Use Cases for Internet of Things or IoT on Blockchain: Analysis of Three Prototypes

In the previous article we covered a high level overview of blockchain and IoT taken together. In this post, we will take a closer look at three use cases for IoT on the blockchain, through different prototype implementations from three different technology companies.

Two in the list are start-ups Slock.it and Filament while one offering is from technology giant IBM.

An interesting fact is that they all have Samsung in the mix; either as partner or as investor.

Use Case: Fully Autonomous Rentals with Slock.it’s Ethereum Computer

Technology Stack: Ethereum, Ubuntu, Wireless Protocols, Swarm/IPFS for storage

Partners: Samsung, Canonical, RWE, Microsoft

We have covered Slock.it’s DAO in this series, aimed at bringing into production by 2017, a solution called the Ethereum Computer that will allow autonomous rentals on the Ethereum blockchain.

Slock.it envisions a disintermediated rental or sale use case applicable to any object such as accommodation, real estate spaces, smart devices or even spare resources such as wi-fi routers or disk space. Slock.it’s proposition for the Ethereum Computer is to bring blockchain technology into every home by activating a "Universal Sharing Network".

The role of the Ethereum computer is to act as a blockchain hub for IoT enabled devices in the vicinity. A conventional smart home hub such as Samsung’s SmartThings is designed to allow different smart objects to communicate with one another and also, function as a central controller for multiple objects. Smart home hubs are not designed for billing or payments use case.

The Ethereum Computer on the other hand, allows connected devices to communicate with the blockchain and negotiate billing smart contracts. On payment of a digital token fee, the device unlocks for use.

First demonstrated at Ethereum Devcon 1 last November, the company, in partnership with Canonical and Samsung, demonstrated a working prototype of the Ethereum Computer at Mobile World Congress in 2016.

Slock.it’s implementation at MWC consisted of a full Ethereum node on Snappy Ubuntu Core, with the complete Ethereum stack of Homestead, Mist and Whisper protocol integrated with Samsung’s Artik IoT platform. The prototype operated door locks and smart lights which were activated by completing a payment transaction on Ethereum.

Other use cases that Slock.it has described are autonomous self-renting electric vehicles. Slock.it has also partnered with RWE, a German energy company for a solution using Ethereum Computer, that will allow electric vehicles to charge from smart sockets making payments via the Ethereum blockchain. Another more futuristic use case is micro-transactions, where connected vehicles can recharge at a smart traffic light, using an embedded Ethereum Computer hub and Whisper protocol for communication.

Use Case: Machine to Machine Supply Chain for Smart Home with IBM and Samsung’s ADEPT (Autonomous Decentralized Peer-to-Peer Telemetry)

Technology Stack: IBM BlueMix, Telehash, Ethereum, BitTorrent

Partners: Samsung

At CES in January 2015, IBM and Samsung unveiled a proof of concept that demonstrated a decentralized IoT framework called ADEPT, using peer to peer messaging, file sharing (such as device logs and marketing videos) and blockchain. IBM describes the outcome as “device democracy”.

In the ADEPT prototype, three smart home use cases for self-sustaining devices using these protocols were implemented.

A smart washing machine was able to negotiate smart contracts to order detergent refill, place repair service order for a fault part under warranty and also collaborate with other devices on energy usage.

Billing and payment transaction and contract terms were made via Ethereum blockchain, while TeleHash was used for device to device communication and BitTorrent to exchange files such as diagnostic logs and marketing videos.

The value proposition of device democracy is to give security and privacy back in the hands of the user through trustless, peer to peer encrypted transactions between machines with blockchain at the core.

Use Case: Decentralized Industrial IoT networks using Filament’s Distributed Sensor Transactions, or DIST

Technology Stack: Filament Tap, Bitcoin, BitTorrent, TMesh (low power mesh networking), Telehash, JOSE (JSON Object Signing And Encryption contract management protocol)

Investors: Bullpen Capital, Verizon Ventures, Crosslink Capital, Samsung Ventures, Digital Currency Group, Haystack, Working Lab Capital, and Techstars

Filament is an industrial IoT solutions provider that provides drop-in decentralized wireless and radio mesh network technology to connect devices such as low power sensors. Filament has integrated its technology with Bitcoin blockchain and Telehash messaging protocol, with BitTorrent for file sharing. Describing these combined protocols as device independence in their "Declaration of Device Independence" Filament brings data sharing and micro-transactions to industrial IoT. TeleM uses Filament’s stack to create a mesh network of distributed devices on the fly.

At O’Reilly Solid Conference held in June 2015 in San Francisco, the company demonstrated use of their solution by connecting multiple Taps sensors at different locations in the Fort Mason venue. Conference participants could access information such as noise levels and ambient temperature, to identify quiet zones, using Filament’s sensor as a service payments model.

Filament’s Taps work as trans-receivers connecting low power physical assets over short range wireless or over long range radio frequencies upto a distance of 10 miles. The Telehash protocol is used for secure encrypted communication between two endpoints.

Filament uses the Bitcoin blockchain for secure device registration and identification. In addition , Filament has also built pennyback, an over the top application on the Bitcoin blockchain that will be used for micro-transactions for exchange of value, through use cases such as billing and selling data for analytics.

What Is The Meaning Of Internet of Things (IoT) On The Blockchain (IoT+Blockchain)?

What is  "IoT+Blockchain"?

Since 2010, IoT or the Internet of Things was being talked about as the next big thing in digital disruption. Then, along came Bitcoin, a "libertarian experiment", which introduced blockchain to the larger unsuspecting world. Now blockchain technology is also talked about as the next bigger thing. 

