Blockchains For The IOT - EVRYTHNG

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BLOCKCHAINS FOR THE IOT:
BEYOND THE HYPE
White paper

2
Blockchains for the IoT: Beyond the Hype
Executive
Summary
The answer is blockchain. What is the question?
Much has been written about blockchain and how it will be a‘game-changer’for the
Internet of Things,addressing the challenges around security,scale and resilience as
more and more things get connected.
But how much is hype and how much is reality? And how will these two technologies
work together?
IoT is much more than driverless cars,industrial M2M or smart home appliances.
Everyday products,such as clothing or consumer packaged goods (CPG),are also
getting connected to the Web too.These non-powered items have no powerful
embedded electronics and gain their intelligence through on-pack tags,labels or
sensors which generate data throughout their lifecycle,as they move along the supply
chain,from factory to retail and then into consumer homes.Over 3 trillion of these
consumer products are manufactured every year and once they are ‘switched on’,the
impact will be seismic.
But what role will blockchain play in this transformation? With a focus on the Apparel
and CPG markets,the EVRYTHNG Innovation team has
been working with blockchain technology in our labs to
see how it might enhance or complement different IoT use
cases.
The white paper is for enterprise business leaders who are
tasked with understanding the impact and potential convergence of IoT and blockchain,
and how this should shape their digital transformation strategies. It will cut through
the hype to understand the real-world commercial value,and will show how companies
can deploy a simple Proof of Concept (PoC) to evaluate blockchain and IoT working
together.
3 trillion consumer products
manufactured every year

3
Definition
A blockchain is a distributed digital ledger technology - at the heart of systems
like Bitcoin and Ethereum - where transactions are recorded and stored on many
computers across a peer-to-peer network without the need for a centralized third
party. Every transaction is verified and secured by all participants in the blockchain
using cryptography and only validated by a consensus.(See figure 1.) This data trail
is immutable and will be stored in the blockchain,unchanged,for as long as the
blockchain exists.
Architecture
Blockchains represent an evolution from centralized to decentralized systems where
there is no master computer.Rather all participating ‘nodes’have an immutable copy of
the chain,which is updated and verified through consensus of the parties involved.
Figure 1: How a blockchain works
A wants to send
money to B
1 The block is
broadcast to every
party in the network
3 The block is then added to
the chain, providing an
immutable and transparent
of all transactions
5
The transaction is
represented
digitally as a ‘block’
2 Parties in the
network approve the
transaction as 'valid'
4 The money is
transferred
from A to B
6
consensus stage
?
?
?
?
?

A B
Blockchains
overview

4
Figure 2: A comparison of architectures
Transactions in a number of centralized databases, via trusted services
Transactions via a decentralized,secure distributed ledger
Brand
Client
Consumer
Client App
Manufacturer
Client
Manufacturer
Client
Centralized
ERP
(Supply)
Application
Services
Transactions Database
Transactions Database
Centralized
Brand Platform
(Brand owned)
Brand
Client
Consumer
Client App
Transporter
Client
Transporter
Client
Retailer
Client
Retailer
Client
Node / Miner Node / Miner Node / Miner
Node/
Miner
Node/
Miner
Node/
Miner
Node/
Miner
Node/
Miner
Node/
Miner
Node/
Miner
Node/
Miner
Blockchain (distributed)
Application
Services
Types of blockchain
Public Blockchain
A fully decentralized,distributed system
that anyone in the world can read,send
transactions to and expect to see them
included if they are valid. Any party can
participate in the consensus process –
the process for determining what blocks
get added to the chain and what the
current state is.
Good illustrations of a public blockchain
implementation are Bitcoin,the digital
currency,and Ethereum which uses the
concept of smart contracts.
Private Blockchain
These are systems often dedicated
to a single organization,or group of
companies,where access permissions
are more tightly controlled and restricted
to a few users to ensure greater privacy
and governance. These blockchains
are built from scratch or based on open
source implementation of blockchain
principles such as HyperLedger.

