A phrase that we hear more and more about the Internet of Things is that we will soon have “billions of devices engaging in trillions of transactions.”
We have already achieved the first half of the statement. The research firm Gartner estimates that 8.4 billion IoT devices have already been deployed, and that the number will more than double to some 20.4 billion by 2020. According to Softbank, even more telling is the number of brain cells in chips would surpass the number of human brain neurons in 2018 and this would mean massive opportunities for smart and connected devices. And as these devices become more interconnected to conduct a range of process flows and other coordinated communications, simple math gets us up to trillions of transactions.
From Millions to Billions to Trillions
When counting in trillions, it is helpful to take a closer look at the significance of the figure. We’ve learned to accept the 1,000-fold increments of millions to billions to trillions. But that actually makes it too easy to overlook the significance of what happens when you multiply 1 billion x 1,000 to get 1 trillion. (Some economists would like to outlaw the use of the word so that when speaking of large budgetary figures politicians had to speak in terms of $17,000 billion, for example, rather than $17 trillion.)
Kalid Azad’s Better Explained site provides some great examples of the significance of the thousand-fold increases that occur along the way from 1 million, through 1 billion, to 1 trillion:
He provides a similar example using distance:
So billions of devices conducting trillions of transactions is going to be a massive challenge – a mind-boggling challenge – in every regard, including security.
Trillions of Transactions per Minute?
Some speculate we may be seeing trillions of transactions a day – or per minute, as per Chris Skinner, Chairman of the European networking group the Financial Services Club, in an article looking toward the 2020s:
“If 60 billion things are trading and transacting nonstop, 24/7, you’re talking trillions of transactions,” Skinner wrote in BANKNXT. “It wouldn’t surprise me, in fact, that there may be billions of things transacting trillions of times a minute in very small amounts, all day long.”
He then posed some critically important questions: “What is the financial system that will support that structure of operation, and how will it know what things are allowed to transact with which? A core question here is how machines are authorized to trade on behalf of humans, and when do the machines need to be kept in check? For example, if my fridge orders 12 bottles of white wine when it usually orders six, is that a mistake? Should it be verified? And how often does the human want to verify what their fridge – TV, car, house, and so on – is doing? Equally, how does the bank know that the fridge – TV, car, house, and so on – belongs to that human, and what they’ve authorized it to do?”
A multi-layered approach to security is required to enable billions of devices to engage in trillions of transactions. Elements such as secure device identity will be required, as will the tracking of device reputation. Tracking reputation of billions of devices is too great an undertaking for a traditional centralized authority. Instead, reputation tracking will require the decentralized approach of the blockchain, with stakeholders serving as auditors, and receiving compensation for their participation, in much the same way proof-of-work miners are rewarded for blockchain efforts.
Reputation, which also includes machine learning and analysis of historic device behavior, could let Chris Skinner know, for example, if his fridge decides to double up on that weekly order of white wine.
We believe that IoT can never reach its full potential without an independent service that establishes immutable identity, handles reputation and trust, and allows autonomous devices to exchange payment for services.
This is why we are creating Atonomi.
Thanks for reading,
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