Evrythng Blockchain Iot

White paper
BLOCKCHAINS FOR THE IOT:

BEYOND THE HYPE
Activate the things that move your business
London . New York . San Francisco
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Blockchains for the IoT: Beyond the Hype
Executive The answer is blockchain. What is the question?

Summary Much has been written about blockchain and how it will be a ‘game-changer’ for the
Internet of Things, addressing the challenges around security, scale and resilience as
more and more things get connected.
But how much is hype and how much is reality? And how will these two technologies
work together?
IoT is much more than driverless cars, industrial M2M or smart home appliances.
Everyday products, such as clothing or consumer packaged goods (CPG), are also
getting connected to the Web too. These non-powered items have no powerful
embedded electronics and gain their intelligence through on-pack tags, labels or
sensors which generate data throughout their lifecycle, as they move along the supply
chain, from factory to retail and then into consumer homes. Over 3 trillion of these
consumer products are manufactured every year and once they are ‘switched on’, the
impact will be seismic.
But what role will blockchain play in this transformation? With a focus on the Apparel
and CPG markets, the EVRYTHNG Innovation team has
been working with blockchain technology in our labs to
3 trillion consumer products see how it might enhance or complement different IoT use
manufactured every year cases.
The white paper is for enterprise business leaders who are

tasked with understanding the impact and potential convergence of IoT and blockchain,
and how this should shape their digital transformation strategies. It will cut through
the hype to understand the real-world commercial value, and will show how companies
can deploy a simple Proof of Concept (PoC) to evaluate blockchain and IoT working
together.

2
Blockchains Definition
A blockchain is a distributed digital ledger technology - at the heart of systems
overview like Bitcoin and Ethereum - where transactions are recorded and stored on many
computers across a peer-to-peer network without the need for a centralized third
party. Every transaction is verified and secured by all participants in the blockchain
using cryptography and only validated by a consensus. (See figure 1.) This data trail
is immutable and will be stored in the blockchain, unchanged, for as long as the
blockchain exists.
1 A wants to send 3 The block is 5 The block is then added to

money to B broadcast to every the chain, providing an
party in the network immutable and transparent
of all transactions
consensus stage

? ?
A B
? ?
?
2 The transaction is 4 Parties in the 6 The money is

represented network approve the transferred
digitally as a ‘block’ transaction as 'valid' from A to B
Architecture
Blockchains represent an evolution from centralized to decentralized systems where
there is no master computer. Rather all participating ‘nodes’ have an immutable copy of
the chain, which is updated and verified through consensus of the parties involved.
Figure 1: How a blockchain works

3
Transactions in a number of centralized databases, via trusted services
Manufacturer Centralized Centralized

Client ERP Brand Platform
(Supply) (Brand owned) Brand
Client
Transporter Application Application
Client & Services & Services
Consumer
Client App
Retailer
Client Transactions Database Transactions Database
Transactions via a decentralized, secure distributed ledger
Brand Consumer Manufacturer Transporter Retailer

Client Client App Client Client Client
Node / Miner Node / Miner Node / Miner
Blockchain (distributed)
Node/ Node/ Node/ Node/ Node/ Node/ Node/ Node/
Miner Miner Miner Miner Miner Miner Miner Miner
Types of blockchain
Public Blockchain Private Blockchain

A fully decentralized, distributed system These are systems often dedicated
that anyone in the world can read, send to a single organization, or group of
transactions to and expect to see them companies, where access permissions
included if they are valid. Any party can are more tightly controlled and restricted
participate in the consensus process – to a few users to ensure greater privacy
the process for determining what blocks and governance. These blockchains
get added to the chain and what the are built from scratch or based on open
current state is. source implementation of blockchain
principles such as HyperLedger.
Good illustrations of a public blockchain
implementation are Bitcoin, the digital
currency, and Ethereum which uses the
concept of smart contracts.
Figure 2: A comparison of architectures

