Bitcoin Could Transform Internet of Things into Vast Data Marketplace

UPDATE (22nd Oct): A version of the working paper, co-authored by Noyen, Volland, Fleisch and Wörner can be found here.

As sportswear giant Nike expands its wearable technology applications, it will need more data to feed its gadgets and software.

To do that will be a simple matter in the future. A Nike executive will simply pull up a list of sensors operated by a private weather station, selecting the ones from which she would like to buy data.

With a click, the executive will pay individual sensors – perhaps thermostats mounted in a Central Park pathway particularly favoured by joggers – for their data, using bitcoin.

The weather sensors will be just one part of a future market filled with data collected by machines on the 'Internet of Things'. The only difference would be that humans will now be able to pay the machines directly for their work, in bitcoin.

Turning sensors into data-hawkers

That's the scenario described in a new paper by two researchers in Switzerland, titled, When Your Sensor Earns Money: Exchanging Data for Cash with Bitcoin. The paper was presented at UbiComp, an annual conference on 'ubiquitous and pervasive' computing organised by the Association for Computing Machinery. The event was held in Seattle last month.

The paper sketches a theoretical framework for sensors to interact with the bitcoin block chain and to receive payments in exchange for their data. This would solve the current problem of growing but silo-ed sensor networks whose owners have no incentive to share their data, the paper says. The authors write:

"There is no way for third parties to leverage today's sensor deployments considerably. [...] Attaching a bitcoin address to a sensor could empower the sensor immediately to take part in a worldwide data market."

The paper's authors are Dominic Wörner and Thomas von Bomhard, researchers at the Bosch Internet of Things and Services Lab at the University of St. Gallen. Wörner says the original work on the concept was done at ETH Zurich, with Kay Noyen, Dirk Volland and Elgar Fleisch.

Helping sensors get paid

The authors describe a framework consisting of software for the sensor and the human data customer, the bitcoin network and a sensor repository that would list all sensors who wish to sell their data and their bitcoin wallet addresses.

A data buyer would check the sensor repository to browse the available data. Once a piece of data has been selected, she would send bitcoin to that sensor's wallet.

When the sensor has received payment, it would send the data to the buyer over the bitcoin network using the OP_RETURN field. The data would be written to OP_RETURN and included in the block chain.

The authors say this is a framework for 'sensing-as-a-service', a play on the popular software-as-a-service model deployed by firms like Salesforce.com.

They point out that their current framework has several problems, including bloating the block chain with sold data and leaving the data open to free-riding because it's publicly viewable on the block chain.

Still, they remain optimistic about the chances for a "world-wide data market", concluding:

"We expect it is only a matter of time until machines not only exchange data but also money. This opens up a whole new dimension for ubiquitous computing."

Bosch, an engineering and electronics conglomerate headquartered in Stuttgart, Germany, is not the only corporation looking at bitcoin and the Internet of Things. Technology giant IBM revealed last month that it too is developing an open-source platform called Adept that will use block chain technology.

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