Whether you realize it or not, many of us live in buildings with some smart capacity. You probably have at least one smart device in your home.

With the smart device industry set to grow by $65 billion by 2024, the odds are, you’ll add more of these devices. The true potential of smart homes lies in the ability of smart devices to communicate together — and that’s where blockchain technology comes in.

How Blockchain is Being Used With Smart Buildings

On the surface, smart technologies make individual tasks easier, but the potential is much larger than that. A smart device is effectively a sensor able to collect significant amounts of data about everything, from your energy use to how well-stocked your fridge is.

Smart Technology Works Better in Swarms

On its own, this data is valuable; when combined with data from other devices, its usability becomes game-changing. A properly connected smart home would be able to automatically adjust the heating to your preferences while minimizing bills, ordering your favorite groceries, monitoring and adjusting energy usage, sending repair notifications if something breaks, and much more.

Internet of Things (IoT) technologies are already used extensively in supply chain management. They help efficiently manage products passed through multiple stakeholders and verify that products are what the label says they are.

Catching Slave Labor in Fishing Supply Chains

One example where smart technology has been useful is in tracking fishing supply chains. The World Wildlife Federation (WWF) has used IoT to track sustainable tuna fishing.

The Western and Central Pacific tuna trade is rife with illegal fisheries — and, in some cases, slave labor — because tracking is either done via an easily-forged paper trail or not at all. However, savvy consumers and brands are demanding more accountability from the tuna industry.

The WWF’s branches in New Zealand, Australia, and Fiji have combined forces with blockchain software studio ConsenSys to implement secure traceability and track to address the problem.

Radio-frequency identification (RFID) or QR codes capture information as a fish moves through the supply chain from the boat to grocers. Tracking information is automatically saved in blockchain, making it nearly impossible to forge.

Privacy and Compatibility Remain a Concern

Although smart technology has many uses in enterprise settings, it becomes a thornier prospect for individuals. IoT devices collect huge amounts of data which can reveal a lot about their owners. Additionally, they are often poorly secured, creating significant security challenges.

Most smart devices must run on centralized platforms controlled by major tech companies, notably Amazon and Google.

There have been significant privacy concerns about both companies due to their access to an extraordinary amount of personal data.

Amazon Alexa’s Vulnerabilities

Setting aside concerns about microphones, Amazon’s voice-activated assistant Alexa also presents other significant security concerns.

Although Amazon provides some privacy protections, with 100 – 200 million Alexa devices and over 100,000 skills already deployed, there is a significant concern about malicious developers taking advantage of security holes.

For example, developer names aren’t verified, allowing a malicious developer to stage a phishing attack posing as a different company. This risk is especially high with some skills that link to email, banking, or social media accounts.

After a skill has been approved and added to the marketplace, a malicious developer can change its coding without getting Amazon’s approval or notifying the customer. Many developers also have misleading privacy policies — or none at all, meaning that customers will have no idea how their personally identifiable information will be used.

Lack of Device Compatibility

The second challenge is compatibility. Early adopters are painfully familiar with the concept of device divorce, where two smart devices cannot speak with another. Part of the problem is that Amazon and Google are used as primary smart home controllers, and there isn’t a platform-agnostic solution widely available to most consumers.

Blockchain Technology is the Missing Piece of the Puzzle

Blockchain technologies are working to provide the solution to these challenges and others since they can enable P2P connections without the need for a centralized validator.

With blockchain, it would be possible to connect numerous smart devices without being forced to hand that data directly over to the device manufacturer, mitigating privacy and security concerns. It can also provide increased transparency over how data is used, helping users understand what data their smart home is collecting and what it’s used for.

Blockchain technology is also hardware agnostic. Thus, it would be possible for users to pair together devices from different manufacturers without worrying about compatibility.

IOTA’s Tangle vs. Traditional Blockchain

One of the best examples of this vision is the IoT-focused blockchain IOTA.

It is important to understand that we are not talking about financial blockchain technology like Bitcoin. Blockchains based on traditional Proof of Work (PoW), like Bitcoin, lack the speed and scalability necessary to process the millions of data points produced by smart devices.

Instead, we are looking at smart device-focused technologies, most notably IOTA. IOTA uses a Tangle specifically designed for data and value transfer.

Blockchains like Bitcoin are essentially long chains of blocks containing transactions. The Tangle, on the other hand, is constructed as a directed acyclic graph (DAG), which is a collection of vertices connected by edges.

Eliminating Validators

IOTA’s implementation is designed in such a way that each new transaction (vertice) must approve two previous transactions when it enters the Tangle. This eliminates the need for Proof of Stake (PoS) or PoW consensus methods.

Because these transactions don’t require always-online validators, they are feeless and contain metadata that makes them suitable for micropayments and data transfer.

IOTA’s Partnerships

IOTA is interesting because the technology is more mature than many other IoT-focused blockchain solutions. The project has experienced past problems, but the roll-out of its improved Tangle has allowed it to secure some important partnerships, primarily in areas designed to improve transparency.

