How IoT and Bitcoin can save your privacy

How IoT and Bitcoin can save your privacy

first published November 5th 2015 at tea-after-twelve.com\r\n

Soon your home will be alive and at your service like the enchanted castle in Beauty and the Beast, where a talking teapot, a singing candelabra and a caring mantel clock are eager to please. Your data might be collected by every device surrounding you in the near future. Recently a new idea has been making the rounds that could offer an answer to these privacy concerns: the Bitcoin technology.

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For those of you who still refusing to use a smartphone, it’s time to give up. This is a battle you just can’t win.

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It won’t be long before  your furniture is smart too. Even your clothes will one day be connected to the Internet. Soon your home will be alive and at your service like the enchanted castle in Beauty and the Beast, where a talking teapot, a singing candelabra and a caring mantel clock are eager to please. For those of you that still rail against the Facebook privacy settings, your data might be collected by every device surrounding you in the near future.

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Soon your home will be alive like the enchanted castle in Beauty and the Beast.

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And this is what has been dampening the enthusiasm about these new developments so far. The so-called ‘Internet of Things’ (IoT) is raising many questions regarding the consumer’s privacy: What will happen with the data accumulated by our furniture?  What data will be collected, and how? Where will it be sent,and who gets access to it? Recently a new idea has been making the rounds that could offer an answer to these privacy concerns. Surprisingly, the idea relies on a technology from a totally different context: Bitcoins.

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Sound geeky to you? You have never heard of the IoT or Bitcoins before? Here is a short introduction to what will happen to your home in the near future and what could be a good solution for protecting your privacy.

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Making the things we own do more for us\r\n“Making the things we own do more for us” is the idea behind the Internet of Things. The term was first used in 1999 to refer to the idea of linking physical objects with the Internet infrastructure. Today, the Internet of Things has generally found  application in the industrial and agricultural sectors and in transportation.

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A new idea could offer an answer to these privacy concerns.

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But soon it will be extended to household appliances and clothes. These smart devices will measure our daily behavior, like our eating and sleeping habits, while connected clothes known as wearables measure our body movements, our heart rate, our blood pressure, etc.  The accumulated data can be used to make industry, agriculture and private households more efficient, assist in health care and improve transportation. There is a vast and yet to be discovered variety of applications of the IoT.

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Is this a bit difficult to imagine? Just think of your habit of making every Thursday Disney movie night. After a while your furniture has registered this pattern in your behavior and on next Thursday evening, your TV has already downloaded a list of new Disney movies, your popcorn machine has already prepared you a bag, and your lamp has dimmed down to fairytale mood lighting.

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People like to compare the development of the IoT with that of the Internet. According to IT market researcher Gartner, there are already 3.8 billion smart objects today. In not even five years, the IoT will consist of 26 billion devices. (Some researchers even speak of 30 to 50 billion by 2020.) Compare this to the circulation of 2.6 billion smartphones today, and the approximately 6.1 billion smartphones predicted by 2020, or with the current world population of 7.36 billion today, and the estimated world population of 8.08 billion by 2020.

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To date connected devices send and receive their information through external data centers also called clouds. But who operates the cloud, who can access the cloud and what happens with the data collected in the cloud remains outside of consumers’ control.

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So what could happen? After a couple Disney movie nights, Amazon starts sending you daily offers for Disney movie DVDs. Your insurance company raises your contents insurance rate since they see that you use a highly flammable popcorn machine and consistently fall asleep in front of the TV. And the police lists you as a person with a suspicious interest in little princesses.

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Things like a light bulb, a door knob or a chair should be turned into little independent computers.

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Privacy  through decentralization

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In a recent report by IBM, Paul Brody and Veena Pureswaran tackled the consumer privacy problem by offering a new approach. The idea of managing the IoT through clouds has been overtaken by a recent development, they state. Over the past years, computing power, which is the number of operations a computer can carry out in a second, has shifted into microchips and has hence become cheaper. Clouds on the other hand are very expensive to maintain. A logical step would be to use microchips and embed computing power into the devices themselves. In other words, things like a light bulb, a door knob or a chair should be turned into little independent computers. This leads to a new solution for consumer privacy.

