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Blockchain and IoT: A Solid Technological Duo

Blockchain and IoT: A Solid Technological Duo

Wondering what can be the benefits of combining Blockchain with IoT? Well, we have got you covered. This article talks about how Blockchain can help IoT and talks about some of the popular use-cases of Blockchain and IoT. 

Table of Contents 

  • Overview of Blockchain and IoT 
  • How Blockchain can Help IoT
  • Applications of IoT and Blockchain
  • Concluding Lines 

Overview of Blockchain and IoT 

Blockchain is a peer-to-peer(P2P) decentralized distributed ledger technology that enables data to be exchanged among multiple parties without involving any third-party intermediary. It has the potential to offer transparency, immutability, security, and privacy and is expected to bring radical changes in a broad range of industries, including business models and operating processes such as payment, accounting, and auditing.

IoT, on the other hand, is a mechanism or interconnection between ordinary computing devices and objects that allow them to receive and transmit data over the internet. IoT devices are known to open up infinite opportunities for businesses to run smart operations. 

Now comes the question of why does the IoT ecosystem need a Blockchain? The answer to this is straightforward. IoT devices suffer from various shortcomings such as lack of compliance in the manufacturing stage, security holes in the device updates, vulnerability to DDoS attacks, etc. Thus, for transforming their operations in terms of accountability and security, enterprises and organizations can send their IoT data to an immutable blockchain ledger for added accountability and security. 

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How Blockchain can Help IoT

Before discussing how Blockchain can help the IoT ecosystem, it is crucial to note that IoT devices are powered by centralized servers, which won’t be enough for long-term solutions. 

 Thus, if IoT devices want to reach their full potential, they must move away from the centralized servers and switch to the concept of decentralization. Unlike the internet alone, Blockchain is decentralized, distributed, open, inclusive, immutable, and secure, giving unprecedented capabilities to create and trade value worldwide.

Let’s delve deeper and explore how Blockchain can help IoT.

  • Brings Trust

As we know, with Blockchain, there is no centralized server in control of your data; thus, technology maintains a complete level of trust. Thus, with the help of Blockchain in IoT, any party can get the true form of trustless connectivity.

  • Cost-Efficient 

Additional safety is one of the prime reasons for high costs. Since IoT devices are prone to vulnerabilities and DDOS attacks, they require additional security mechanisms, which of course, comes with high costs. But Blockchain and IoT can manage everything on their own without any issues, reducing the additional cost associated with security. 

  • Streamline Processes

Blockchain in IoT can streamline the entire process without involving any third-party intermediaries. Moreover, Blockchain’s smart contract functionalities help smart devices to monitor themselves and work independently.

  • Applications of IoT and Blockchain

Now, as we have understood how Blockchain can help the ecosystem of IoT, let’s explore some of the applications of IoT and Blockchain.

  • Blockchain in Agriculture

The combination of Blockchain and IoT has the ability to completely transform the food processing market, from farm to grocery store to home. By installing IoT sensors in the farming area and sending data directly to Blockchain can bring transparency and security and can overall transform the food supply chain. 

  • Tracking Components and Maintaining Compliance

The ability to track components that go into an aircraft or automobile is critical in terms of safety and regulatory compliance. IoT data stored in Blockchain enables all the involved parties to see component provenance throughout a product’s life. 

  • Healthcare 

Maintaining privacy is crucial, especially in the healthcare sector, as there are possibilities of counterfeit medicines. Thus transparency and traceable nature of Blockchain, along with the embedded IoT sensors, can help monitor and trace the shipment of drugs right from their origin to the supply chain destination.

Apart from these, the Department of Homeland Security is leveraging Blockchain and IoT to prove that the broader surveillances’ information is legit. Also, Maersk is working with IBM and utilizing Blockchain and IoT to change how the global supply chain works.

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Concluding Lines: Are there any Prerequisites?

From the above discussion, it is clear that undoubtedly Blockchain and IoT are good technological combos, but some of the prerequisites must be met. Like for instance, the willingness of companies to collaborate, despite their different interests, the integration of the Blockchain platform in business operations, the right choice of platform protocol, the technical re-alignment towards use cases, and, most important legal regulations that allow the facilitation of Blockchain platforms in the Internet of Things industry.

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council.  

Blockchain and IoT: A Solid Technological Duo

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Crypto Businesses Granted Liberty to Operate at DMCC in Dubai

According to the recent announcement, crypto businesses have been granted the freedom to operate in Dubai Multi-Commodities Centre (DMCC) once registered licenses are admitted.

The report mentions that DMCC has entered into a memorandum of understanding (MoU) with the SCA (Securities and Commodities Authority) to build a regulatory framework for corporations endeavoring, issuing, and trading crypto assets in Dubai city.

This strategic alliance intends to foster growth and development by bringing Blockchain and cryptographic technologies ecosystem in Dubai city.

