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A joint report from Deloitte and RIDDLE&CODE outlines that Blockchain technology appears today as the most suitable and efficient way to generate, monitor and exchange digital twins in a fast growing billion-dollar industry 


Digital Future: Blockchain brings digital twins for the Internet of Things to life.

How Blockchain technologies facilitate the application of digital twins in IoT

This Point of View focuses on how the Internet of Things, particularly digital twins, can be combined with Blockchain and its distributed ledger technology, which provides the required security and transparency to serve as a commonly shared platform. Currently, most information generated within the IoT ecosystem is stored in fragmented data silos. This fragmentation needs to be abolished and replaced by an integrated ledger technology, like the Blockchain, in order to truly leverage the benefits provided by digital twins. Therefore, a newly introduced framework model, the Blockchain-User Interaction Model, is used to demonstrate the requirements and benefits of, and relationships among, stakeholders. Illustrated use cases further support how digital twins benefit from connecting Blockchain technology with crypto hardware.

The Blockchain User Interaction Model – an Introduction

The expected potential of digital twins today is limited by an extremely fragmented IoT ecosystem. A universally adopted distributed ledger platform could help overcome this fragmentation. Blockchains constitute a multi-sided platform, which serves as a transaction platform for a diverse set of parties (data providers & data users), creating transparency and "injecting trust" in the systems and their participants. Blockchain technology resolves one crucial obstacle: interacting only fragmented IoT ecosystems.

The illustration below, highlights how ecosystems and sub-ecosystems build upon a mutually used distributed ledger platform. It illustrates how the Blockchain-User Interaction Model unites core components of IoT with Blockchain technology.

Within the application level, a variety of IT components from various ecosystems deliver data related to physical objects and / or real processes and feed their respective digital twins through use case specific APIs.

However, users from Ecosystem #1 are not limited to interacting only with their original ecosystem. By using a compatible protocol and sharing a distributed ledger platform, users may access all connected applications. This is possible due to Blockchain technology, which allows digital twins to be “tokenized” and equipped with smart contracts. Interested parties, such as Big Data companies, may access this data and feed it into new, potentially real-time, business models. Using tokens and smart contracts allows different users to decide on individual parameters in terms of pricing, usage or further distribution rights.
Only a user-friendly and efficient platform with an adequate infrastructure provides the necessary convenience and incentive to attract multi-stakeholder interactions. Blockchain is the backbone of such a system. It functions without the need for intermediaries due its peer-to-peer and smart contract capabilities. Further, trust among stakeholders is not a requirement because Blockchain technology offers encryption features and complete traceability of every block.

The Blockchain-User Interaction Model introduces the four major stakeholders, users, regulatory authorities, and technology and infrastructure companies. The foundation of the model is the mutually used platform, populated by users with digital twins, which are accessed for further processing of information. Regulatory and social requirements lay the groundwork for rules on how this platform and ecosystem are to be used. In particular, how smart contracts are enforced or settled if doubts arise and litigations follow can only be solved by involving regulatory authorities. The exchange of data and value using digital twins requires commonly accepted standards, set by globally acting companies, esteemed as authorities in the domain of global protocols.

These standards need to be developed in harmony with users, regulatory authorities and infrastructure providers. The latter are also tasked with providing the necessary bandwidth to meet the increase in user demand for data transmissions within and across ecosystems. By adding Blockchain hardware, such as a microchip, it can be guaranteed that digital twins are created in the chip’s secure environment and are stored with cryptographic security. This is necessary in order for multiple parties with non-aligned interests to interact based on the common belief that the data stored in the commonly used Blockchain repository can be trusted. Smart contract-based obligations, e.g. transactions of data and / or physical assets, can therefore be settled due to mutual trust in the Blockchain.


Blockchain-User Interaction Model

Blockchain-User Interaction Model

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