4
The missing piece of the jigsaw?

According to Cisco1 99% of things in the world will become connected and part of a
network. But this vision of full interconnectivity between things, people, applications and
infrastructure across industries is not yet a mainstream reality.
Perceived security vulnerabilities, fragmented ecosystems, inconsistent interoperability

standards, lack of scalable computing infrastructure and limitations in network access are
all thorny challenges that need to be overcome.
Blockchain has indisputable potential to help, but such IoT obstacles cut across many
different areas, including operational, economic and even regulatory, and so cannot be
overcome by technology alone. Moreover, there are still many concerns with blockchain
itself which are holding back wider adoption, including:
1. Immaturity: Blockchains will undergo significant change over the coming months
and years, with new distributed ledger alternatives surfacing regularly.
2. Scalability: Executing peer-to-peer transactions with shared consensus is not

particularly efficient and involves significant latency, cost and energy consumption.
Cost effective models needs to be found.
3. Security and privacy: Clear policies are needed for how data is stored and
accessible on the shared ledger in a secure and permissioned way, that suits both
enterprises and consumers.
4. Transparency and governance: Clarity around legal compliance and the

operationalization of blockchain technology is needed before it can be embraced
by major enterprises.
5. The centralization question: There is likely to be continued disagreement about

the true value and role of emerging public, private and community blockchain
models.
1
http://www.cioinsight.com/it-management/innovation/the-internet-of-things-gets-real.html

5
How When should you use blockchain?

blockchains The distributed ledger approach is suited to some specific real-world scenarios:
financial transactions, smart insurances, drug or medical compliance and even diamond
work with authenticity are all areas where blockchain-based solutions have already been deployed.
the Internet
Ledger Litmus Test
of Things
But, with the above concerns in mind, EVRYTHNG recommend a simple assessment - our
Ledger Litmus Test - to see if blockchain is merited for your specific IoT use case. Answering
yes to each of these 3 criteria is a strong indication that blockchain is worth exploring.
Fix Distrust Multi-Party Transactions Decentralize & Distribute
Is there a legal framework Can your transactions wait Do devices or entities need to
(contract) around the transactions (order of minutes) for consensus communicate independently
that needs to be respected? to be reached? with each other?
Does processing capability need

Is there an inherent lack of trust Is there a need for more
to be spread across multiple
between parties, absence of than a few parties to record
nodes or locations for
transparency or risk of fraud? transactions?
performance or scale?
NO YES
Consider Consider
Centralized Blockchain
Solution Solution
Figure 3: Ledger Litmus Test.

6
Evaluating 4 potential use cases

Let us apply the Ledger Litmus Test to assess whether blockchain is warranted for some
common use cases where IoT currently plays a role.
1. Supply Chain Traceability

Thanks to the IoT, supply chains are experiencing a revolution. This has been enabled by
the digitization and serialization of product packaging, including RFID, steganography
and barcode technologies, combined with massive-scale IoT data management platforms
which are able to collate the data generated. Item-level traceability has become a reality,
making supply chains more transparent and efficient. But is blockchain needed?
Criteria: Fix Distrust MET: PARTIALLY

A detailed time- and location-based chain of custody across the supply chain for any
product brings transparency and value. For example, manufacturers can manage
3PL partners more effectively, and retailers can have certainty on the quality of the
product being delivered to them. But blockchain is not the sole way to bring this
transparency, and there are data management platforms today which aggregate
disparate data from ERP systems, and share this securely with various actors in the
ecosystem. Moreover, full transparency is not always desired by all parties, as it can
weaken commercial leverage when agreeing contracts.
Criteria: Multi-Party Transactions MET: PARTIALLY

Most supply chain are by definition highly distributed, with several actors, including
suppliers, 3PL partners and retailers needing to validate and participate in
transactions. Delays to reach consensus are usually acceptable in supply chains,
but in some cases this might be problematic (e.g. when real-time programmatic
decisions are taken on manufacturing conveyer belts).
Criteria: Decentralized & Distributed MET: PARTIALLY

Decentralization often achieves better resilience but well architected, high-
availability centralized platforms often provide sufficient resilience for most
common use cases today.