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The missing piece of the jigsaw?
According to Cisco1
99% of things in the world will become connected and part of a
network. But this vision of full interconnectivity between things,people,applications and
infrastructure across industries is not yet a mainstream reality.
Perceived security vulnerabilities,fragmented ecosystems,inconsistent interoperability
standards,lack of scalable computing infrastructure and limitations in network access are
all thorny challenges that need to be overcome.
Blockchain has indisputable potential to help,but such IoT obstacles cut across many
different areas,including operational,economic and even regulatory,and so cannot be
overcome by technology alone. Moreover,there are still many concerns with blockchain
itself which are holding back wider adoption,including:
1. Immaturity: Blockchains will undergo significant change over the coming months
and years,with new distributed ledger alternatives surfacing regularly.
2. Scalability: Executing peer-to-peer transactions with shared consensus is not
particularly efficient and involves significant latency,cost and energy consumption.
Cost effective models needs to be found.
3. Security and privacy: Clear policies are needed for how data is stored and
accessible on the shared ledger in a secure and permissioned way,that suits both
enterprises and consumers.
4. Transparency and governance: Clarity around legal compliance and the
operationalization of blockchain technology is needed before it can be embraced
by major enterprises.
5. The centralization question:There is likely to be continued disagreement about
the true value and role of emerging public,private and community blockchain
models.
1
http://www.cioinsight.com/it-management/innovation/the-internet-of-things-gets-real.html

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When should you use blockchain?
The distributed ledger approach is suited to some specific real-world scenarios:
financial transactions,smart insurances,drug or medical compliance and even diamond
authenticity are all areas where blockchain-based solutions have already been deployed.
Ledger Litmus Test
But,with the above concerns in mind,EVRYTHNG recommend a simple assessment - our
Ledger Litmus Test - to see if blockchain is merited for your specific IoT use case.Answering
yes to each of these 3 criteria is a strong indication that blockchain is worth exploring.
Multi-Party Transactions Decentralize Distribute
Fix Distrust
Is there a need for more
than a few parties to record
transactions?
Can your transactions wait
(order of minutes) for consensus
to be reached?
Does processing capability need
to be spread across multiple
nodes or locations for
performance or scale?
Do devices or entities need to
communicate independently
with each other?
Is there an inherent lack of trust
between parties, absence of
transparency or risk of fraud?
Is there a legal framework
(contract) around the transactions
that needs to be respected?
Consider
Centralized
Solution
NO
Consider
Blockchain
Solution
YES
How
blockchains
work with
the Internet
of Things
Figure 3: Ledger Litmus Test.

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Criteria:Fix Distrust
A detailed time- and location-based chain of custody across the supply chain for any
product brings transparency and value. For example,manufacturers can manage
3PL partners more effectively,and retailers can have certainty on the quality of the
product being delivered to them. But blockchain is not the sole way to bring this
transparency,and there are data management platforms today which aggregate
disparate data from ERP systems,and share this securely with various actors in the
ecosystem.Moreover,full transparency is not always desired by all parties,as it can
weaken commercial leverage when agreeing contracts.
Criteria:Multi-Party Transactions
Most supply chain are by definition highly distributed,with several actors,including
suppliers,3PL partners and retailers needing to validate and participate in
transactions. Delays to reach consensus are usually acceptable in supply chains,
but in some cases this might be problematic (e.g.when real-time programmatic
decisions are taken on manufacturing conveyer belts).
Criteria:Decentralized Distributed
Decentralization often achieves better resilience but well architected,high-
availability centralized platforms often provide sufficient resilience for most
common use cases today.
Evaluating 4 potential use cases
Let us apply the Ledger Litmus Test to assess whether blockchain is warranted for some
common use cases where IoT currently plays a role.
1.Supply Chain Traceability
Thanks to the IoT,supply chains are experiencing a revolution. This has been enabled by
the digitization and serialization of product packaging,including RFID,steganography
and barcode technologies,combined with massive-scale IoT data management platforms
which are able to collate the data generated. Item-level traceability has become a reality,
making supply chains more transparent and efficient.But is blockchain needed?
MET:PARTIALLY
MET:PARTIALLY
MET:PARTIALLY