Naturally many people have thought hard about the effect of combining IoT with blockchain that is enabling some use cases for IoT applications on the blockchain.

IoT: A Distributed Network of Pervasive Objects

The first series of posts on this blog include a three part starter guide on IoT. To summarize, IoT is a distributed network of pervasive everyday objects which have a digital computing identity and IP address. Devices share and receive information via public or private cloud. IoT applications and data are centralized.By making use of localized wireless technologies and aggregation of data, millions of devices such as sensors can be used for IoT applications from wearables to smart homes, scaling up to smart grids and smart cities. 

Security Concerns are the biggest threat to the growth of IoT

The progress of IoT is hampered by two major challenges – security threats and lack of universal standards. Security and privacy are some of the biggest concerns with consumer data located on a centralized infrastructure.  Hacking or malicious attacks on embedded devices makes the possibility of large scale man made catastrophic attacks a possibility. 

Blockchain: A Decentralized, Disintermediated, Trustless Ledger

The blockchain on the other hand is a decentralized database and exists as many instances of the same version in a peer to peer network over the Internet. The best known blockchains Bitcoin and Ethereum are both public and use cryptography to authenticate and authorize transactions. 

Transactions are confirmed based on a consensus method which adds new blocks which are accepted by all participating nodes. Using the blockchain, trustless peer to peer transactions are possible without the need for a trusted third party which removes the dependency on a central provider or intermediary. 

The (public) blockchain is not only decentralized but it also enables disintermediation. 

Further as the blockchain grows as well as the peer to peer network, security issues such as hacking or malicious attacks to get control over the network reduce exponentially. The Bitcoin blockchain has never been hacked in seven years of operation. 

Blockchain Technology Needs to Improve Transaction Scalability by Several Orders of Magnitude

Blockchain security comes at the cost of transaction throughput. New transactions can be included at block confirmation times which in case of Ethereum is twelve seconds. Lowering the time for consensus can result, among other things, in many side chains, compromising the security of the blockchain. 

Use Cases

By combining smart devices (location/context aware) with the decentralized, disintermediated blockchain, a next level of smart contracts is possible which can enable machine to machine interaction, moreover in a secure model. 

Payments or exchange of value are the most critical smart contracts in the real world. Using IoT application on a blockchain can enable a smart contract that uses a payments use case to control a smart device or vice versa. IBM and Samsung’s proof of concept ADEPT, based on IoT and blockchain technology, had a washing machine make a detergent refill order transaction on the Ethereum blockchain. Slock.it on the other hand, have invented the smart lock which opens doors based on rental payment confirmation on Ethereum.

Another variation of the payments use case is to control access to smart vehicle based on owner identity (see our article on provenance). If the vehicle is rented or leased, access will be provided as per terms of the contract which can include time, add-on features and revert control on contract expiry.

The Roadmap for IoT on the Blockchain

IoT applications on the blockchain is relevant to some use cases, although the combined stack will not make sense in every situation. 

The blockchain addresses the security issue. One solution to scalability is private blockchains, which bring in the centralized authority (such as the Ripple Consensus Ledger which moves cross currency transactions in 5 seconds). Trusted intermediary is not a showstopper in many consumer and contract use cases (e.g. buying insurance on a rental). Another option is to bring in the peer to peer blockchain within the participating devices or local blockchain hubs such as the Ethereum Computer from Slock.it.

The eventual architecture is likely to be a hybrid of cloud based device management and peer to peer  smart contracts on the blockchain. 

Slock.it and The DAO

Slock.it's "The DAO" which is in the process of creation through a token stake presale for investors , can launch a new trustless sharing economy powered by digital locks operated through smart contracts on the blockchain. Image Source: Wikimedia Commons, Willh26 (Own Work), CC-BY SA4.0

Introduction

We recently covered the Digix DAO and pre-sale. In this month, another highly anticipated DAO creation via token sale is in progress. “The DAO” launched by Blockchain+IoT start-up Slock.it, has gone live on the Ethereum blockchain on April 30, 2016. 

Slated to run for 28 days with no cap on token, the sale has raised over 1 million ether or $10 million. “The DAO” which is getting created is a yet to be branded Decentralized Autonomous Organization that can be thought of as a decentralized VC to fund blockchain+IoT applications on the (Ethereum) blockchain.

Slock.it

Slock.it is a German “Blockchain+IoT” solutions start-up firm formed in Germany in 2015 by some of Ethereum project team members and IoT technology evangelists, Simon Jentzsch, Christoph Jentzsch and Stephan Tual.  

Slock stands for Smart,Safe and Secure lock, a physical object with digital identity which can be operated via a smart contract on an Ethereum blockchain. Slock.it has a potentially hugely disruptive smart contracts innovation on their hands. The concept of "slocks" can revolutionize the peer to peer sharing economy that has created intermediary tech unicorns such as Uber and AirBnB. 

At the London Ethereum DevCon in November 2015, the Slock.it team demonstrated a proof of concept of a “slock”. 

The solution illustrated a disintermediated rental contract use case by wirelessly opening a digital smart lock upon executing a payment transaction on Ethereum blockchain. The solution works by assigning a digital identity to the lock, a Decentralized app or dapp on mobile that opens the lock and checks for payment on the Ethereum blockchain. We will cover the details of Slock.it’s smart lock solution and their proposed Ethereum Computer offering in another post. 

By successfully combining IoT and Ethereum blockchain stack, Slock.it proved that a decentralized and trustless sharing economy can be made possible in the digital world, applicable to everything from Uber, AirBnB to renting wi-fi routers, unused spaces all through a secure digital covenant. 