Properly Validating Smart Device Data Is The First Step

IOTA’s most important partnership for smart homes is undoubtedly Project Alvarium. The biggest challenge posed by IoT — and smart devices in general — is the sheer volume of data collected. The vastness of information makes assessing what data is trustworthy and useful difficult, especially in an automated environment.

To solve this problem, Dell and IOTA teamed up to create Project Alvarium, designed to provide a simple way to assess the trustworthiness of data gathered.

Project Alvarium’s system logs every datapoint as it travels across the system. Each interaction is given a trust rating, which is logged on the IOTA Tangle to prevent tampering. This provides a simple way to find problems or deliberate tampering within a network of data.

Blockchain Can Help Resolve Security Concerns About Smart Security

When smart home users are certain that they can trust the data being generated by their devices, it opens up a world of opportunities that could transform our daily lives.

The most immediate use of blockchain technology is in improving building security. The most high-profile problem is undoubtedly Amazon’s Ring. In late 2020, dozens of people sued Amazon over accusations that their Ring doorbells had been breached.

The breach enabled hackers to watch people inside their homes and talk to individuals in the house over the Ring speakers.

Additionally, the product’s privacy policy is porous and allows Amazon to share video and microphone data with numerous third parties, removing any expectation of privacy.

The Blockchain Difference

Blockchain has been shown to resolve both the problem of data breaches as well as hacking takeovers. Capturing a blockchain-powered device would require compromising the entire blockchain itself compromised.

But proper validation, such as that proposed by IOTA, allows malicious devices to be pruned from the network, significantly improving security.

Additionally, blockchain could enable consumers to understand how their data is being used, helping to make smart devices more privacy-focused.

Smart Building Management Solutions are Already Being Tested

The value of blockchain technology becomes even bigger at scale. One of the most impactful uses of IoT and blockchain technology is in building management. Whether for an apartment building or an office building, it’s often difficult to effectively manage a building’s heating, lighting, and security in a way that minimizes waste.

Example: How Blockchain Could Manage Heating Bills

In a traditional setting, most buildings are managed centrally. If there is a unified heating system, it is often controlled by the local administration. Although this system is more efficient than individually-heated buildings, there is significant room for human error. That’s because the system is not optimized to account for more efficient heating higher up in the building as heat rises.

A network of heating sensors could be used to automatically measure the temperature in each apartment or office in a building. If the different thermostats could communicate with each other, it should be possible to input all the data into a blockchain solution.

A scheme like this would allow the building operators to create a proper heat map of the building and understand the most efficient usage of energy. It would also enable residents to access the data and understand why the system works the way it does.

Theoretically, it could also enable a user to select a target temperature for their apartment by leveraging rising heat from lower apartments.

Solutions on the Horizon

This kind of project is already being tested. For example, Brickschain offers several products that minimize difficulties with building management and handover on sale. There are also an increasing number of studies looking at how blockchain can be positively implemented into the building management process.

The Future of IoT: Many-to-Many Marketplaces

When buildings are utilizing IoT devices and blockchains, a bigger opportunity opens up: decentralized marketplaces.

Currently, it can be difficult to get the best deal on energy or heating bills because it is a marketplace with many customers but only a few providers. Switching providers can be difficult and doesn’t guarantee a competitive rate.

However, with blockchain, it would be possible to change providers based on real-time pricing data. This setup would create a competitive many-to-many environment where many providers are looking to sell energy to many customers. The competition among providers would drive down energy prices and improve overall efficiency in energy markets.

Swedish District Heating Study

Sweden has conducted studies to investigate the utility of blockchain for a district heating market. The setup allows apartment blocks already utilizing blockchain to automatically select the most affordable provider at any given moment, minimizing bills without requiring micromanagement.

The same concept could be applied to many aspects of building management.

Decentralized Governance

One interesting idea is the concept of decentralized governance. This type of network could empower tenants and apartment owners to vote on changes to their apartment block’s management proceedings.

For example, renters could vote in favor of using only green energy sources or for changes to living space regulations. Building administrators could then better understand their occupants’ needs and create a better living environment for all involved.

Blockchain Will be Needed to do IoT Correctly

Adoption of IoT and smart technologies will likely increase. Governments like the UK are already pushing hard on smart meters and many of us have already adopted some form of smart technology in our homes.

This rush to adopt new technology will undoubtedly come with significant scaling problems as well as security concerns and significant privacy issues.

Additionally, a market dominated by a handful of major tech companies like Amazon and Google could prove damaging to the consumer in the long term.

To counter these eventualities, we’ll need a platform-agnostic solution that allows a more diverse field of producers to create new IoT devices.

Blockchain technology still represents the best way to utilize IoT for everyone’s benefit. If solutions like IOTA are implemented into existing smart homes, then we could build a new decentralized marketplace that will give us better control of our data, while improving the efficiency of our homes.

Image Credit: pixabay; thank you!