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Blockchain, Internet of Things, and Logistics

January 2, 2018

According to Wikipedia, the Internet of things is the network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators, and network connectivity which enable these objects to connect and exchange data. The Internet of things has been touted as the next big thing in computing for the last several years. Of course, that was before the next "next big thing", Blockchain, came along. This begs the question, “what would happen if the two next big things were combined in an application? What would be the impact?

The figure above shows a sample application flow of strawberries being shipped from the farm to their final destination in a grocery store. Let's detail the process flow and highlight what Blockchain and Internet of Things technology add to the process efficiency (the numbered paragraphs below correspond to the numbered steps in the diagram above).


1) The first step is that all the participants in this scenario agree on the terms of a smart contract. In this example, the smart contract is focused only on the temperature of the containers that will hold the strawberries during the shipping process. The participants include the growers, shipping company, trucking company, depot and the grocery store. The container temperature cannot exceed 32 degrees Fahrenheit or the container must be opened for inspection and possible rejection.

 2) The origin of the strawberries is tokenized so as the shipment progresses, the various handlers of the produce can be assured that they have the correct produce and also report on the location of the shipment through the Blockchain.  Tokenization is the idea of replacing a physical object with a digital representation of that object.  And, as we all know, whenever something becomes "digitized" time and space become irrelevant.  Think of the benefits of email versus snail mail to capture this notion.  Also, certain qualities of that object can be represented by the token.  In the case of these strawberries, the origin and location of the fruit is digitized in the token.  As the strawberries move along the logistics path, ownership of the token is transferred to whomever possesses the strawberries at that time and logged in the Blockchain.  This way, the participant taking possession of the strawberries is assured of where the fruit came from and the physical location of the strawberries is updated in the token.  

3) The strawberries are loaded into smart containers. The smart containers are equipped with special Blockchain Open Ledger Operating System (BOLOS) core sensor devices that monitor the temperature of the container. These BOLOS-core sensors are Blockchain-aware and also have a private key for device identity and a special anti-tampering capability if the device comes under attack. The token is updated to show that the shipping company now has possession of the strawberries.


4) Because the smart containers are network capable, whenever there is connectivity to the Internet, the current status information of the produce is transmitted to the IoT cloud and then replicated in the distributed ledger across the Blockchain. So far, the smart containers are reporting that the temperature is 28 degrees Fahrenheit which is within the allowable temperature range specified in the smart contract.


5) The ship reaches the depot and the smart container is now transferred to the truck. Since there is Internet connectivity at the depot, the smart container transmits status information to the IoT cloud. The temperature is 31 degrees Fahrenheit which is still within the allowable temperature range specified in the smart contract. The token is updated to show that the trucking company now has possession of the strawberries.


6) The smart container reaches its final destination at the grocery store. Since there is Internet connectivity there, the smart container transmits the latest produce status information. Now, the temperature being reported by the smart container is 35 degrees Fahrenheit. The temperature is above the allowable container temperature that was detailed in the smart contract. Therefore, the container must be opened for a physical inspection before the produce will be accepted.


What Blockchain brings to IoT

The most significant benefits that Blockchain brings to the Internet of Things revolve around identity. Since the “things” referred to in the Internet of things are all types of electronic devices, it is paramount that the devices have an unchallengeable identity. This begins with capturing the relevant characteristics of the device, like serial number, manufacturer, firmware and anything else that is relevant. Each device is assigned a digital identity and digital signature in the form of a private key. Devices should be able to send “challenge” and “response” messages to ensure that the device is in control of its own identity. Tamper-proof characteristics as are available in BOLOS-core devices will ensure that devices are not compromised. Over time, a “reputation history” will emerge for the devices – especially when the device has proven to be reliable. And, the Blockchain can ensure authenticity and origin, while providing the full provenance of all product or produce being shipped. This would provide for an auditable chain of custody record of the movements of an asset. Finally, combining a Blockchain with IoT unifies the process and methods of validation for all the participants in the process. Instead of the shipping company, matching shippers with signatures and port stamps to verify the location of the shipment, while the grower must wait for confirmation through a back channel of paper document flow, the near real-time updates to the distributed ledger in the Blockchain gives all the participants in the process the same information that has been confirmed through the consensus method inside the Blockchain. When you mix smart contracts, distributed shared ledgers, device identity, provenance of the movement of assets, immutability, and shared consensus of Blockchain with smart containers, intelligent sensors, and store and forward data capabilities of the Internet of Things, it is clear that two Next Big Things are better than one!

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