DAO Re-visited

One of Ethereum’s early successes are using the concept of DAO as a crowdfunding channel. As we saw in the Digix DAO posts, a Decentralized Autonomous Organization can be created as a smart contract on the blockchain. 

A DAO creates a virtual decentralized business entity that is governed by its owners. DAO’s are not legal entity at present, as there is no legal or regulatory framework on treatment of DAO in the physical world. Ownership in a DAO is represented through DAO specific digital tokens which are like owner equity on the blockchain. 

Tokens represent voting rights which are in proportion to the owner’s stake (in tokens).  Tokens are purchased in exchange for ether. DAO’s are formed through presale of tokens to raise ether funds which are deployed similar to capital investments and operating expenses for the DAO projects. 

Owners use the token rights to vote on project ideas, investment proposals and participate in governance decisions such as hiring or firing management and execution teams. 

Token holders can earn return on investment in two ways. They can trade their tokens in exchange for ether or other cryptocurrencies or fiat or, earn agreed returns from the DAO earnings. 

Slock.it's DAO Framework

The Digix DAO was centered around development of the Digix gold backed asset exchange platform on Ethereum. 

Slock.it’s DAO  is a framework that has taken a completely disintermediated approach. In the words of Stephen Tual, co-founder of Slock.it, a DAO is a disruptive application to crowdfunding channels such as Kickstarter. The Slock.it team donated a complete DAO framework with source code and all, that anyone can use to build a DAO model for their business. From this framework, the Slock.it team has deployed “The DAO” . 

“The DAO” Construct

“The DAO” funds and token owners will form contractual relationships with any third party service provider that have proposals and smart contract applications for blockchain+IoT use cases. Thus ,“The DAO”, in context to the current pre-sale will work as a blockchain+IoT start-up incubator for the benefit of its members. 

Slock.it have submitted their proposal to be hired as contractor to build their blockchain+IoT offering which includes the Ethereum Computer.Another proposal is coming from a firm, Mobotiq for a solution that will enable fully autonomous self renting electric vehicles. 

In DigixDAO, the owners retained 15% ownership and the right to create their proposals. Special badge holders had the right to vet proposals. 

In “The DAO”, Slock.it has added an oversight layer to prevent a 51% malicious attack through curator roles – these are experts in their field (cryptocurrency, Ethereum, IoT technologies) who will perform the role of reviewing proposals and code and curating the contractor list for the benefit of the DAO. Curators can prevent any one actor from gaining control over all or majority of the DAO funds in interest of their proposal. Curators can also be hired or changed based on voting.

“The DAO” Creation

The Slock.it DAO is currently running from April to May 30, 2016. Under “The DAO” tokens for the DAO are available for public purchase on the Ethereum blockchain for a month’s time. 

Unlike Digix DAO, there is no cap on investment. Instead token presale costs will increase in tiered fashion. Investors in the first two weeks will receive 100 DAO tokens for 1 ether. This amount will go up linearly and eventually rise to 1.5 ether for 100 tokens in the last four days. 

Slock.it The DAO token sale progress on the website daohub.org

At the time of writing the DAO has raised, over 1.4 million ether or $13 million USD within 3 days of opening. Given the explosive potential if the technology takes off, many investors have taken an active interest in the DAO. 

Five Features of Smart Contracts on a Blockchain

 Bitcoin versus other Blockchain Projects

Towards the end of April, as bitcoins crossed the $450 mark, news articles started appearing focusing on Bitcoin’s seeming resilience despite all the negativity and the price of bitcoin having doubled from last year. 

 .

Despite so many initiatives coming up that claim to eventually sideline or displace Bitcoin altogether, that gloomy prognosis is still at least five years away. 

What could be the reason? For one, Bitcoin is a use case which was implemented using existing technology. Only two things can take down Bitcoin. One, a better Bitcoin application or two, a 51% attack. 

On the other hand, many blockchain projects are trying to create innovative technical designs while simultaneously looking for use cases that apply. This cart before horse approach is no doubt, where the future lies for enterprise solutions. However, it is both time consuming and expensive. 

In this article, we take a step back toward the underlying premise of Bitcoin and Ethereum applications, which is smart contracts, an idea which has its roots from some of earliest proponents of digital cash and Bit Gold such as Nick Szabo.

Cryptocurrency followers are familiar with the notion of smart contracts as explained through Nick Sbazo’s website, Satoshi Nakamoto’s white paper, articles on the Bitcoin wiki, as well as through Ethereum architecture. 

Long story short, a good blockchain use case should implement smart contracts. Otherwise you are better off with a highly redundant database locked away in a vault. 

What is a smart contract? These are the five features that one can consider as characteristics of a smart contract.

Note: In order to describe the concept, this article has taken several liberties with the definitions. Many terms are not strictly true to the dictionary definitions, but used in a more generic context without losing the meaning. 

1. Smart Contracts enable Peer to Peer Agreements

Contracts are made between two or more parties, who are both beneficiaries of the agreement. When two parties, or peers in this case, who are otherwise unknown to one another, enter into a contract, a third party enforces trust, dispute remediation or even intermediary services. 

For example, Uber, AirBnB or other sharing economy applications allow people to use services in a peer to peer model opening a vast supply of resources than conventional taxi or hotel industry can provide. Uber or AirBnB act as the trusted third party and also provide the platform to connect suppliers and consumers. A contract between two parties is made using the platform and payments are made to the service provider who charge the supplier. Thus Uber can drive pricing and control who can use the system.

