Mika Lammi: Viable Real-life Applications of IoT Will Soon Become a Reality

In an exclusive interview with Binary District, Mika Lammi, Head of IoT Business Development and Project Manager at Kouvola Innovation Oy, delves into the practicality of blockchain technology in the Internet of Things (IoT), major obstacles in blockchain adoption, and potential issues with the commercialization of blockchain and IoT.

Since early 2016, nearly every high profile financial institution and tech giant, including JPMorgan, Microsoft, and Intel, have turned their attention to the development of blockchain-based applications -- specifically, permissioned distributed ledgers. The vast majority of them have partnered with blockchain consortia such as Hyperledger and the Enterprise Ethereum Alliance to develop practical blockchain applications that could automate operations which currently require considerable manpower.

JPMorgan has developed Quorum, a blockchain technology inspired by the Ethereum Go client, which is currently being tested by pharmaceutical giants Genentech and Pfizer. Also, as part of the Hyperledger consortium, Intel introduced the Sawtooth Lake blockchain network.

“Everyone working in this space is literally pushing the boundaries of possible every day, and the obstacles range widely in type and scope.”

Public blockchain have indeed demonstrated significant potential, notably the Ripple blockchain network recently processed hundreds of millions of dollars in payments for Sweden’s SEB Bank. However, blockchain technology has only been tested in a limited ecosystem and applied to small scale payment channels. The fact of the matter is that not a single blockchain network has seen commercial success in the finance or technology industry.

Mika Lammi explained that the integration and commercialization of blockchain technology is difficult because of its open-sourced and decentralized nature. This is why companies such as Intel and JPMorgan have focused on building centralized blockchain networks that are capable of settling millions of data points without facing scalability problems.

“Creating a working product out of an emerging open source technology is inherently very, very difficult”, said Lammi. “Everyone working in this space is literally pushing the boundaries of possible every day, and the obstacles range widely in type and scope. Perhaps one of the biggest ones in my radar is the compliance of industry standards in machine-to-machine data transfer scenarios – industrial blockchain initiatives are always about changing the fundamentals of the business, not so much about technology itself”.

Blockchain Network SmartLog

Over the past few months, Lammi and his team at Kouvola Innovation has been developing a blockchain network called SmartLog, an enterprise-grade permissioned blockchain network developed specifically for companies and large-scale conglomerates. But, even with private blockchain networks, Lammi stated that scaling remains an issue.

“The scaling problem is actually a multi-faceted one – we are currently dealing with questions regarding the complexity of logical relationships within the data mass, as well as transaction volumes and the sheer mass of data we are projecting to handle in the near future. Uncontrollable complexity is something you just have to deal with, and the best you can do is to design for mechanisms which limit the complexity. The private aspect of the blockchain obviously helps, unless you are doing a continent-level application”, said Lammi.

Analysts and researchers in the cryptocurrency sector have long been critical of permissioned ledgers. However, as University College of London researcher Patrick McCorry told Binary District, if nodes are run in a distributed ecosystem then permissioned or centralized blockchain networks can still be decentralized to an extent.

It is in consideration of these advantages and disadvantages that companies like Intel, JPMorgan and, Kouvola Innovation Oy have chosen to develop centralized blockchain networks, rather than public blockchain networks that are significantly harder to integrate for commercial usage.

“I am not ideologically opposed to permissioned or centralised blockchains. In fact - it is also arguable that blockchains like Bitcoin have many similarities with them (one similarity being that both systems rely on a small committee to select the contents of new blocks; in bitcoin this committee is elected based on wealth/investment, whereas this committee in permissioned blockchains are appointed), but there are some issues,” McCorry told Binary District.

The Practicality and Applicability of IoT

Permissioned blockchain technology has also been a reoccurring theme in discussions on the practicality and applicability of IoT. In order for IoT devices and protocols to function, an underlying infrastructure -- preferably distributed networks -- is necessary. Since 2016, developers and researchers have been testing the applicability of blockchain technology in IoT systems, connecting each IoT device to the blockchain network as a node.

In a sense, the Bitcoin network could be considered as an IoT network since it is run by a network of nodes which are connected to the public Bitcoin blockchain network. In the future, the commercialization of IoT systems would strictly require blockchain networks that are flexible enough to handle thousands of data points every second, like Visa.

Once scalability issues and technological boundaries for both permissioned and public blockchain networks are resolved, Lammi explained that real-life applications of IoT will become more realistic and practical.

“At this point in time, we are slowly sliding out of the peak hype and moving towards real life applications in the IoT and other-than-ICO spaces. Now more than ever we need patience and diligent work on the fundamental prototypes, so we can keep moving on towards the eventual production environment applications,” said Lammi.

Hole in the… Iceberg?

ATM machines went online for the first time in 1974 and can therefore be considered some of the first IoT devices. To say that ATM machines are ubiquitous would be a gross understatement -- like saying Antarctica is cold. Speaking of which, there is a whopping total of two ATM machines in the world’s most uninhabited continent. So if you ever find yourself wading through the white wilderness of the southern hemisphere...

To contact the editor responsible for this story:

Margarita Khartanovich at editor@binarydistrict.com