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2.Product Provenance
There is a growing demand for apparel and CPG firms to provide consumers with details
about a unique item’s provenance,the raw materials used,and where it was farmed,
sourced or manufactured. In effect providing visibility back into the supply chains to
consumers at point of sale or post-purchase. As an example,EVRYTHNG is collaborating
with the Sustainable Apparel Coalition (SAC) and its members in the apparel industry
to provide a breakthrough program providing consumers with sustainability information
about clothes and footwear products to help inform purchase decisions.
Does the Litmus Test indicate that blockchain technology is also required?
Consumer distrust of brands has become an issue over recent years.If shoppers
are to fully believe product labels that claim the item is organic,fairtrade or made
without GMO ingredients,for example,it can be argued that an independent stamp
of approval or immutable history is needed.This is highlighted by a Mintel survey in
2015 found that “more than half of Americans now think brands are using the terms
‘organic’ and ‘artisanal’as an excuse to increase prices.”
As with Traceability,product provenance data comes from multiple parties that need
to work together to provide a full picture of the product origins. And in most cases,
delays incurred by the time needed to reach consensus are acceptable in product
provenance use cases.
There is no absolute need for provenance data to be decentralized.Data could be
aggregated in a centralized system.
MET:FULLY
MET:FULLY
MET:NOT MET

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3.Compliance
Compliance is one of the most compelling and convincing use cases for blockchain
technology.Brands having to comply with an increasing number of regulations which
means transparency of a product’s provenance,its transportation journey and its condition
is vital. Product location and temperature information from on pack sensors can be
automatically recorded as a product moves among multiple parties to its destination.Avery
Dennison’s TT Sensor Plus ™ is an example of such smart packaging technology.
As an example,the EU law GDP2013/C343/0 states that a deviation of temperature
within the supply chain of a drug should be reported to the distributor and recipient.
What is considered in the interest of the consumer (product quality) may be to the
detriment of the transporter or producer in additional costs or penalties.Having this
data added to a blockchain with a public ledger provides 100% transparency and
enables parties to demonstrate whether contractual commitments have been met.
Several start-up companies have based their compliance solutions on blockchains
such as Ethereum for this.
Compliance use cases require multiple parties to collaborate within the law or
contract.Transactions can usually wait to be confirmed and do not need to be
instantaneous.
Having a decentralized system for gathering data and making this available to any
member of the ecosystem is important and helps with resilience,compliance and
auditing.
MET:FULLY
MET:FULLY
MET:FULLY

10
4.Product Authenticity
The OECD estimates that 2.5% of global trade is lost to counterfeit each year,and in the
apparel industry alone,fake goods are worth $1.8 trillion. The manifold impacts of lost
revenues,risks to consumer health and brand reputation mean it is a critical business
problem for brands to address.
Global distrust does not exist in the same way as other examples,as consumers will
trust the CPG or Apparel brand’s‘authentic’stamp of approval,knowing it is in the
brand’s interest to fight counterfeit and prove authenticity.However there are some
specific use cases,such as the secondary (resell) markets or the diamond industry,
where sellers can gain financially from selling fake goods,and in these instances,an
immutable product history would eliminate fraud and distrust.
Providing proof of a unique item’s authenticity to consumers or the manufacturer’s
brand protection officers requires a combination of technologies.First,an on-pack
digital identification code,either visible or invisible.Second is an app for scanning
the product and third,a product identity management system to validate whether
or not the product is genuine,operated by the brand owner.However,information
from multiple parties (along the supply chain and in retail) helps reinforce product
authenticity data especially in cases when the on-pack digital identification trigger
could be forged.
Brands usually own product authenticity systems and well-architected,high-
availability centralized platforms are resilient enough for most cases.
MET:PARTIALLY
MET:PARTIALLY
MET:NOT MET