In Satoshi Nakamoto’s introduction to Bitcoin on the P2P forum, the creator of Bitcoin has pointed out the disadvantage of a third party aka central authority. Centralized systems can shut down or be shut down leaving consumers and suppliers high and dry, many times causing them some loss as well. 

If Uber fails, consumers have to look for another platform provider. 

A smart contract uses the blockchain to allow two parties to make a contract automatically. Instead of using a third party to determine the pricing and participants for all, two parties can directly set-up and execute a contract with mutually agreed rules. 

For example, Alice and Bob who are unknown to one another can enter into a transaction for a precious asset say a diamond. Alice who owns the diamond can sell the diamond to a highest bidder, Bob in this case. Alice receives payment only when she delivers the diamond to Bob. If Bob does not receive the diamond after a specified interval of time, he receives an automatic refund. 

2. Smart Contracts Secure Rightful Ownership through Cryptography Technology Protocols

A smart contract allows two parties to define and enter into a custom contract. But a trusted third party provides one more function. It establishes who the rightful parties are and this knowledge is limited to the parties of the contract and the third party. 

In a smart contract, rightful ownership is established through security protocols such as cryptographic keys. Bitcoin and other blockchain applications use public private key cryptography to assign digital signatories to a contract. The public portion of the key establishes an identity and the private key is the signing authority. Public keys designate who the parties are and signing using a private key executes or enforces a contract. 

Trust is not limited to the ownership but also extends to the asset or contract object(ive). A smart contract can use cryptography protocols to establish unique and immutable digital identities to assets. 

For example, when Bob buys a diamond from Alice, he sends her digital money by signing the transaction with his private key. Alice has designated the diamond as an asset and she releases the asset by signing it with her private key. The money can now be transferred using Alice’s private key. In turn, the diamond’s ownership is assigned to Bob and only he can unlock it for future transactions such as a sale, a gift or heirloom. 

Three: Smart Contracts Enforce Contract Rules Automatically

A smart contract should include contract rules that can execute automatically. Most contracts involve an exchange (event) between two (or parties) subject to conditions which must be fulfilled (e.g. sufficient balance). These rules should be encoded within the contract. The objective being, of course, fulfilling the role of trust and enforcing rules more consistently, objectively and using escrow than escalation mechanisms. 

In the Alice and Bob example, there are four rules. The price at which Bob and Alice agree for the diamond. Alice should receive the money. Bob should receive the diamond. The transaction should be completed within a stipulated time. A smart contract application would enforce all these rules which would execute at a stipulated time and/or when an event such as payment receipt is triggered. 

Four: Smart Contract Transactions are Immutable

A smart contract once executed cannot be reversed through system rules, hacked or tampered with or violate agreed fulfillment rules. 

Smart contracts are immutable, in the sense that while some rules are changeable, the effects of a contract rule once executed, cannot be reversed or modified, without substantial (and meaningless) collateral damage. The blockchain makes transactions immutable to eliminate the “double spending” problem, another human problem that requires trusted third party. 

Alice can sell her diamond to Bob and then again to Carol, except that the blockchain (or a Merkle tree of transactions) will track her asset history and prevent her or another willing buyer to enter into another transaction unknown to Bob. If (and since) the blockchain is a distributed transaction ledger sitting on many different nodes or a peer to peer network,  timestamped (in real time or near real time), Alice’s transaction is buried under many other transactions and blocks. 

Five: Smart Contracts Enable Fungible Transactions

I think that the most important benefit of smart contracts is the technology allows for an immense scale of transactions from the infinitesimal to large scale. Transaction costs, market driven value and supply and demand, have always excluded micro-transactions or made customization very expensive. 

Like the sharing economy, smart contracts enable peer to peer transactions of smallest value possible. Bitcoins are fungible to 8 decimal places and can be used to make micro-payments and purchase of multi-million dollar luxury villas at the same transaction fee and speed. Smart contracts make allow pricing unit items such as blog article or Internet tipping, where a unit or contract token can break down into a million parts or more. 

Using a smart contract Alice can sell Bob a diamond, a used guitar or even rent a single room in her house, an idea that Slock.it, a smart contracts startup is pioneering on Ethereum.   

Summary

Smart contracts are the single most important use case that blockchain technology enables. Describing blockchains as a globally distributed database is looking at just one aspect. Applying smart contract features is one way to validate use cases for decentralized applications on a blockchain.

Ethereum Wallets: Featuring Mist And Other Options

As Ethereum gains traction, the demand for wallets, the means to store and transact ether, the cryptotoken for the Ethereum blockchain grows, almost on a daily basis. In this post, we profile wallets for ether.

Ethereum Wallet Uses

If you are new to the cryptocurrency world and the importance of wallets, do check this post in the Bitcoin series, explaining features and types of cryptocurrency wallets such as multi-sig, cold storage, desktop, mobile, hardware, hosted, paper wallets etc. 

Those who are familiar with Bitcoin wallets will find some similarities with the Ethereum wallet but also a slight learning curve on the user experience and concept of contracts. 

Bitcoin has a specific purpose, i.e. a digital cash payments network, wallets have a simple function, allow a user to send bitcoins from one address to another using their private keys.

Ethereum, on the other hand, is designed to run any type of smart contract application, as we covered in our post on the differences between Bitcoin and Ethereum. This means that other than storing ether, users/owners have to specify the type of contract which receives their ether, with a provision for some ether to be used as gas. 

The other question for those trading in ether is, how to move ether to and from an exchange to another cryptocurrency or fiat. There are different ways to achieve this in Ethereum.