7
2. Product Provenance
There is a growing demand for apparel and CPG firms to provide consumers with details
about a unique item’s provenance, the raw materials used, and where it was farmed,
sourced or manufactured. In effect providing visibility back into the supply chains to
consumers at point of sale or post-purchase. As an example, EVRYTHNG is collaborating
with the Sustainable Apparel Coalition (SAC) and its members in the apparel industry
to provide a breakthrough program providing consumers with sustainability information
about clothes and footwear products to help inform purchase decisions.
Does the Litmus Test indicate that blockchain technology is also required?
Criteria: Fix Distrust MET: FULLY

Consumer distrust of brands has become an issue over recent years. If shoppers
are to fully believe product labels that claim the item is organic, fairtrade or made
without GMO ingredients, for example, it can be argued that an independent stamp
of approval or immutable history is needed. This is highlighted by a Mintel survey in
2015 found that “more than half of Americans now think brands are using the terms
‘organic’ and ‘artisanal’ as an excuse to increase prices.”
Criteria: Multi-Party Transactions MET: FULLY

As with Traceability, product provenance data comes from multiple parties that need
to work together to provide a full picture of the product origins. And in most cases,
delays incurred by the time needed to reach consensus are acceptable in product
provenance use cases.
Criteria: Decentralized & Distributed MET: NOT MET

There is no absolute need for provenance data to be decentralized. Data could be
aggregated in a centralized system.

8
3. Compliance
Compliance is one of the most compelling and convincing use cases for blockchain
technology. Brands having to comply with an increasing number of regulations which
means transparency of a product’s provenance, its transportation journey and its condition
is vital. Product location and temperature information from on pack sensors can be
automatically recorded as a product moves among multiple parties to its destination. Avery
Dennison’s TT Sensor Plus ™ is an example of such smart packaging technology.
Criteria: Fix Distrust MET: FULLY

As an example, the EU law GDP2013/C343/0 states that a deviation of temperature
within the supply chain of a drug should be reported to the distributor and recipient.
What is considered in the interest of the consumer (product quality) may be to the
detriment of the transporter or producer in additional costs or penalties. Having this
data added to a blockchain with a public ledger provides 100% transparency and
enables parties to demonstrate whether contractual commitments have been met.
Several start-up companies have based their compliance solutions on blockchains
such as Ethereum for this.
Criteria: Multi-Party Transactions MET: FULLY
Compliance use cases require multiple parties to collaborate within the law or
contract. Transactions can usually wait to be confirmed and do not need to be
instantaneous.
Criteria: Decentralized & Distributed MET: FULLY

Having a decentralized system for gathering data and making this available to any
member of the ecosystem is important and helps with resilience, compliance and
auditing.

9
4. Product Authenticity
The OECD estimates that 2.5% of global trade is lost to counterfeit each year, and in the
apparel industry alone, fake goods are worth $1.8 trillion. The manifold impacts of lost
revenues, risks to consumer health and brand reputation mean it is a critical business
problem for brands to address.
Criteria: Fix Distrust MET: PARTIALLY

Global distrust does not exist in the same way as other examples, as consumers will
trust the CPG or Apparel brand’s ‘authentic’ stamp of approval, knowing it is in the
brand’s interest to fight counterfeit and prove authenticity. However there are some
specific use cases, such as the secondary (resell) markets or the diamond industry,
where sellers can gain financially from selling fake goods, and in these instances, an
immutable product history would eliminate fraud and distrust.
Criteria: Multi-Party Transactions MET: PARTIALLY

Providing proof of a unique item’s authenticity to consumers or the manufacturer’s
brand protection officers requires a combination of technologies. First, an on-pack
digital identification code, either visible or invisible. Second is an app for scanning
the product and third, a product identity management system to validate whether
or not the product is genuine, operated by the brand owner. However, information
from multiple parties (along the supply chain and in retail) helps reinforce product
authenticity data especially in cases when the on-pack digital identification trigger
could be forged.
Criteria: Decentralized & Distributed MET: NOT MET

Brands usually own product authenticity systems and well-architected, high-
availability centralized platforms are resilient enough for most cases.

