Blockchain and IoT – How "Crypto" Probably going to Herald Industry 4.0

While most people only started learning about “blockchain” thanks to Bitcoin, its roots – and applications – go much deeper.

Blockchain is a technology in itself. It powers Bitcoin and is essentially the reason *so many* new ICOs have flooded the market – it’s ridiculously easy to set up an “ICO” (no barriers to entry).

The point of the system is to create a decentralized database – which essentially means that instead of relying on the likes of Google or Microsoft to store data, a network of computers (usually controlled by individuals) can act as same as a larger company.

To understand the implications of this (and thus where the technology could lead the industry) – you need to look at how the system works at a fundamental level.

Created in 2008 (1 year before Bitcoin), it is an open source software solution. This means that its source code can be downloaded and edited by anyone. However, it should be noted that the central “repository” can only be changed by individuals (so the “development” of the code is not a free-for-all in principle).

The system works with a so-called Merkle tree, a type of data graph that was created to provide versioned data access to computer systems.

Merkle trees have been used to great effect in a number of other systems; especially “GIT” (source control software). Without getting too technical, it basically stores a “version” of a dataset. This version is numbered, and thus can be downloaded at any time if the user wishes to recall its old version. In the case of software development, this means that a set of source code can be updated on multiple systems.

The way it works is by keeping a huge ‘file’ of updates to a central dataset – this is basically what powers systems like ‘Bitcoin’ and all other ‘crypto systems’. The term “crypto” simply means “cryptographic”, which is the technical term for “encryption”.

Regardless of his core work, the real benefit of wider “on-chain” adoption is almost certainly the “paradigm” he provides to industry.

The idea called “Industry 4.0” has been floating around for several decades. The idea often associated with the Internet of Things is that a new level of “autonomous” technology could be introduced to create even more efficient manufacturing, distribution and delivery methods for businesses and consumers. Although it was often called for, it was never adopted.

Many experts now see technology as a way to facilitate this change. The reason is that the interesting thing about “cryptography” is that – as systems like Ethereum especially demonstrate – the various systems that are built on top of it can actually be programmed to work with a layer of logic.

This logic is exactly what IoT / Industry 4.0 is still missing – and why many are looking to “blockchain” (or its equivalent) to provide a base-level standard for new ideas moving forward. This standard will enable companies to create “decentralized” applications that allow intelligent machines to create more flexible and efficient manufacturing processes.