Utilizing blockchain to bolster automation in smart factories

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Automated smart manufacturing plants where machines communicate with each other are no longer a thing of the future—they already exist in the US and China. As industrial sensors get cheaper and smarter, more of them are being deployed in factories and warehouses to track and analyze copious amounts of data. There exists a huge potential for blockchain-based solutions to further improve on automation levels in these industrial scenarios by ensuring machines are sharing the information with each other in an efficient and reliable way.

Pavel Romanenko, head of marketing and partnerships at Berlin-based startup ZkSystems, spoke at the electronicAsia trade fair in Hong Kong on Sunday on the links between the technology and the Industrial Internet of Things (IIoT). The fair ran from October 13 to 16.

Track, connect, and validate

Factories could be among the first industrial areas to feature fully automated machine-to-machine communication, which enables the network of things, including sensors, cameras, and industrial equipment to run more efficiently and cost-effectively.

“The most exciting thing about blockchain is that it enables automation and simplification of business rules because they can be autonomously executed by machines,” said during his speech Romanenko.

According to Romanenko, to enable automated communication, three main solutions are needed—smart sensors to track data, adequate network technology to connect a large number of devices, and a blockchain-based system to validate the integrity of the data.

ZkSystems runs a scalable blockchain protocol tailored for IIoT. The firm was recently selected to be part of UC Berkeley’s Blockchain Xcelerator program and is working with leading global companies such as Bosch, Siemens, and Oracle.

Sensors are smart enough to record and track data collected from the device and are fast becoming cheap enough to deploy at scale. With the impending 5G roll-out, connectivity will soon hit a level allowing thousands of devices to ‘speak’ to each other by way of communicating the information recorded. Another piece of the puzzle is the technology that can help create systems to validate data collected in an automated manner so that businesses can ensure the data is tamper-proof and reliable. This, Romanenko said, can be solved by blockchain.

In Germany, leading hardware and electronics manufacturers are quickly moving into the burgeoning blockchain space. There is a slew of startup projects still in stealth mode as the industry is still developing, he added.

For instance, German multinational Bosch is working with ZkSystems on a blockchain-based IIoT solution for its hydraulic power units, used in a wide variety of manufacturing applications. 

Some of the industrial manufacturers are choosing to rent out their equipment instead of selling it in one go. The equipment-as-a-service model is not only considered a more profitable model but another reason is manufacturers are able to collect usage data throughout the lifecycle of the equipment.

A blockchain-based enables a more precise and flexible payment model that is usage-based, Romanenko said. ZkSystems’ blockchain protocol allows businesses to keep track of data collected from the sensors such as the intensity of the hydraulic cycles of the power units and monitor each payment-triggering event in real-time. With blockchain, the process can be automated and eliminates manual audits of equipment usage.

IIoT in China and Asia

Germany is one of the leading manufacturing and industrial hubs in the world with an abundance of companies spanning the automotive, home appliance, electronics manufacturing sector, but there is another rising manufacturing economy—China.

There has been a lot of enthusiasm in the Chinese blockchain space, and large tech giants like Alibaba, Tencent, and Baidu are experimenting and adopting related solutions to improve business processes.

Romanenko told TechNode in an interview that, similar to Germany, there is a demand for alternatives to centralized solutions in China. However, in Asia, it is much easier for software companies to gain direct access to hardware companies. Compared to Germany, the Chinese ecosystem of hardware companies is much larger and more diverse and it can be advantageous for blockchain’s development in terms of IIoT. There are countless small and medium-sized hardware enterprises in China. Romanenko highlighted the country’s 3D printing industry as an example—home to hundreds of companies, it provides blockchain projects with vital opportunities to work and have access to hardware companies as potential clients and partners.

There is also an interest among German companies to work with their counterparts in Asia, Romanenko said. He believes that blockchain technology can also serve as an enabler for more international collaboration between companies because of its ability to enable trust and ensure the reliability of data. 

If there is a way to validate the source of data and do so automated manner, companies don’t have to rely on their business partner’s capability of managing and handling data on the other side of the world. “You just have to trust the algorithm, which validates the data,” Romanenko said.

“In the future,” Romanenko added, “machines will not only communicate with each other but actually make deals and do business with each other.”