10
Blockchains To trust the data we first need to get the data

It is not so much that consumers do not trust the data they get today from brands
are just part about what is in the products they purchase or how they were made, but more that this
of the picture traceability data is largely not provided. Brands first need to fill this visibility vacuum by
providing clear real-time information on the product’s they’re buying or consuming.
To do this brands must instrument their supply chain operations with IoT technology. This
enables them to capture information through the product lifecycle and make this easily
accessible to consumers. Only when such transparency has become ‘the norm’, will the
immutability, or trust in this data, be the next challenge to tackle. At that point, expect to
see blockchains become of some competitive differentiation.
Physical things first need digitizing

Consumer goods companies could Blockchains are not IoT solutions in their own
right. For physical products to exist and interact
take a step toward this goal by
in the digital world, enterprises first need a
using serialization to provide a solution to digitize these physical assets.
platform for gathering data at
Companies who embark on discrete blockchain
different nodes in the supply chain.2 projects without a wider digital transformation
strategy risk being left with orphan solutions.
Gartner, 2017
This is akin to erecting street signs before the
roads have been built.
2
“Blockchain Will Drive Digital Branding in Consumer Goods Manufacturing”

11
Solutions need more than just a distributed ledger

Enterprises deploying solutions need more than just a distributed ledger. A registry of
transactions such as a blockchain is only one component of a successful IoT deployment.
Digital Identity Management Transactional Database

A system to manage billions of identities Database storage and querying for huge
and profiles for every physical thing. and ever growing number of transactions.
Smart Packaging Enterprise Integrations

Passive physical products require Off-the-shelf connectors and open APIs
on-pack digital triggers which can enable simple integration with various 3rd
be scanned by smartphones or readers. party systems such as ERP, CRM or BI platforms.
Permissions
Customized Analytics
To make this data available to applications
and users requires a fine-grained Intuitive web interfaces and custom
authentication and authorization system. visualizations for data analytics.
Toolkits Reactions
Developer documentation, published Programmable workflows are needed
SDKs and APIs are needed to simplify to initiate rules based on real-world
app development. events or actions.
Figure 4: Solution building blocks when using IoT to connect products to the web.

12
Conclusion Don’t believe the hype

It is easy to carried away with hype. But the Ledger Litmus Test showed many common
use cases do not necessarily require blockchain solutions. Moreover, deploying private
blockchains threatens to create information silos that represent yet another form of
centralization.
The technology, despite clear and unique potential, is not ready for large scale deployment
due to the current complexity and immaturity. EVRYTHNG recommends at this time that
experiments with blockchain are best regarded as proof of concept rather than forming
the foundation for a widespread rollout. It should be considered as a complementary layer
which can add value in certain cases, such as compliance or when a brand decides to offer
100% transparency.
EVRYTHNG: an IoT platform that works with blockchains

Numerous global companies use EVRYTHNG’s IoT platform for exactly the kind of
traceability, provenance and authenticity use cases described in this paper. Although
blockchains are not required, we have built an optional integration with our platform to
ensure our customers have a fully future-proofed IoT solution.
EVRYTHNG is a centralized client-server solution, albeit deployed on a completely

distributed cloud platform architecture. The platform securely manages today over half a
billion unique digital identities for diverse physical items from soda cans and jackets to
plugs and light bulbs. EVRYTHNG is predicated on a model where the brand ultimately
owns the product identities and the data about them, and can securely invite other
companies (e.g. in a supply chain) to collaborate on this data.
Every product identity is encrypted at rest and in motion, referenced using a

cryptographically secure identifier via an authenticated and authorized API, and can be
audited via a list of data access and changes. In other words, this gives auditability and
high-availability wrapped up by robust, mature security policies.
Our data model, based on the W3C Web Thing specification, holds a unique identity -
known as an Active Digital Identity™ - for each physical object and captures all changes to
those objects.