Currently, most ether wallets come with some caveats, being in beta among one of them. Users have to verify that the wallet works with small amounts to begin with, and become familiar with the concept of gas fees which use up ether. Offline storage and backup are as important as any other crypto wallet. 

We start off the list with Mist, Ethereum’s native wallet which has established the design and terminology for ether wallets in general.

Mist 

Mist Platform

Like, Bitcoin, Ethereum also has a native support for a wallet. There are two variations geth, a command line option and Mist, a GUI desktop wallet.

Ethereum rolled out the Mist GUI wallet in beta form in October 2015, following the Frontier release. The Mist wallet has since upgraded from beta 6 to Wallet 0.7.2 (beta 16) and has ironed out several problems. A very helpful step-by-step (unofficial) guide is available on a blog by KLMoney which also sorts out some confusion between terms for wallet users.

Mist is available as a desktop download on different operating systems and installs with a full Ethereum node. 

Using Mist Wallet

Ethereum's Mist GUI desktop wallet

The wallet is used to create user (external) accounts and contract wallets. A user has to create an account to generate public address and private key and store their ether. Ethereum account is secured by the account password and the owner’s encrypted private key, both of which are required to access the ether stored in the account. 

It is critical to backup and secure the account password and keyfile generated by Mist.  

Another important requirement is to paste Ethereum’s 40 digit hexadecimal addresses rather than manually typing them – incorrect destination addresses means the ether is lost forever. The latest release of Mist uses checksum feature to flag potentially invalid addresses. 

In order to use the wallet for transactions on Ethereum, a contract wallet has to be created by the account, using some ether (or gas). A contract wallet differs from account in these respects.

One, sending or receiving ether from a contract wallet will require some gas (ether) to be spent as well. Second, contract wallets can be set-up as single owner or multi-sig wallets. Multi-sig wallets have features such as daily limits and multiple owner account keys for transactions. Multi-sig wallets can have one owner account as creator.

Mist also has some unique but useful features such as identicons which are visual icons generated for an account. 

Should one use an account or a contract wallet? 

Accounts are preferred for use cases whether ether is being traded like a currency such as between two accounts or with an exchange, as these transactions do not require gas. Note that an address will not appear on the Ethereum blockchain until there is some transaction made, i.e. gas spent.

When ether are used to execute smart contracts via decentralized apps on the blockchain, the sender is responsible for including the cost of transaction i.e. gas. Contract wallets are required for this purpose.

Exchange Integration

Mist also integrates with ShapeShift, the instant cryptocurrency converter which makes it possible to purchase ether for an account using bitcoins or other cryptocurrencies. Unlike bitcoins, crypto exchanges which trade ether do not have a hosted/online wallets for ether. Kraken and Poloniex have hosted Ethereum presale wallets that owners can import into their accounts using the Mist wallet. 

While Ethereum continues to upgrade Mist wallet with future versions including light nodes and cross platform options, third party developers are rolling out ether wallets to fill the gaps.

Client side Wallets for Ethereum

For end users who not want/need to download a full node and the familiar experience of a “bitcoin like” wallet, there a few options from other developers. Built as client side Javascript or browser extensions, these wallets allow users to transact in ether by creating the password and generating the private key. Bulk creation, import from exchanges and sending to a contract wallet are all supported. Import into Mist/geth is also supported.

Client side wallets are not web wallets or light clients, the generated wallet has to be download in JSON format to a user computer. Users are responsible storage, backup and/or maintaining a paper wallet. A QR code version is also provided in some wallets. 

Some commonly used client side wallets include MyEthereumWallet which is an open source Javascript ether wallet, Kryptokit’s Ethereum wallet and EthAddress, a paper wallet generator . 

MyEtherWallet a client side Javascript wallet generator

Ethaddress, a paper wallet generator

In February this year, Kryptokit has also recently released JAXX, a cross-platform wallet application that supports both bitcoins and ether. 

Multi-sig Web Wallet: Ether.li

Mist or other client side options still require a local computer or device for storage. Although web or hosted wallets are not the best sources for long term storage, they are a convenient option to quickly access accounts or move ether online. 

In March 2016, developers at BitGo, a Bitcoin start-up released Ether.li,  a multi-sig web wallet with SMS two-factor authentication for ether storage. Ether.li deploys a multi-sig smart contract on the Ethereum blockchain creating a 3 account wallet (ether.li being a co-signer that authorizes the user) with 2 accounts (the creator/owner’s) needed to sign off transactions. The wallet is still listed as a proof of concept, but it has the distinction of being the first web wallet for ether.

Ethereum Wallet Dapps

A number of additional options listed on the Ether Dapps list include EtherWall which is an open source wallet that works with geth, the command line wallet interface. Consensys have released IceBox, a cold storage wallet on Lightwallet, a client side Javascript wallet, also developed by them. 

Hardware Wallets: Coming in 2016

At the time of writing hardware wallets for ether are still not available in the market,  but solutions are expected later in 2016. In April, Bitcoin hardware wallet maker Ledger showcased the developer edition of Ledger Blue, their upcoming hardware wallet that can run PGP and an Ethereum wallet. Digix made an announcement in January that they were developing a hardware wallet to be called Troth. 

2016 and beyond: Future Developments on Ethereum Wallets 

Ethereum Foundation continues to work on the roadmap for the Ethereum platform. Future releases and third party solutions should see more capabilities added to wallets and application interfaces such as cross platform support, lightweight wallets,  exchanges with other crypto-tokens and added ease of use to move ether between different smart contracts.

DigixDAO: Understanding the DigixDAO platform and the first on chain crowdsale on Ethereum

"Gold is Old" but Digix Global's platforms and approach to tokenize physical gold into fungible tokens represent early innovation on the Ethereum blockchain. DigixDAO can start a virtuous cycle to accelerate a digital gold ecosystem on Ethereum.

