Blockchain & IoT – How "cipher" Likely to go to Herald Industry 4.0

While most people are only starting to learn about the “blockchain” because of Bitcoin, its roots – and its applications – go deeper than that.

Blockchain is a technology in itself. It powers Bitcoin, which is the primary reason so many ICOs flood the market – creating an “ICO” is very easy (no barriers to entry).

The goal of the system is to create a decentralized database – essentially meaning that instead of relying on the likes of Google or Microsoft to store data, a network of computers (generally managed by individuals) is able to function in the same way as a larger company.

To understand the implications (and thus where technology can take the industry) – you need to look at how the system works at the most basic level.

Created in 2008 (one year before Bitcoin), it is an open source software solution. This means that its source code can be downloaded and modified by anyone. However, it should be noted that the central “repository” can only be changed by certain individuals (so basically “development” of the code is not free for everyone).

The system works with what is known as a Merkle tree – a type of data graph created to provide access to version-specific data for computer systems.

Merkle trees have been widely used in a number of other systems; Most notably “GIT” (source code management software). Without having to delve into the technology, it essentially stores a “copy” of a set of data. This version is numbered, and therefore can be loaded any time the user wishes to recall the older version of it. In the case of software development, this means that a set of source code can be updated across multiple systems.

The way it works – storing a huge “file” with updates for a central data set – is basically what powers the likes of Bitcoin and all other “crypto” systems. The term “encryption” simply means “encryption,” which is the technical term for “encryption.”

Regardless of the core business, the real benefit of broader “on-chain” adoption is certainly the “model” it provides to the industry.

An idea called “Industry 4.0” has been around for several decades. Often confused with the “internet of things,” the idea is that a new layer of “autonomous” machines can be introduced to create more efficient manufacturing, distribution, and delivery technologies for businesses and consumers. While it is often trumpeted, it has never been adopted.

Many critics now view technology as a way to facilitate this change. The reason being that the interesting thing about “crypto” is that – as evidenced particularly by the likes of Ethereum – the various systems built on top of it can actually be programmed to work with a layer of logic.

This reasoning is really what IoT/Industry 4.0 has missed so far – and why so many look to “blockchain” (or its equivalent) to provide an essential benchmark for new ideas moving forward. This standard will provide companies with the ability to create “decentralized” applications that enable intelligent machines to create more flexible and efficient manufacturing processes.