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Security comes through transparency, the IBM paper states, privacy must be built in through decentralization. So instead of sending and receiving their information through a cloud, the devices share their information, that is every digital exchange they carry out, with all other devices in their network.

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For this two preconditions must be met: First, devices must all “speak the same language”. To date smart devices are still incompatible with each other: Google just announced Brillo as its IoT operating system, Samsung already launched Tizen OS, Apple uses its HomeKit. Second, the users must be able to control “what they talk about”.  And this is where the Bitcoin technology comes in. if you are already familiar with Bitcoin technology, just jump to the next paragraph. For those of us who have spent the last few years dreaming of falling in love with an enchanted prince instead of reading tech blogs, here is a short summary of one of the most magical technological developments in recent years:

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Bitcoin is a decentralized digital currency that basically allows financial transactions to take place without going through a central authority such as a bank. Instead they are verified by all participants of the Bitcoin network. Bitcoins are transferred using a digital ledger called Blockchain. Imagine Blockchain as a protocol to which every transaction made by every participant is added. Every record is seen and confirmed by every participant, which means no central authority figure is needed.

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Bitcoin’s digital ledger, the Blockchain, could be used for much more. It can basically process any kind of digital exchange. Fatcom is one of the start-ups that has already used Blockchain for other applications. It has developed a data layer for the Blockchain technology in order to make data immutable while processed.

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“A lot of the same problems that we designed Factom to solve, like identity and distributed data indicies ,are problems faced by IoT firms,” says Peter Kirby, CEO of Factom. At this year’s Texas Bitcoin Conference hackathon, a group of developers used Factom’s technology to build TeleBoT. The project stores video camera data on a distributed global ledger, which can be used for automated payment and fine systems, advanced fleet management, etc. They named it the “Blockchain of Things”. “Factom’s new architecture of the Internet of Things lets you balance privacy and transparency. It is Blockchain-as-a-service. You don’t need to understand Blockchain in order to have it coded into your devices”, Peter says. “The IoT devices can encrypt and publish data in whatever level is appropriate for their device. When it comes to sensors and IoT devices, having an immutable history is a powerful tool.”

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Democratization of Devices

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Given that the Bitcoin does not need a central authority because of Blockchain technology, the IoT would not need a central cloud or platform through which information and transactions pass. Digital transactions would be discussed and decided on by all the devices in the network just like in a good democracy. Let’s say a smart device wants to do an update check or a digital payment. First it  records this to the Blockchain. The Blockchain is embedded into all the smart devices in your household. Before the transaction is carried out, the majority of the other connected devices of your home need to give their confirmation. Or to put it in Disney terms: When Chip Potts, the tea cup from Beauty and the Beast, wanted to serve the princess Belle, it needed to get permission from its mother, teapot Mrs Pott.

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“The bill was already paid from the digital wallet of your fridge.”

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The invisible Internet\r\nThe human-machine interaction of user and Internet would be replaced by machine-machine interactions. The former CEO of Google, Eric Schmidt, suggested in a panel discussion at the World Economic Forum that the future Internet will be invisible and embedded in everything with which we interact.

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So imagine you are getting ready for your Disney night. The popcorn is already made, the TV has turned itself on, and then the doorbell rings. It is the delivery service. “Good evening,” the guy says, “your doorknob just informed us that you arrived home. This is a package of detergent your washing machine ordered with the permission of the dryer and the dishwasher.” “Great!” you reply, “How much do I owe you?” “Nothing,” the guy answers, “the bill was already paid from the digital wallet of your fridge.” He looks at his phone: “It says here that the fridge and washing machine agreed that the fridge would take over the detergent bill since the washing machine exchanged unused power with the fridge.” “Makes sense,” you mumble a little confused, “And where do I sign?” “Not necessary,” the delivery guy says already climbing back into his car. “Your shirt has just sent your heart rate identification to our system.”

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