IT is under pressure to keep up with the diversifying demands of enterprises undergoing digital transformation. Often, these enterprises deal with a range of issues such as ageing infrastructure, working under tight budgets, or simply seeking ways to address...
IoT Data Tokenisation in Enterprise Blockchains
Since blockchain emerged alongside Bitcoin over a decade ago, the technology has come a long way and today serves many industries as a decentralised, secure, and efficient medium for exchanging digital assets.
The blockchain market is predicted to grow to nearly 40 billion USD by 2025. Blockchain promises an efficient way to store data, execute transactions, perform business functions and establish trust in open environments. Most of the blockchain strengths reside in intelligent cryptographic algorithms and distributed computing concepts.
Blockchain is becoming the much-needed solution for data and insight sharing in highly regulated environments such as healthcare and financial industries. At the same time, it democratises the Internet of Things (IoT) and artificial intelligence (AI) applications by facilitating the secure and regulated exchange of valuable data and business insights.
Information like any other asset can be tokenised and exchanged on the blockchains. For example, HPE Swarm Learning is a new concept that uses blockchains to exchange valuable insights between intelligent devices at the edge while protecting the underlying data from being exposed. Read on to learn about blockchain capabilities, how enterprise assets can be tokenised, and the details of HPE’s Swarm Learning tool.
Blockchain can be seen as a decentralised database that is shared across the nodes of a network. The database stores information about transactions that occur in the network. Every participant in a network holds the latest validated version of a blockchain. New transactions are added to the database only after the predefined consensus is reached.
Consensus mechanisms in the blockchains are backed by advanced cryptographic algorithms that offer inherent advantages. Namely, these algorithms make the blockchains secure and immutable. Once the data is entered into a blockchain, it cannot be removed or tampered with, while any participant in the network can use unique signatures to verify the validity of network transactions.
Blockchains can be classified as public, private, and consortium.
Public blockchains, typically cryptocurrency blockchains, are open for everyone to participate. These blockchains are also termed “permissionless” since they do not need any special permissions for participation.
Private blockchains have restricted access and operate under rules that define how data is accessed and how the consensus is reached. These blockchains are so-called “permissioned” blockchains. Private blockchains have a defined user hierarchy and, while not fully decentralised, still offer the security characteristics of public blockchains. This is when taking into account one attack vector.
Consortium blockchains are semi-private, permissioned environments that are governed by a consortium of enterprises. Consensus is often reached through a group of validators. The access rules are flexible, and the data’s visibility can be granted to only selected members or all participants.
Both permissionless and permissioned, blockchains offer numerous business advantages.
The first and foremost blockchain capability is facilitating trust in open business environments. Blockchains are often called trustless networks because participants do not have to trust each other to engage in business transactions. The mechanisms that fuel the trust are security, transparency, and traceability.
Blockchains are decentralised and allow peer-to-peer transactions. Business transactions are verified once the predetermined consensus is reached, and there is no need for an intermediary party. When a transaction is initiated, the details are broadcast to the network participants. After successful validation, the transaction is added to the blockchain and cannot be modified afterwards.
The transactions in a blockchain network are fully visible and traceable. Participants of a blockchain can individually verify all transactions historically and view the transaction details. Due to the inherent security advantages of underlying cryptographic algorithms, blockchain transactions are immutable.
The automation in blockchains is mainly achieved through the smart contracts feature. Smart contracts are simply the rules programmed to execute once a predetermined set of conditions are met. Thus, automated contracts eliminate the need for intermediaries and can automate complicated workflows. Their execution triggers new contracts that eventually lead to meeting specific business goals for participating parties.
Tokenisation of enterprise assets
Blockchain tokens are digital representations of assets with value. Participants of the blockchain can buy, sell and exchange these tokens via blockchain transactions. One of the main advantages of the tokens is that they enable trading of a normally indivisible asset (art painting, real estate, etc.).
