It is clear that blockchain and the Internet of Things (IoT) are complementary technologies. One of the most common use cases cited is around the supply chain; combining the devices, the data produced from them, and a way for it to be stored to ensure the wheels keep turning.
But what about the rise of the machines? Thomas Fuerstner, founder and CTO of Riddle&Code, a ‘blockchain interface’ solutions provider, explains that as machines become empowered to make decisions usually only done by humans, their identity becomes as important as the identity of humans. With ethical concerns around artificial intelligence (AI) being commonplace, this is an interesting and important problem to solve.
In an exclusive interview with The Block, Alexander Koppel, CEO of Riddle&Code (left) explains his company’s vision and the concept of ‘machine identity’, as well as why no market will be left untouched by blockchain technologies.
The Block: First off, tell us the story about how Riddle&Code came to be…
AK: Before Riddle&Code came about, Thomas had the idea to register digital art and other digital property on the blockchain so as to promote transparency and traceability of ownership and copyright. It soon became obvious to him that the same benefits can be extended to most physical objects. Blockchain underwriting of physical objects could provide an incorruptible, unique identity to physical objects, supporting their autonomous communication. This turns out to be a critical feature required for the IoT industry to truly flourish. So, providing machines with a unique identity and an interface to the blockchain became the first missions of Riddle&Code.
Could you tell us more about the concept of ‘machine identity’ and how it translates to your work?
Blockchain and IoT technologies are quite powerful even when taken in isolation. But their true potential can only be unlocked and developed when blockchain and IoT are used together. That’s also when the most promising use cases become possible. IoT is already a growing sector with more and more devices being connected to the internet all the time. However, connected devices, their owners, the data they transmit and the servers which store collected data are open to the cyberattacks. All of these concerns can be addressed with blockchain technology that creates immutable and transparent records of transactions that occur between two nodes on the network and these records are simultaneously updated across the entire network for everyone to see.
Riddle & Code has developed a range of crypto hardware which leverages this transparency and immutability, specifically to protect devices, giving them a unique identity; protect owners, by giving the device a unique identity and reducing the risk that owners can be traced via their devices; and protect data by securing the data source and repository and providing the added benefit of analytics.
You recently partnered with Brazilian energy company Energias de Portugal SA (EDP) in efforts to create a distributed energy network. Could you tell us about how this works?
Managing the energy produced by the solar plants is never easy. This pioneering solution enables “prosumers” to consume and produce energy at the same time. For this project, we developed a non-removable cryptographic tag. By attaching these tags to domestic energy meters, we can measure the consumption of each user and facilitate calculations for charging and taxing without the need to install an intelligent meter. Thus, it is possible to certify if consumption was in excess or if there should be a discount on the next invoice.
Among the benefits of this solution is the improved management of energy decentralisation with the interconnection of the three agents involved: distributor, consumer and distributed generation plant. The veracity, transparency and traceability of data are verified by registering the customer and the using remote meter readings of conventional meters. The design of the solution using blockchain technology ensures scalability and sustainability of the entire system.
What are the advantages of energy distribution for both consumers and suppliers?
If we talk about distribution of energy, as in the case of the EDP, the consumers benefited from having access to the solar energy produced in remote areas, when no energy could be bought locally. This gave consumers additional electrification option besides more conventional means or no electricity whatsoever.
For the suppliers, it opened up possibilities to set up plants in remote, under-utilised areas that can be acquired at lower prices. Riddle&Code supports distributed energy initiatives by providing state-of-the-art solutions that can be seamlessly integrated into existing legacy systems of energy companies and work with consumers’ existing mechanical meters. This facilitates the translation of the Brazilian legislative initiative into a real-life application.
What other projects are you working on at the moment, and what sort of companies are approaching you?
The luxury sector is very active in early blockchain trials to verify provenance and certify supply chains. We’re excited to be working on one such project with one of the world’s best-known luxury brands.
Otherwise, we are continuing our work with Deutsche Telekom bringing machine identity solutions to market; Deloitte’s Blockchain Group and Riddle&Code have an active global partnership; and finally, we are finalising the crypto infrastructure for a major Swiss bank.
What are the most practical and tangible applications of blockchain and IoT at present, moving beyond experimental level?
Only a few sectors will be passed-over by blockchain technology. Beyond the energy and luxury goods sectors we have just discussed, we have identified a dozen key markets that would benefit from the trust and transparency provided by our crypto-hardware. In the short-term, however, we believe crypto asset management with cold B2B crypto wallets, supply chain and IoT tagging hold particular promise.
What are the key challenges in reaching this potential?
The potential for blockchain-backed IoT is already reflected in the ballooning popularity of the IoT sector itself. Currently, most of the connected devices are either not fully autonomous and can be traced to the owner via key, or highly exposed to cyber threats by being connected to the central servers and operating via centralised internet.
There is a growing recognition that if such issues are not addressed properly, the future of IoT will be compromised. Blockchain technology tackles these issues effectively and elegantly. In addition, blockchain-backed IoT devices with capabilities to autonomously and securely communicate, open up possibilities for a ‘machine-2-machine’ economy where human intervention is no longer at the centre of all transactions. The transformative potential of this layer of the economy is mind-boggling.
The purely technical challenges such as scalability are being addressed head-on by our solutions and other challenges include the lack of understanding of technology leading to fear and resistance to its deployment. We believe, that overcoming this scepticism towards the new and unexplored is only a question of time.
Finally, do you think blockchain technology will be as revolutionary to society and business as it has often been touted?
Just like the internet did, creating networks of trust, thanks to blockchain technology, will have a truly transformative effect on our economies and our societies. Blockchain technology in isolation still has limited uses, such as cryptocurrencies. As of today, it can most successfully be deployed to support the IoT sector. Indeed, combining blockchain and IoT is the core concept which underpins our products.
Interested in hearing leading global brands discuss subjects like this in person? Find out more at the Blockchain Expo World Series, Global, Europe and North America.