The Dubai Multi Commodity Centre (DMCC) was founded in 2002 as a government body tasked with improving commodity exchange flows across Dubai, involving approximately 18,000 businesses from various areas and industries.

Agreement to Foster Growth and Promote the Development of Blockchain Applications in Dubai

According to the announcement, the SCA will grant permits for crypto-related companies seeking to set up in DMCC, collaborating closely with the onboarding departments at DMCC. Following that, the SCA would control crypto operations in compliance with their policies, which were declared last year in October 2020, in order to create an interconnected environment for the crypto and Blockchain industries.

Ahmed bin Sulayem, Executive Chairman and Chief Executive Officer of DMCC, also talked about the agreement. According to him, this collaboration builds the foundation for coming partnerships in the crypto domain. Furthermore, he believes that this is a big step toward the opening of the DMCC Crypto Centre, which we will bring to the market in the upcoming years.

Bin Sulayem appears delighted with the partnership with SCA as he mentioned that cutting-edge developments are at the core of our policy, and they will play a vital role in future trade development across Dubai. In his words, “We are able to develop and grow the centralized supervision of the crypto sector to our business district in Dubai by partnering with SCA.” 

DMCC is making it simpler for crypto and blockchain enterprises to set up and operate in Dubai city. In 2020, it was reported that DMCC established an agri-commodity trading and sourcing platform named Agriota E-Marketplace based on Blockchain technology to link Indian farmers with the UAE food sector.

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council. 

Crypto Businesses Granted Liberty to Operate at DMCC in Dubai

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Meeting Over Regulations Set Between Key Biden Staff And Blockchain Association

The Blockchain Association stands as a crypto advocacy group based in the US, and has started to take part in the age-old practice of lobbying. In particular, it’s meeting up with various key figures within the Biden administration in order to advocate for more favorable regulations within the crypto space.

Crypto Lobbyists Doing Their Thing

Kristin Smith stands as the executive director of the Association, and gave a statement to Fox Business about the matter. In this statement, Smith highlighted that the Blockchain Association has already met with certain key figures within the Biden Administration, or are otherwise scheduled to meet them in the future.

These high-ranking officials of the White House include names like Wally Adeyemo, the former BlackRock executive, and Deputy Secretary nominee, as well as Janet Yellen, the Treasury Secretary. Alongside this, various representatives of the Treasury Department have been in talks with the Blockchain Association as well.

crypto

Trying To Fix Mainstream Crypto Image

The Association’s biggest aim with these talks, according to the public statement, is to have the Treasury Chief gain a greater understanding of the value of crypto. Smith cited a comment Yellen made in the past, declaring that the primary use case for crypto was illicit financing, and Smith states that it’s the Association’s top priority to change this view.

Yellen herself has seen quite a bit of dislike from the general crypto community. Granted, she didn’t really make that a difficult prospect after declaring that was an extremely inefficient means to conduct any type of transaction, declaring that it wasn’t used as a transaction mechanism all that much.

Using Tools Just For Governments

It should be noted that Yellen isn’t against Decentralized Ledger Technology (DLT), just the general decentralized cryptocurrencies. Yellen had repeatedly shown interest in the centralized use case for DLT. In this angle, Yellen declared it would be very beneficial for the Dollar, offering quicker and safer, not to mention cheaper, means of payment as opposed to fiat.

Adam Traidman stands as the CEO of the BRD crypto wallet. In his public statement, he highlighted how the crypto space at large is trying to work with the highest echelons in the Treasury command chain as possible. In a statement, he highlighted that many in the crypto space aren’t even bothered by compliance or regulations. However, he advocated for a less stringent regulation just for now to spur innovation and jumpstart mainstream adoption.

Meeting Over Regulations Set Between Key Biden Staff And Blockchain Association

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Tokenization of assets is not taking off, but it really should

For years, experts have been talking about how tokenization — the act of creating a digital representation of an asset on a distributed ledger — of a financial or real asset can unlock trillions in illiquid assets, giving retail investors access to investments with previously high minimum capital requirements thanks to fractional ownership or settle trades on a distributed ledger instantly. 

But if we investigate the current tokenization offerings, none is truly taking off and attracting the masses. If the theoretical advantages are true, millions of investors must be onboarding on exchanges that offer tokenized assets. However, this is not the case.

What is the problem of most tokenization offerings?

Let us take the example of tokenized equity to showcase the current issues and hurdles. The tokenization lifecycle of an equity consists of multiple steps. The first is the legal structuring followed by the minting (creation) of the tokens, in most cases with ERC-20 tokens on the Ethereum blockchain. Contrary to many beliefs, minting is one of the easiest parts of tokenization — the bigger challenges follow. As the purpose of the equity tokens is to be traded, we need to have a marketplace. With this comes the questions of token custody, liquidity, settlement and regulatory compliance.