13
There is a clear parallel here with how blockchain transactions work. Such a similarity has
enabled EVRYTHNG to develop a composite solution which utilizes both technologies and
provides:
1. A proven, auditable and latency-free IoT solution with enterprise-ready tools, built
upon future-proof web standards, to provide traceability, provenance and digital
trust information.
2. 100% data immutability where transactions are simultaneously written to a public

blockchain.
Active Digital Identity
Web Identity
Crytosecure ID Shortcode URL
Identifiers
EAN EPC SAP ID Data Matrix Blockchain Hashes
Locations Actions
Manufactured Purchased Blockchain Transaction
Scanned In/Out Registered <any action>
Custom Fields static data Properties dynamic data

Size Colour Ingredients Origin Availability Status Amps Lux
Version Weight Model <any data> Temperature Humidity Price Temporal Data
Programmability
Reactor URL Redirector <any rule> Blockchain Smart Contracts
Analytics
Streaming Analytics Custom Dashboards Data Visualizations
Figure 5: A product profile in the EVRYTHNG platform holds a 360 degree dynamic view
of a physical object and now includes blockchain data.

14
One identity to bind them

As the number of public and private blockchain environments multiply, data
fragmentation will increase. There will be a growing need for an ‘identity and data bridge’
or a platform to federate between blockchain ecosystems. EVRYTHNG’s composite
solution enables world-wide, unique Active Digital Identities ™ generated via our IoT
platform to be used to record transactions across several blockchains, throughout the
product lifecycle. We believe this federation between blockchains will be vital in the
future as it opens up the benefits of different blockchain-based solutions rather than
having to bet on a single (potentially immature) blockchain platform. As an example,
a brand wanting to take part in a provenance trust mark program can leverage the
innovative Provenance blockchain solution directly from EVRYTHNG by pushing the
relevant data to Provenance (built on top of the Ethereum blockchain).
IoT SaaS Platform
Born Digital Sourcing Manufacture Distribution Retail Consume Operate Recycle Rsponsibly
Disposed
Binding EVRYTHNG to blockchains - how it works

EVRYTHNG effectively puts an API over a blockchain transaction, creating a blockchain
copy or backup, executed by thousands of computers around the world in a truly
decentralized and immutable way. All actions, events and interactions performed
within the EVRYTHNG platform are written to the blockchain.
Figure 6: EVRYTHNG manages data throughout the product lifecycle and can federate between
companies providing specific services based on private and public blockchains.

15
Appendix: EVRYTHNG is running proof of concepts (POC’s) to enable our customers to test and
evaluate both technologies working in tandem. A PoC involves 4 key steps:
POC
Integration 1 2 3 4
steps
1. Create Thngs in the EVRYTHNG platform. A Thng is a unique physical item.
2. Define the Actions (e.g. types of transactions) that will be executed with
those physical products in the real-world. As an example, moving a pair
(or pallet) of shoes from distribution to a store is an Action on the uniquely
identified pair of shoes (Thng), performed by the distributor (source)
designated to an actual pair of shoes (destination). In this case, Actions
relate to moments in the supply chain: ‘Arrive at Distribution Center’,
‘Scanned at retailer,’ etc.
3. Thanks to EVRYTHNG’s Reactor™ rules engine, we can ‘certify’ this