Introduction

In our preceding article, we covered Digix Global, creators of the gold backed smart asset platform DigixCore which was launched on Ethereum in January 2016. Following the alpha release, Digix Global has now launched the DigixDAO on Ethereum. DigixDAO is a crowd sourced funding channel and rewards program for further developments of DigixCore and its ecosystem. 

In this post, we will cover the salient features of DigixDAO and participation crowdsale. Originally scheduled to run for two weeks from March 30 with to raise a maximum of $5.5 million USD in exchange for DigixDAO tokens, the crowdsale reached its target within 12 hours. The required sum was raised between 675 unique purchasers, with many others still waiting to get in. 

Ironically, in early interviews in February, Digix Global CEO and co-founder, KC Chng had modest expectations of this first DAO crowdsale on Ethereum, with a refund plan if the sale raised fewer than $500,000.

What is the Digix DAO

The DigixDAO is a smart contracts application that implements a Decentralized Autonomous Organization (DAO) on the Ethereum blockchain. 

The objective of the DAO is to get public participation to spur development of DigixCore roadmap and a collective ecosystem.

The DigixDAO membership/ownership is designated through digital tokens denoted as DGD. The DigixDAO has released an initial supply 2000,000 tokens, each token divisible upto 9 decimal places. 

The initial release of 2,000,0000 DGD tokens will be distributed between members of public (85%) and Digix Developers (15%). Token ownership give holders voting rights, in some cases in proportion to their holding. All raised funds are maintained in Ether at a public Ethereum address.

Token holders receive rewards/return on investment in the form of a share of transaction fees in DGX (0.13% capped at 1 gm) collected from asset transactions on the Digix platform. Rewards are also promised for user referrals on the DigixCore platform and ecosystem.

All token holders receive rights to pledge for projects in proportion to their holdings. Token holders can pledge their preferences around different development projects. Funds will be allocated by project to prioritize and accelerate development of Digix Core a platform ecosystem around Digix such as wallets, exchange APIs, addition of blockchain partners and so on. Additional privileges are tokenized through badges such as founder and proposer. The former can submit proposals directly or for vetting, vet and pledge proposals. The latter is not allowed to submit proposals directly.

Like the Proof of Asset certificate for gold assets on the DGX platform, a project proposal with budget and timelines is maintained on Inter Planetary File System, IPFS. Members pledge for or reject proposals and accepted proposals (with 51% majority) get approved. Approved projects are allocated funds from a multi-sig DAO wallets which holds the raised ether. 

Participant Rewards 

DGD tokens represent ownership in the DigixDAO. Tokens can be traded using an Ethereum wallet.

Token golders receive quarterly rewards in the form of DGX tokens, the gold backed token representing 1 gm of physical gold, generated on the smart asset core platform. Fees are divided by the total number of DAO tokens (2000,000) and distributed to individual holders as pro-rated reward benefits in DGX.

To recap, a DGD token holder whose funds are denominated in ETH, will receive DGX tokens on a daily basis in their wallet. The DGX token value is tagged to the value of 1 gm of physical gold and divisible upto 4 places. 

Return on Investment and Risks

DigixDAO’s rewards model once understood is quite an attractive proposition. A one time investment in ether will provide perpetual return in the form of gold backed DGX tokens in proportion to the growth of the platform. The actual return on investment is subject to many market variables such as ether price, gold prices and transaction volume.

Digix has cited eGold, the first digital gold backed currency in the early Internet ecommerce era, which rose  to a $2 billion annual transaction volume at its peak. 

In a scenario described in DigixDAO’s whitepaper, a USD 2 million DGX transaction daily volume, which nets a 10,000 DGD token holder 125.3772 DGX (or 125 gms physical gold) in the course of a year. Other scenarios and related risks have been discussed in various forums. For example, this calculation/explanation below on reddit by Digix Global’s CEO. 

How DigixDAO nets returns in DGX: A discusssion thread on reddit.

If DigixCore ecosystem takes off likewise and DGX tokens become the gold backed currency for other decentralized apps on Ethereum, token holders stand to have a potential "gold mine" on their hands.

The greatest risk where the crowdsale investment borders on speculation, is that it is a yet to be proved model on an as the emerging Ethereum platform. Other risks include any future regulation around DAO as investment/ownership vehicles and tax treatment of rewards. These risks are  not limited to DigixDAO alone and are applicable to the emerging world of cryptocurrency and blockchain applications as in the case of Bitcoin.

Digix DAO Crowdsale

After the go live of the alpha version of Digix Core in January, Digix made a formal announcement in March on the first Digix DAO Crowdsale.

The DigixDAO crowdsale public contract address and purchase transactions on the Etherium blockchain

This was the first crowdsale built and executed entirely on chain. Investors sent in Ether using their Ethereum wallets to a public contract address on Ethereum blockchain. Payments were also accepted in BTC, altcoins and fiat currency through integration using ShapeShift API. The target $5.5 million was raised within twelve hours. 

The Digix crowdsale stats are available on the DAO sale website and crowdsale transactions can be viewed on the Ethereum blockchain. 

What’s Next for DigixDAO

Post the crowdsale Digix Global have started several public communications such as this latest update and have opened a public Slack channel as well.  DGX tokens will be distributed and open for trading on April 28, 2016 on decentralized cryptocurrency exchange OpenLedger. Post distribution, token holders will be able to pledge approval for priority projects and new proposals. 

