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Beyond IoT: How blockchain will help create the collaboration of things

By Alan Morrison, Senior Research Fellow, Center for Technology and Innovation, PwC

This feature was produced by Pricewaterhouse Coopers, and does not reflect the opinions or point of view of Vox Media or Vox Creative. Vox Media editorial staff was not involved in the creation or production of this content.

Most people don't realize it yet, but blockchain could clear a path for "the collaboration of things."

By 2020, 50 billion devices will be connected to the internet, the World Economic Forum predicts. Even then, connected devices will only get us so far. That would be an internet of things, true, but those things could only interoperate as well as smartphones do, for example. We'd have something bigger, but it wouldn't really be new.

The real value of things being online is in getting them to act on our behalf, so they can do things for us they haven't done before. Think for a minute about autonomous ecommerce, the blue-sky scenario we considered around smart contract automation. Autonomous ecommerce implies massive machine-to-machine collaboration at scale.

Even more challenging is what's not depicted in the illustration above. What good is a self-driving truck if it can't recharge itself anywhere there's a charging station, for example? What good is a delivery drone if it isn't authorized to place the package you're expecting on the back patio, or pick up that pair of shoes from you that don't fit?

How will devices in general help us get work done in new ways? Standards, of course, are still in flux, but effective networking protocols are hardly the only challenge. What things need to interoperate is not just communication, but validation of steps in a process. If you're a self-driving truck and I'm a charging station, there are a few things we need to interoperate. We need mutual authentication, authorization, a rules framework encoded in a smart contract that sets parameters around this recharging scenario, and a means of logging the resulting energy transfer to a shared, tamperproof ledger so there's a record of the transaction, whether or not there's a money transfer.

In other words, you and I as autonomous things would need to be not only connected to the internet, but to a blockchain (or a blockchain equivalent) as well.

There shouldn't just be an internet of things—but a collaboration of things. Without blockchain technology or something like it, even if they're smart, things online can't collaborate very effectively with each other or scale across boundaries. They certainly can't do so on an ad-hoc basis.

To collaborate at scale and in the ad-hoc ways, there needs to be a full online ecosystem. That's why some including the International Telecommunications Union have adopted another term: the internet of everything (IoE). The IoE includes not only machines and people, but also process. Blockchain technology ideally marries immutable identity, authentication, authorization, and access control to business process in smart contract form.

In that sense, blockchain technology closes the trust gap that would otherwise exist in the IoE. Forget what you may have heard about blockchains being "trustless"—their value is in removing the need for human third parties and substituting a more reliable, virtual third party instead. Blockchains could be the internet's chief validators, checking the identities and other facts necessary to validate, complete, and log a transaction in a permanent record visible to all parties. In addition, blockchains enable virtual agents embodied in smart contracts to enforce terms.

How would blockchain, business process management, and artificial intelligence all work together in an internet of everything that would make it possible for things to collaborate? That's a topic we're exploring on our new Next in Tech site.

Follow @AlanMorrison on Twitter.

© 2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

This feature was produced by Pricewaterhouse Coopers, and does not reflect the opinions or point of view of Vox Media or Vox Creative. Vox Media editorial staff was not involved in the creation or production of this content.

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