If we look at the current service providers in this space, there is nearly no one who can offer all the steps of issuance, custody, marketplace, liquidity, settlement, etc. in one integrated offering. This has some major implications for why tokenization is not taking off — namely, that issuers and investors must deal with multiple service providers. Most probably these service providers are also located in different jurisdictions, which adds a whole new dimension to it, as equity tokens should ideally be able to be traded internationally just like traditional equity. And that is not possible as regulation differs from country to country.

Another major problem of tokenization marketplaces is liquidity. Currently, there is very low liquidity on tokenized marketplaces if we are to look at the trading volumes while the volumes of cryptocurrencies are currently reaching new all-time highs on a weekly basis. A reason for this is that the few exchanges that are on the market cannot attract enough investors. The easiest solution to solve this issue is for tokenized asset marketplaces to be connected to traditional exchanges and to leverage their customer base as they already have the desired liquidity.

This is only possible if the UI/UX is equal to traditional exchanges, and the investors do not see and interact directly with the blockchain. If investors need to set up their own wallet and deal with the blockchain directly, then we will never see a big inflow of mainstream investors into tokenized assets, as this makes the whole process more difficult and inconvenient, which is the exact opposite of the end goal.

A good UI/UX is very important in tokenization offerings as opposed to crypto applications such as DeFi platforms, where the UI/UX may not be the best. But despite the fact that the product is revolutionary, the masses are unwilling to deal with tokenization because it’s inconvenient and not seen as a groundbreaking innovation.

Another big topic in tokenization is regulatory clearance. If we continue with our example of tokenized equity, there is the question of how to deal with a digital representation of a security. In most jurisdictions, a token is not a security by itself. Rather, the token just represents the right to own the equity, but the equity still also exists in its “traditional” form. In other jurisdictions, however, there is even less clearance.

While tokenization is without question one of the most promising use cases of blockchain technology, the current setup is in most cases worthless, as it renders things more complicated rather than effective. To change this, we need a clear regulatory environment, such as in Switzerland, for example, to integrate all elements of the tokenization lifecycle into one offering, and have a “traditional” UI/UX for the investors. If we can get these three elements right, there is nothing to stop tokenization to become a major game-changer and open many new asset classes to the market. I believe that tokenization marketplaces should partner up with traditional exchanges to offer liquidity, especially for tokenized equity.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Darius Moukhtarzadeh is in the sales and clients team of Sygnum Bank. Sygnum is a digital asset bank that received a Swiss banking license from the Swiss Financial Market Supervisory Authority in August 2019. Prior to Sygnum Bank, Moukhtarzadeh worked for Ernst & Young in blockchain consultancy and for several startups in the Swiss Crypto Valley.

Tokenization of assets is not taking off, but it really should

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Cointelegraph Consulting: Research outlines how DeFi can merge with traditional finance

Whilst public adoption of crypto assets is increasing, the global regulations continue to progress and recognise decentralized technologies as a suitable infrastructure for the dematerialisation of securities. In Luxembourg, the country that is second in the world in terms of assets under management, the country’s regulator adopted a bill that explicitly recognised the possibility of using distributed ledger technology for the dematerialisation of securities. 

The regulation is moving quickly elsewhere across Europe: Tokenized securities now fall under the same rules and regulations as traditional financial instruments in many other European countries including France, Switzerland, Germany, Italy, the Netherlands, Romania, Spain and the UK.

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What next for the industry? Due to the increase in public adoption and the favourable regulatory environment, demand from the financial industry to access digital networks is on the rise. So far, banks have digitized the retail industry but not much has evolved in capital markets.

The digitization of this industry is now possible through the blockchain, an infrastructure now widely recognized by the largest governments globally for financial instruments. Funds and asset managers can now upgrade their distribution channels by launching Digital Asset Marketplace (DAM) and connecting to others via decentralized networks.

DAMs will help their customers discover new opportunities, manage their investments and even open secondary market possibilities. In this ebook, industry participants explain how capital market players can benefit from blockchain by launching a DAM and maximizing the monetization of their investor base.

Financial institutions are beginning to publicly embrace and adopt the technology. So far they have started, as expected, with crypto-assets. Once they begin to trust the technology and it becomes embedded within their portfolios, it will mean one thing: curiosity will peak and these institutions will realise the operational benefits of decentralized technology.

Driven by increased confidence in the technology, and pressured by DeFi replacing many traditional banking functions, institutions will begin to learn that the technology can solve long-standing and deeply entrenched industry problems, particularly in the opaque and highly illiquid private markets.

Digital Asset Marketplaces, i.e. primary and secondary venues where investors meet, will be the driver for this according to the study. However, open source standards like the Token for Regulated EXchanges (T-REX), are required to enforce compliance onchain in a heavily regulated world.

Cointelegraph Consulting: Research outlines how DeFi can merge with traditional finance

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