Summary

The DigixDAO’s purpose and incentive mechanism can start a virtuous cycle for creating a strong payments ecosystem on DigixCore with the same disruptive potential of Bitcoin. Even though the DAO is a yet to be tested model on an emerging platform, the business idea behind Digix Core is sound and as old as gold.

Digix: The Gold Backed Smart Asset Platform On Ethereum Blockchain

Digix, a Singapore smart assets start-up has been in the news last week regarding the DigixDAO (Distributed Autonomous Organization) crowdsale that was a smash hit, raising over $ 5.5 million USD using 200,000 ether within twelve hours of launch.

Digix has followed a structured roadmap before getting to their successful DAO crowdsale. Their value proposition is to become the first smart asset ecosystem on Ethereum by tokenizing physical assets into fungible crypto-tokens that can be managed in a decentralized trustless construct. 

Using gold as an underlying asset, Digix has launched a smart asset platform, a digital token DGX and the Digital Autonomous Organization, making use of multiple decentralized platforms such as Bitcoin, Ethereum and IPFS (Inter Planetary File System).

In this two part series, we look at Digix Global’s offerings on the blockchain.

About DigixGlobal

DigixGlobal was founded in Singapore as a self funded firm by TH Chng, former chairman / CEO of Fujitsu Asia Pte Ltd and Kc Chng a currency trader.

In January 2015, months ahead of the Ethereum blockchain going live, co-founder Kc Chng announced on the Ethereum forum that their firm was building the first smart asset company on Ethereum. 

By the third quarter of 2015, Digix had announced a partnership with Coinify to create (gold backed) cryptoassets on the Ethereum blockchain using payments made with Bitcoin.

In January this year, Digix released their gold asset smart contracts platform and on the Ethereum blockchain. Digix also released a whitepaper on the solution and public releases on benefits of trading gold using the Digix solution. On April 5, the DigixDAO was launched and Digix have been in news since releasing their roadmap and outcomes of the sale which are expected end of April.

How Digix Works

Digix has described the smart asset platform in detail on their website and whitepaper. The platform consists of digital token, provenance record and smart contract processes to record asset history from acquisition to liquidation.

Proof of Asset

Digix maintains asset provenance on the Ethereum blockchain through a Proof of Asset certificate which is a digitally signed contract records (for more on provenance, see our article on blockchain use cases). The proof of asset card which is maintained on the blockchain is a secure record chain of custody of the underlying physical gold. A proof of asset certificate is a sequential record of digital signed transactions that mark acquisition from a vendor, receipt from custodian of the physical gold and periodic independent audit verification records. Digital certificates are stored on IPFS.

Digix Tokens (DGX)

Digix tokenizes physical assets using the Ethereum blockchain The physical asset be gold or other precious commodities, real estate and so on. The first Digix application tokenizes physical gold.

Digix tokens are tagged to physical gold. Each token represents 1g of physical gold and is further divisible upto 0.001g. This reduces the price volatility of tokens a problem of other cryptocoins.

The Digix client is an Ethereum wallet. Customers can purchase DGX tokens using bitcoins, ether or other currencies via an exchange. 

Digix Smart Contracts

Digix tokens are generated on the Ethereum blockchain through Smart Minter smart contract process, whereby POA certificates are generated in exchange for DGX tokens. A recast smart contract process is used to exchange POA certificates in DGX tokens.

A token based user identification process is used to redeem DGX tokens into physical gold.

Digix also provides generic I/O contracts which are intended for third party dapps and other applications to build an ecosystem around Digix, using the DGX tokens (such as a remittance system).

Decentralization

Digix uses the blockchain to remove centralization out of the equation. Instead, using the decentralized app, users can directly purchase gold using Digix GOLD tokens using the wallet apps. Digix facilitates the chain of custody ecosystem vendors, custodians and auditors to individually sign the proof of asset but uses peer to peer file systems and the decentralized blockchain to manage assets. Digix’s proposition is that they have no influence on the user assets. They act as intermediaries with agreements held on the public blockchain.

Digix's Role

Digix is the custodian of the smart asset management platform and receive compensation in the form of fees. Transaction fees include fees Smart Minter, Recast and a storage fee, as well as liquidation into physical gold bars.

Digix has taken a strategic approach which combines regulatory compliance, transparency and safety for customers. Digix requires KYC and AML compliance. They are headquartered in Singapore, known for its stable and investor friendly economic regime especially for gold assets. Their proof of asset partners are established players in the industry. Physical gold is held in the form of London Gold Bullion Market Association bars supplied by Value Max, a Singapore bullion vendor. Bureau Veritas Inspectorate is the auditor participant. Malca-Amit which is located in Singapore is the safe custodian.

Summary

Digix has the potential to become the killer app for Ethereum and smart asset management on the blockchain, testified by the investor interest in the crowdsale. Their strategic and transparent approach and choice of Ethereum as the smart contract platform can be a major competitive advantage (compare with Xaurum, the other gold backed cryptocoin on the Bitcoin blockchain).

In the next article, the DigixDAO.

Three Social Robots Arriving in 2016: Novelty or Next Level of Home Automation?

Who will be the first to arrive? JIBO, AIDO and BUDDY are scheduled to arrive in April, October and December 2016 respectively, though JIBO has run into delays. All solutions received funding on Indiegogo and have been widely covered in mainstream media.

Introduction

Even as smart technologies proliferate making smarter homes, clothes and appliances the world is still waiting for that one intelligent killer app that takes away the management of this technology. The ideal solution on everyone’s list? A robotic butler.

Although robotics automation has gone better and smart technology become cheaper (the average smart device costs below $500), the perfect robotic butler may still be a decade away.