transaction via a blockchain. Using a reactor script, which creates a secure
hash of an EVRYTHNG Action and pushes this as a transaction in the Bitcoin
or Ethereum blockchains or in a private blockchain. This ensures the Action
can be validated without its content being publicly revealed. After a number
of minutes, the transaction is accepted by the blockchain system and
validated by a number of blockchain participants before being permanently
added to the blockchain. A blockchain bridge service running on the
EVRYTHNG side captures this event and creates a new Action containing
the reference to the blockchain transaction. The Action is now certified by
the blockchain, it can be audited by anyone and any malicious modification
could easily be spotted (the Action hash would become different from what
was recorded on the blockchain).
4. Products are scanned or interacted with in real-world and events are

simultaneously written to EVRYTHNG against the Thng, and the blockchain.
With this service, trust is instantly established if the hashes are identical on both, and
you get a searchable, analytics-ready series of blockchain transactions for your physical
products as they move through their product lifecycle. Brands can collect and immutably
store data on every action or interaction with their physical products as they make their
journey through the supply chain and into the consumers’ hands. This could be used for
instance to push data to a novel blockchain-based solution with the aim of re-establishing
trust in product provenance, global supply chain applications or for compliance issues.
If you would like to participate in a PoC, please email us at

[email protected] or tweet @EVRYTHNG using #proj-iot-blockchain.

16

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White paper

BLOCKCHAINS FOR THE IOT:

Executive The answer is blockchain. What is the question?

The white paper is for enterprise business leaders who are

Activate the things that move your business

1 A wants to send 3 The block is 5 The block is then added to

2 The transaction is 4 Parties in the 6 The money is

Figure 1: How a blockchain works

Activate the things that move your business

Transactions in a number of centralized databases, via trusted services

Manufacturer Centralized Centralized

Transactions via a decentralized, secure distributed ledger

Brand Consumer Manufacturer Transporter Retailer

Public Blockchain Private Blockchain

Figure 2: A comparison of architectures

Activate the things that move your business

The missing piece of the jigsaw?

Perceived security vulnerabilities, fragmented ecosystems, inconsistent interoperability

2. Scalability: Executing peer-to-peer transactions with shared consensus is not

4. Transparency and governance: Clarity around legal compliance and the

5. The centralization question: There is likely to be continued disagreement about

Activate the things that move your business

How When should you use blockchain?

Fix Distrust Multi-Party Transactions Decentralize & Distribute

Does processing capability need

Figure 3: Ledger Litmus Test.

Activate the things that move your business

Evaluating 4 potential use cases

1. Supply Chain Traceability

Criteria: Fix Distrust MET: PARTIALLY

Criteria: Multi-Party Transactions MET: PARTIALLY

Criteria: Decentralized & Distributed MET: PARTIALLY

Activate the things that move your business

Criteria: Fix Distrust MET: FULLY

Criteria: Multi-Party Transactions MET: FULLY

Criteria: Decentralized & Distributed MET: NOT MET

Activate the things that move your business

Criteria: Fix Distrust MET: FULLY

Criteria: Multi-Party Transactions MET: FULLY

Criteria: Decentralized & Distributed MET: FULLY

Activate the things that move your business

Criteria: Fix Distrust MET: PARTIALLY

Criteria: Multi-Party Transactions MET: PARTIALLY

Criteria: Decentralized & Distributed MET: NOT MET

Activate the things that move your business

Blockchains To trust the data we first need to get the data

Physical things first need digitizing

Activate the things that move your business

Solutions need more than just a distributed ledger

Digital Identity Management Transactional Database

Smart Packaging Enterprise Integrations

Activate the things that move your business

Conclusion Don’t believe the hype

EVRYTHNG: an IoT platform that works with blockchains

EVRYTHNG is a centralized client-server solution, albeit deployed on a completely

Every product identity is encrypted at rest and in motion, referenced using a

Activate the things that move your business

2. 100% data immutability where transactions are simultaneously written to a public

Scanned In/Out Registered <any action>

Custom Fields static data Properties dynamic data