Tokens in the enterprise blockchains can increase operational efficiency. In enterprise blockchains, tokens are issued (minted) based on the proof of possession of an asset. In other words, tokens are pegged to an enterprise asset. Once issued, these tokens can be transferred, traded, or redeemed depending on the use case.
Tokens enable the trading of intangible assets such as data or information as well. Similar to other enterprise assets, fiat currency or gold can also be tokenised. So-called stable coins are pegged to real-world commodities and can speed up transactions and eliminate the need for intermediaries.
Blockchain in practice
Tokenisation is an area of massive growth in blockchain, with many industries starting to embrace its potential. The partnership between Blockhead Technologies and ABC Refinery is one home-grown example.
ABC Refinery, Australia’s largest independent precious metals service group, last year partnered with Blockhead Technologies to create a technology platform that enables precious metal traceability and tampering detection. Fraudulent gold bullion is an increasingly costly issue as the price of gold climbs. Blockhead’s blockchain-enabled ‘STAMP Vision’ platform uses advanced image processing of gold bullion and, by leveraging the security of the blockchain, can track gold throughout the entire supply chain.
The advanced image processing creates a ‘digital fingerprint’ for each gold and silver bullion bar and stores it in a cryptographically secure manner. This information is quickly accessible via a mobile app, enabling ABC Refinery to see that the bullion is authentic and has not been tampered with.
In the current IoT (Internet of Things) use cases, the data is shuttled back and forth from the edge to a central data centre for analysis, and results are delivered back to the edge. This back-and-forth method is slow, expensive, and not secure. It simply cannot support the needs of intelligent devices. With Swarm Learning, insights gathered by smart devices at the edge can be shared globally, without needing to shuttle private data to a centralised hub or cloud. Not only does this create a less expensive and more elegant system, but data sovereignty is protected.
In the Swarm Learning scenario, the intelligent devices process data right at the source. The processing takes place within edge devices such as semi-autonomous vehicles that gather petabytes of driving data each day or in a fraud detection system that tracks credit card purchases as they happen. In both of these scenarios, the observations gathered at many locations are only truly valuable when shared and turned into a collective understanding by the entire group. This way, when one vehicle encounters a problem, an entire fleet can be trained to avoid it.
With the help of blockchains, the insights can be sharable and secure. By tokenising intelligent insights, enterprises can trade them in a global, blockchain-backed marketplace. The process allows blockchain participants to sell or exchange information without giving away the underlying data. Thus, Swarm Learning enables the monetisation of information processed at the edge.
Huge amounts of data are collected daily from edge devices, whether they be sensors, IoT, or endpoint computing. These vast amounts of, often sensitive, data require a solution that protects the data from its collection point at the edge to the subsequent movements and actions applied to it.
Blockchains enable secure and transparent peer-to-peer transactions in business environments. The businesses that use blockchains are capable of cutting costs due to the improved efficiency of transactions. For example, automated transaction handling eliminates the tasks of data handling, reporting, and auditing. At the same time, automatic settlement of transactions saves cost by eliminating the need for intermediary vendors.
Blockchains are a necessary element of Swarm Learning. They enable edge locations to share insights in a trusted manner. As a result, systems become more intelligent, faster, less biased, and more accurate, and AI algorithms can be trained on a greater volume of data while following relevant privacy laws. Swarm Learning is also reducing IT costs by eliminating unnecessary data movement and duplication.
The world is shifting from data centres to millions of centres of data. It is only a matter of time when tools such as Swarm Learning will become mainstream. For modern IT organisations it is essential to start implementing IoT, edge, AI, and blockchain solutions into their workflows to maintain their competitive advantage.
Consider the types and volume of data your business is collecting at the edge and how you want to automate and secure that data and its movement. By keeping the data as close to the source as possible, your organisation will see greater efficiencies. As your IT partner, we’re interested in hearing more about your edge requirements and helping you fully leverage the available solutions.