11
To trust the data we first need to get the data
It is not so much that consumers do not trust the data they get today from brands
about what is in the products they purchase or how they were made,but more that this
traceability data is largely not provided. Brands first need to fill this visibility vacuum by
providing clear real-time information on the product’s they’re buying or consuming.
To do this brands must instrument their supply chain operations with IoT technology. This
enables them to capture information through the product lifecycle and make this easily
accessible to consumers. Only when such transparency has become ‘the norm’,will the
immutability,or trust in this data,be the next challenge to tackle. At that point,expect to
see blockchains become of some competitive differentiation.
Physical things first need digitizing
Blockchains are not IoT solutions in their own
right.For physical products to exist and interact
in the digital world,enterprises first need a
solution to digitize these physical assets.
Companies who embark on discrete blockchain
projects without a wider digital transformation
strategy risk being left with orphan solutions.
This is akin to erecting street signs before the
roads have been built.
Blockchains
are just part
of the picture
2
“Blockchain Will Drive Digital Branding in Consumer Goods Manufacturing”
Consumer goods companies could
take a step toward this goal by
using serialization to provide a
platform for gathering data at
different nodes in the supply chain.2
Gartner,2017

12
Solutions need more than just a distributed ledger
Enterprises deploying solutions need more than just a distributed ledger. A registry of
transactions such as a blockchain is only one component of a successful IoT deployment.
Figure 4: Solution building blocks when using IoT to connect products to the web.
Transactional Database
Database storage and querying for huge
and ever growing number of transactions.
Enterprise Integrations
Off-the-shelf connectors and open APIs
enable simple integration with various 3rd
party systems such as ERP, CRM or BI platforms.
Customized Analytics
Intuitive web interfaces and custom
visualizations for data analytics.
Reactions
Programmable workflows are needed
to initiate rules based on real-world
events or actions.
Digital Identity Management
A system to manage billions of identities
and profiles for every physical thing.
Smart Packaging
Passive physical products require
on-pack digital triggers which can
be scanned by smartphones or readers.
Permissions
To make this data available to applications
and users requires a fine-grained
authentication and authorization system.
Toolkits
Developer documentation, published
SDKs and APIs are needed to simplify
app development.

13
Conclusion Don’t believe the hype
It is easy to carried away with hype. But the Ledger Litmus Test showed many common
use cases do not necessarily require blockchain solutions. Moreover, deploying private
blockchains threatens to create information silos that represent yet another form of
centralization.
The technology,despite clear and unique potential,is not ready for large scale deployment
due to the current complexity and immaturity. EVRYTHNG recommends at this time that
experiments with blockchain are best regarded as proof of concept rather than forming
the foundation for a widespread rollout. It should be considered as a complementary layer
which can add value in certain cases,such as compliance or when a brand decides to offer
100% transparency.
EVRYTHNG:an IoT platform that works with blockchains
Numerous global companies use EVRYTHNG’s IoT platform for exactly the kind of
traceability,provenance and authenticity use cases described in this paper. Although
blockchains are not required,we have built an optional integration with our platform to
ensure our customers have a fully future-proofed IoT solution.
EVRYTHNG is a centralized client-server solution,albeit deployed on a completely
distributed cloud platform architecture.The platform securely manages today over half a
billion unique digital identities for diverse physical items from soda cans and jackets to
plugs and light bulbs. EVRYTHNG is predicated on a model where the brand ultimately
owns the product identities and the data about them, and can securely invite other
companies (e.g.in a supply chain) to collaborate on this data.
Every product identity is encrypted at rest and in motion,referenced using a
cryptographically secure identifier via an authenticated and authorized API,and can be
audited via a list of data access and changes. In other words,this gives auditability and
high-availability wrapped up by robust,mature security policies.
Our data model,based on the W3C Web Thing specification,holds a unique identity -
known as an Active Digital Identity™ - for each physical object and captures all changes to
those objects.

