IoT and AI are growing exponentially


A future of transacting intelligent machines
• Individually, each of these technologies deserves all the attention they’re getting as enablers and disruptors
• But, taken together?
• Their transformative effect becomes multiplicative
• A future driven by machine connectivity, data exchange and commercial services:
- IoT connects billions of machines and sensors generate unprecedented quantities of real-time data
- AI enables the machines to act on data and trigger services
- Blockchain functions are the transaction layer where data and service contracts are securely stored and payments for services are settled
How does blockchain support intelligent connected machines?
• Smart Contracts enable self-executing and self-enforcing contractual states
- Custom financial instruments (tokens), records of ownership of an underlying physical asset (smart property), any
- complex business logic that can be programmable
- Can such applications be ideal for intelligent (AI) and connected (IoT) machines?
- These machines are intelligent enough to negotiate contracts, but need a technology allowing them to securely sign and enforce them
• Digital currencies create new forms of money
- Programmable and active
- Will such money be ideal for intelligent (AI) and connected (IoT) machines?
- These machines will need digital currency to pay for services assigned through the smart contracts
How will the three technologies work together?
IoT – Internet of Things
- Sensors allow us to cost-effectively gather tremendous amounts of data.
- Connectivity allows us to transmit/broadcast these data.
- But, there is a missing element: intelligence to process these data.
AI – Artificial Intelligence
- Intelligence at the very edges of the network (mini-brains).
- Combine with IoT and you have the ability to recognize meaningful patterns buried in mountains of data in ways that would be impossible for most humans, or even non-AI algorithms, to do.
- But, there is a missing element: a secure storage layer for data and a transaction layer for services
DLT (blockchain) – Distributed Ledger Technology
- Decentralized governance, coupled with no single point of failure, disintermediation, unalterable and searchable records of events.
- Digital currencies and tokenized custom financial instruments.
- Combine with AI and IoT and you have a new world of autonomous systems interacting with each other, procuring services from each other and settling transactions.
The technology stack of the future

Toward a world of machine commerce

M2M will need SSI (self-sovereign identities) – for objects!

Object identities can be SSI by default
- Multi-source, multi-verifier
- Digitally signed, verifiable credentials that can prove issuer, holder and status
- Secure peer-to-peer connections (permanent or session-based)
- Exchange full credentials, partial credentials or ZKPs derived from credentials
Next milestone: Decentralized Organizations (DOs)
DOs are good at:
- Coordinating resources that do not know/trust each other (including hybrid
- H/M)
- Governing in a geography-agnostic, censorship-resistant manner
- Enabling short-term or informal organizational structures (networks/communities)
- Tracking and rewarding contribution
Challenges
- Jurisdictional issues
- Legislating new types of work for humans and work rules for machines
- Governance modalities, including external supervision

Challenges
New/upgraded system architectures
• From legacy to blockchain/AI/IoT-native systems
• Integration, interoperability, backward compatibility
• ROI obvious ex post, difficult ex ante – Bootstrapping
Advanced analytics capabilities
• As devices at the edge become smarter, the smart contracts enabled by blockchain platforms will require more advanced data analytics capabilities and gateways to the physical world.
New Business Models
- Disruptive innovation will dominate – but not without boom-and-bust cycles and big failures along the way.
- Winners will NOT be the ones focusing on efficiency gains, but on disruptive models.
Key takeaways
• IoT, AI and DLT (blockchain) are foundational and exponentially growing technologies
- When combined, they will create a new internet of connected, intelligent and commercially transacting machines
- An era machine-to-machine (M2M) and human-to-machine (H2M) commerce is likely to emerge, with profound consequences on social and economic dynamics
- New forms of corporations or organizational formats (code-only, autonomous) will emerge
• There are numerous challenges that must be overcome
- IoT has outpaced the human internet, but is still a largely passive, insecure and privacy-vulnerable network
- AI has made huge leaps, but still requires immense computational resources and is largely incompatible with edge computing
- DLT is a new technology, largely untested at scale; both smart contracts and digital assets lack the regulatory clarity required for mass adoption
This work is available under a Creative Commons Attribution-Non-Commercial-No Derivatives license
© University of Nicosia,
Institute for the Future, unic.ac.cy/blockchain

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