apple Pay (Not really).  But, after four years, it is obsolete and the latest version of iOS won’t run on it

But, for the internet of things, a four-year old device is barely a child! These devices could last for far longer than anybody expects. How often do you change the locks on your door? When did you last replace your toaster? Some observers claim LED lightbulbs could last for twenty years.

Now imagine what the world would be like if Apple had to support the iPhone 4 for twenty years.  That is a long time to support, maintain and upgrade an internet-connected device.   As Paul and the team write in their very readable whitepaper, we can’t assume that the data produced by these devices will somehow create enough value to fund the ongoing costs.  Consumers seem to be in no mood to give away ever more data in exchange for “free” services… and it’s entirely unclear that this data has as much value as people think, in any case.

Technology Principles for internet-connected devices that could run for decades

So we need to make it as easy as possible for manufacturers and others to support these devices in the field. And part of the answer is surely that we need to make it as easy, cheap and sustainable as possible for manufacturers to do the “right” thing. And the argument that Paul’s paper makes is that the key to doing this is to decentralize as much logic as possible – so that what’s left at the centre is as small as possible.   They capture this intuition in the form of three key “technology principles”:

• think “peer-to-peer” wherever possible… if two devices can find each other and communicate directly, why route it through a central point?
• assume you’re operating in a “trustless” world: if you can’t be sure that everything is running perfectly all the time (because it won’t be), then choose a design that needs as little trust as possible
• decentralize autonomy to the greatest extent possible – if something doesn’t need to be decided at the centre, decide it at the edges. Build on the insight that those with the greatest ongoing incentive to keep these systems running are those closest to them and who depend on them the most.

Device Democracy

This concept inspires the title of the paper: “Device Democracy”. They call the resulting architecture an “Internet of Decentralized, Autonomous Things”. The project’s IBM landing page explains more.

The paper explains the reasoning in more depth but the intriguing result is that the principles above are well-matched to concepts well-understood by the crypto and cryptocurrency worlds. A secure point-to-point messaging system like Telehash is a good candidate for direct device-to-device messaging, for example. Similarly, a trustless decentralized contract platform like Ethereum (a second-generation blockchain technology) could be a way to encode agreements between devices and to enforce rules.

Indeed, the team’s prototype (which has real locks opening and closing – I so wish I had been in the room when they demonstrated it) is based on Ethereum, Telehash and BitTorrent (you need something to distribute billions of firmware updates, after all)

But it’s important to realize that this isn’t a break from the past; it’s incremental. Existing protocols will still be needed and manufacturers will still need a way of communicating with their devices. This is all about making it as easy and secure as possible and to give end-users as much control as possible – hence “Device democracy”.

It’s perhaps likely that we’ll see hybrid models emerge where these peer-to-peer technologies are coupled with centralized services (cloud-based to hit cost objectives).

This is why I say Bitcoin and Cryptocurrencies are about so much more than currency…

For me, this project gives me further reason to believe that the impact of blockchain technologies and cryptocurrencies will be far greater than anybody expects: their applications go beyond the imaginations of any one of us.

We first saw this with Bitcoin. You needed good knowledge of economics, finance, cryptography and computer science to understand the Bitcoin concept in its full breadth. Indeed, I think this is why may academic economists, central bankers and computer scientists were amongst the slowest to grasp its importance: they were, in general, just too specialised and narrow.

So it is with this project: it has taken a team with knowledge of electronics, engineering, manufacturing, decentralized protocols and economics to devise this prototype platform.

The future belongs to the versatilists?

I wonder if this could be further evidence that the future will be owned not by the specialists or the generalists – but by the versatilists?

 

Disclaimer and Notes

1) I know there’s a lot of interest about this project so a quick reminder that this blog contains my views and analyses… not IBM’s.  I am not an official spokesman on IoT or anything else. 

2) I have lost the contact details of the clever person who created the excellent t-shirt design above. Please do get back in touch so I can credit you