14
There is a clear parallel here with how blockchain transactions work.Such a similarity has
enabled EVRYTHNG to develop a composite solution which utilizes both technologies and
provides:
1. A proven,auditable and latency-free IoT solution with enterprise-ready tools,built
upon future-proof web standards, to provide traceability,provenance and digital
trust information.
2. 100% data immutability where transactions are simultaneously written to a public
blockchain.
Figure 5: A product profile in the EVRYTHNG platform holds a 360 degree dynamic view
of a physical object and now includes blockchain data.
Crytosecure ID
EAN EPC SAP ID Data Matrix Blockchain Hashes
Reactor URL Redirector any rule Blockchain Smart Contracts
Shortcode URL
Active Digital Identity
Web Identity
Streaming Analytics Custom Dashboards Data Visualizations
Analytics
Programmability
Identifiers
Locations Actions
Manufactured
Scanned In/Out
Purchased Blockchain Transaction
Registered any action
Properties dynamic data
Availability Status Amps Lux
Temperature Humidity Price Temporal Data
Custom Fields static data
Size Colour Ingredients Origin
Version Weight Model any data

15
One identity to bind them
As the number of public and private blockchain environments multiply,data
fragmentation will increase.There will be a growing need for an ‘identity and data bridge’
or a platform to federate between blockchain ecosystems.EVRYTHNG’s composite
solution enables world-wide,unique Active Digital Identities ™ generated via our IoT
platform to be used to record transactions across several blockchains,throughout the
product lifecycle. We believe this federation between blockchains will be vital in the
future as it opens up the benefits of different blockchain-based solutions rather than
having to bet on a single (potentially immature) blockchain platform.As an example,
a brand wanting to take part in a provenance trust mark program can leverage the
innovative Provenance blockchain solution directly from EVRYTHNG by pushing the
relevant data to Provenance (built on top of the Ethereum blockchain).
Binding EVRYTHNG to blockchains - how it works
EVRYTHNG effectively puts an API over a blockchain transaction,creating a blockchain
copy or backup,executed by thousands of computers around the world in a truly
decentralized and immutable way. All actions,events and interactions performed
within the EVRYTHNG platform are written to the blockchain.
Born Digital Sourcing Manufacture Distribution Retail Consume Operate Recycle Rsponsibly
Disposed
IoT SaaS Platform
Figure 6: EVRYTHNG manages data throughout the product lifecycle and can federate between
companies providing specific services based on private and public blockchains.

16
With this service,trust is instantly established if the hashes are identical on both,and
you get a searchable,analytics-ready series of blockchain transactions for your physical
products as they move through their product lifecycle. Brands can collect and immutably
store data on every action or interaction with their physical products as they make their
journey through the supply chain and into the consumers’hands. This could be used for
instance to push data to a novel blockchain-based solution with the aim of re-establishing
trust in product provenance, global supply chain applications or for compliance issues.
If you would like to participate in a PoC,please email us at
hello@evrythng.com or tweet @EVRYTHNG using #proj-iot-blockchain.
EVRYTHNG is running proof of concepts (POC’s) to enable our customers to test and
evaluate both technologies working in tandem. A PoC involves 4 key steps:
Appendix:
POC
Integration
steps
4
3
2
1
1. Create Thngs in the EVRYTHNG platform. A Thng is a unique physical item.
2. Define the Actions (e.g.types of transactions) that will be executed with
those physical products in the real-world. As an example,moving a pair
(or pallet) of shoes from distribution to a store is an Action on the uniquely
identified pair of shoes (Thng),performed by the distributor (source)
designated to an actual pair of shoes (destination). In this case,Actions
relate to moments in the supply chain:‘Arrive at Distribution Center’,
‘Scanned at retailer,’etc.
3. Thanks to EVRYTHNG’s Reactor™ rules engine,we can ‘certify’this
transaction via a blockchain. Using a reactor script,which creates a secure
hash of an EVRYTHNG Action and pushes this as a transaction in the Bitcoin
or Ethereum blockchains or in a private blockchain.This ensures the Action
can be validated without its content being publicly revealed.After a number
of minutes,the transaction is accepted by the blockchain system and
validated by a number of blockchain participants before being permanently
added to the blockchain.A blockchain bridge service running on the
EVRYTHNG side captures this event and creates a new Action containing
the reference to the blockchain transaction.The Action is now certified by
the blockchain,it can be audited by anyone and any malicious modification
could easily be spotted (the Action hash would become different from what
was recorded on the blockchain).
4. Products are scanned or interacted with in real-world and events are
simultaneously written to EVRYTHNG against the Thng,and the blockchain.

Blockchains For The IOT - EVRYTHNG

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