As fascinating as Industry 4.0 has already been, it has yet to be fully defined. In order to understand this Fourth Industrial Revolution and the role blockchain can play in it, we must first take a look at what the first three industrial revolutions brought into the manufacturing world because, as we'll see, the revolutions all brought about their own innovations which built upon each other.
The First Industrial Revolution (lasting from 1760 to about 1840) was focused on mechanization, steam power, and waterpower. The Second Industrial Revolution (1870-1914) brought advancements in production, electricity, and technology like telegraphs. Next, the Third Industrial Revolution (beginning in the 1990s and is considered to be ongoing) is the introduction of the Internet of Things (IoT), electronic and IT systems, and automation.
This brings us to the Fourth Industrial Revolution (or Industry 4.0)—which represents the first time two revolutions are happening concurrently. This revolution is focused on what happens in the cyber physical systems. It is the beautiful collision of digital, biological, and physical innovations that will drive this revolution.
The Internet of Things is a system of interrelated, internet-connected objects that are able to collect and transfer data without human intervention.
So, what role will blockchain play in this revolution? Let's talk about it.
Industry 4.0 strives for greater amounts and more robust use of automation in our everyday lives. Smart contracts, for example, are the building blocks of decentralized applications (DApps). They can be used to perform a variety of tasks, including enabling access to off-chain data and triggering the execution of the contract when conditions are met. When they interact with real world data, smart contracts significantly reduce the need for human intervention. One real-world application for this would be a smart contract with access to an airport's flight schedule and the time, which could be used to used to settle an insurance claim related to a flight delay.
What about the interaction between blockchain and the internet of things? Well, blockchain can help grow the IoT while also providing much-needed security. Data collected by IoT sensors can be transmitted through blockchain's tamper-proof ledger. The use of encryption algorithms ensure that information remains secure, while the decentralized nature of a network eliminates single points of failure. Blockchains are already being used for asset tracking: by tying the IoT to blockchain, manufacturers will be able to streamline how they aggregate, store, and share data with their partners in the supply chain.
How can blockchains accelerate growth of other emergent technologies like data analytics and AI? The idle computing power of personal computers can be connected through technology and used to process great amounts of data. The signature decentralization of blockchain networks is much more secure than a centralized structure when it comes to a field as sensitive as human-machine interaction, and the level of data security blockchain offers is another advantage.
Though it is not yet considered a predominant technology for Industry 4.0, blockchain will doubtlessly bring value wherever there is a need for various participants within a business network to transact, exchange, and share data while maintaining a trustworthy environment. Blockchain can be used across the whole manufacturing industry to address many types of projects and shareholders—it's value to manufacturers is promising and encouraging as the Fourth Industrial Revolution continues.