Blockchain & IoT – How "Crypto" It will likely move to Herald Industry 4.0

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

Blockchain is a technology in itself. It powers Bitcoin and is essentially the reason *so many* new ICOs flood the market – creating an “ICO” is ridiculously easy (no barriers to entry).

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

To understand the implications of this (and therefore where the technology might take 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 specific individuals (so the “development” of the code is not a free-for-all in principle).

The system works with what is known as a merkle tree – a type of data graph that was created to provide access to versioned data on computer systems.

Merkle trees have been used to great effect in a number of other systems; most notably “GIT” (source code management software). Without getting too technical, it basically stores a “version” of a dataset. This version is numbered and thus can be loaded whenever a user wishes to recall its older version. In the case of software development, this means that a set of source code can be updated across multiple systems.

The way it works – which is to store a huge ‘file’ of updates to a central data set – 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 its main work, the real benefit of wider adoption “on the chain” is almost certainly the “paradigm” it provides to the industry.

An idea called “Industry 4.0” has been floating around for several decades. Often associated with the Internet of Things, the idea is that a new layer of “autonomous” machines can be introduced to create even more efficient production, distribution and delivery techniques for businesses and consumers. Although this was often mentioned, it was never really accepted.

Many experts are now looking to technology as a way to facilitate this change. The reason is that the interesting thing about “crypto” is that – as is particularly evident with the likes of Ethereum – the various systems that are built on top of it can actually be programmed to operate with a layer of logic.

This logic is really what IoT / Industry 4.0 has missed so far – and why many are looking to “blockchain” (or equivalent) to provide a base-level standard for new ideas moving forward. This standard will give companies the ability to create “decentralized” applications that enable intelligent machines to create more flexible and efficient manufacturing processes.