Meanwhile, there is something (or someone) to fill the gap. Social or personal robots as they are called, have arrived on the scene in last year with prototypes vying for funding and presales. 2016 is when many of them will come into consumer hands and homes.

We profile three of the widely anticipated social robots that were crowdfunded on Indiegogo and arriving in 2016. 

JIBO -The world's first social robot for home

JIBO, a table top social robot. Source: JIBO

First on the list is the popular JIBO, which was in news last week for yet another delay in its widely anticipated launch. 

JIBO, dubbed as the world's first social robot for home, was founded in 2014 by Dr Cynthia Breazeal, a veteran in social robotic designs. Production launched after a presales funding campaign on Indiegogo that has raised over $3.7 million and 4,800 pre-orders at $749 apiece. New orders are currently on a waitlist.  

Standing at 11 inches, JIBO’s has a cute animated face sitting atop a 6-inch base. JIBO is not mobile, but can swivel around its base in response to its 3600 sound localization sensors. JIBO’s in-built hardware includes high resolution cameras, 3D microphones and speakers for facial recognition, voice recognition, taking pictures and videos and notifications such as reminders and alerts. 

Voice assistant capabilities like Siri or Google Now are delivered through natural language processing for speech to text/speech conversion. JIBO also has artificial intelligence algorithms that progressively learn and adapt individual user preferences.

Processing capabilities are delivered through a high end mobile ARM processor. JIBO connects to the Internet using wifi and Bluetooth for communication with other mobile devices and other JIBO’s as well. 

JIBO also includes a developer SDK that includes a Visual Simulator and animation, timeline and behaviour tools to develop add on applications that will be available via a dedicated JIBO store.

JIBO technical specs as listed on their Indiegogo project

JIBO is already popular with consumers although the delayed launch this week, means JIBO will lose its first social robot tag and will have to compete with the more sophisticated alternatives that are also arriving this year.

AIDO: Interactive Personal Home Robot

AIDO, the interactive personal assistant. Source: AIDO.

Dubbed an interactive personal home robot, Aido raises the game up several notches from JIBO at roughly the same pre-order price. AIDO includes all capabilities that are bundled in JIBO and some more, making it closer to a robot butler (it actually has a mode called “butler”).

For one, while JIBO is more of a table top companion, AIDO can move. It is a three foot high ball bot with a single ball base for motion and swivel. Unlike the bouncy toy we played with as children, AIDO constantly equilibrates on its base even when stationary, with additional retractable legs to keep it in one place for longer periods.

AIDO also boasts a multimedia HD projector add on, which means it works as a portable entertainment unit cum projector screen for videos in any part of the house.

AIDO's features multimedia projection features Source: AIDO

The robot also supports ZigBee and Z-wave wireless standards which means it can communicate with and control compatible smart home appliances such as lighting systems, climate control and security. Users can program workflows via a mobile app creating a series of time sequenced instructions. 

AIDO packs in some heavy duty computing and innovative architecture to support all its capabilities. There is 3 quad core CPU and GPU processing unit. Its supports connectivity through wifi, Bluetooth, ZigBee and Z-Wave protocols, plus a Universal Infra Red remote that supports over 1000 devices. It has 4D gravity sensor, 6 microphone array, indoor object recognition, touch screen, multiple cameras and projector displays. All this makes it good value at the price offered for early birds. If it takes off, AIDO may be worthwhile at twice.  

For developers, AIDO is built on open source hybrid Andriod-Linux architecture and comes with OpenAIDO, an open platform SDK, which includes tools and libraries to build applications. 

JIBO technical specs as listed on their Indiegogo project

Also founded in 2014, AIDO’s design has already received awards wining "GameChanger" of 2016 by T3 magazine. At the time of writing AIDO’s Indiegogo campaign has raised over $370,000 in pre-orders and still has 11 days before it closes. First deliveries are planned in October 2016. If you are among those waiting to get your hands on a ball bot there is still a chance to do so.

In the optimistic world of smart tech, maybe AIDO will do everything that is promised. But even a fraction would still be a major step in the evolution of robot Jeeves cum Jarvis.

BUDDY - The Companion Robot

Rounding up this list is BUDDY from French company Blue Frog Robotics. Dubbed a social companion robot, BUDDY runs on wheels and casters and is available on pre-order price of $699 for the classic edition. Their campaign on Indiegogo raised over $600,000 from backers. Shipments are estimated in December 2016.

BUDDY’s capabilities are similar to AIDO’s. It provides the same range of capabilities from voice assistance, entertainment, smart home appliance management, multimedia projection and social interaction. BUDDY also lists two additional functions. It serves as home security unit, actively patrolling the house and sending alerts on detecting unusual situations. It also provides elder care serving medication reminders, detecting falls or unusual activity. 

It also runs on open source platforms, using Arduino and Unity 3D video gaming platform for applications.  Unlike AIDO, BUDDY supports wifi and Bluetooth connectivity only. 

Buddy Tech Specs

The future for Social Robots

Long featured in science fiction, social robots or personal robotic assistance may just become the critical accessory for home automation. 

2016 may be the entry point for many such products which are currently in the voice assistant/entertainment category. But the technology may not work completely as advertised through. The challenges with natural voice recognition technology, data security and privacy are just some of the concerns about social robots. Like this feature in IEEE Spectrum on JIBO and MIT Technology Review’s experience with Buddy  show that the first robots off the assembly line may still be lacking something.

Maybe the social robots score on cuteness but are not yet the real thing. But this is promising step in a market which is still in early stages. Another space where exciting things are in store.