Distributed Ledgers in IIoTAn Industrial Internet Consortium White Paper

2020-07-27

Distributed Ledgers in IIoT

What is a Distributed Ledger for IIoT?

CONTENTS
What is a Distributed Ledger for IIoT? ..................................................................................... 3
Permissioned vs Permissionless DLTs ...................................................................................... 4
Use Cases ................................................................................................................................ 5
Mediledger Network ....................................................................................................................... 6
Alibaba Food Traceability ................................................................................................................ 6
Amazon Managed Blockchain and Quantum Ledger Database ........................................................ 7
Walmart Farm-to-Store ................................................................................................................... 7
Dun & Bradstreet Business Identity ................................................................................................. 8
Everledger Diamonds ...................................................................................................................... 9
Wien Energie .................................................................................................................................. 9
SkyCell Smart Containers .............................................................................................................. 10
Maersk’s & IBM’s Global Trade Platform ....................................................................................... 11
End-to-End Deloitte Supply Chain with Integrated IoT and ERP ..................................................... 12
Bosch & TÜV Odometer ................................................................................................................ 13

Blockchain Scalability & Security ........................................................................................... 13

Off-Chain Solutions ....................................................................................................................... 14

Open Source & Standards ...................................................................................................... 15
Challenges ............................................................................................................................. 17
Conclusion ............................................................................................................................. 18
Authors and Legal Notice....................................................................................................... 18-2-

Distributed Ledgers in IIoT

What is a Distributed Ledger for IIoT?

We’ve all heard of volatile cryptocurrencies, such as Bitcoin and Ethereum, which rely on
distributed ledger technologies (DLTs), such as blockchain, to function. But what about the impact
of distributed ledgers in the Industrial Internet of Things (IIoT)? Industrial companies are using
DLTs for everything from shipping-container tracking, vehicle identity and history, to energy
trading and farm-to-store tracking—and succeeding because DLTs provide secure data sharing
and trust.
Decision makers in IIoT companies need an overview of the use of DLTs today to understand theircosts and benefits, and make good decisions on whether and how to incorporate DLT in theirenvironments. This paper provides practical guidance on a variety of DLT use cases, architectures
and the building blocks necessary for scalable industrial deployment, in the face of rapidly
evolving technology. This paper investigates distributed ledger:
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characteristics,
key drivers for implementation,
current deployments,
future opportunities,
challenges,
scale,
security,trust,
standards andpractical guidance on how distributed ledgers may be deployed in IIoT systems.

We highlight several detailed use cases, explore security benefits and make deployment
recommendations. A longer and more detailed distributed ledger architecture will be developedin a follow-up document.

WHAT IS A DISTRIBUTED LEDGER FOR IIOT?
A distributed ledger (also called a shared ledger) is a consensus of replicated, shared andsynchronized data spread across multiple sites, countries or institutions. There is no central
administrator and no centralized data storage. In the absence of a central authority, such as abank, lawyer, realtor or government, trust must be provided through consensus mechanisms—
collaborative methods of validating data before it is added to the system of record.
Distributed ledgers can comprise at least three layers. The bottom layer is the immutable ledger
itself. The middle layer is the consensus algorithm that determines what can enter the lower
ledger layer. The top layer of the architecture includes functionality such as smart contracts andsmart grids.
DLTs are relevant to IIoT as they provide a safe, immutable distributed ledger to store sensor data
and allow information to be verified without relying on a third-party authority. This reduces-3-Distributed Ledgers in IIoT

Permissioned vs Permissionless DLTs

mistakes and fraud, particularly along the IIoT supply chain. There are many IIoT use cases,
several of which are outlined here.
Blockchain is one of the most popular and widely used types of DLT. A subset of the larger
category of DLT, blockchain links transactions together into blocks, which are processed together
and tracked using a cryptographic hash of the block’s data.
A blockchain is a historical record of transactions, much like a database. A blockchain can containfinancial and non-financial transactions, the details of which can be distributed across several
systems in near-real-time over a peer-to-peer network. Blockchains come in bothpublic/permissionless and private/permissioned variants. Permissionless networks rely on
pseudo-anonymous identities and have a strong dependence on underlying game theory
mechanics for the consensus mechanism, the process by which all participants agree ontransaction history.
In private/permissioned networks, there is a strong dependence on identity of the participantson the network and the sophistication on role-based access controls for network participationand data access. Every participant helps determine the intrinsic immutability of all existing
records using cryptography and digital signatures to prove identity, authenticity and enforce
read/write access rights. Blockchain has mechanisms to make it difficult to change historical
records, but easy to detect when someone is trying to change them.
Directed acyclic graphs (DAGs) are a type of DLT that deliver properties similar to blockchain
through different mechanisms. These technologies promise to deliver similar outcomes toblockchain, while using less computational effort. This class of technology differs from blockchain
in that instead of requiring nodes in the network to validate all transactions from all nodes in the
network, directed acyclic graphs nodes send transaction events only to nodes that are
participating in a transaction. Nodes need not validate all transactions in a network at a given
time, and blocks are no longer assembled or needed. Examples of DLT, without the use ofblockchain, include Corda (corda.net), Hashgraph (hedera.com), OByte (obyte.org) and IoTA
(iota.org).
A smart contract is a computer program that directly controls the transfer of digital currencies,
assets or other information between parties under certain conditions. The contract is stored on
the distributed ledger and whenever a transaction occurs that triggers a specific smart contract,
it performs any necessary processing. Smart contracts are stored on the ledger because it isimportant for the contract to be readily available to the participants executing transactions.

PERMISSIONED VS PERMISSIONLESS DLTS
Most applications of industrial DLTs require a permissioned deployment as opposed to a public,
permissionless option. Permissioned, or private, DLTs allow organizations to benefit from DLT
without the reductions in throughput, scalability and security assurance negatives. This allows-4-Distributed Ledgers in IIoT

Use Cases

the DLT system to scale with existing internal organizational processes and to limit power
demands that are prevalent in a global, permissionless consensus model. Most DLTs are notstrictly permissioned or permissionless. A DLT can be permissioned regarding access to its
network, but permissionless in that any accepted network participant can propose a transaction.
And the same DLT can again be permissioned in allowing users to develop applications on the
DLT. As such, permissions can be set to varying degrees among the different levels of the DLT
architecture.

USE CASES
Although IIoT distributed ledgers are in their infancy, there are trials and deployments today incertain industrial verticals. Depending upon the long-term success of the following real use cases,
we could see a quicker uptake of blockchain.

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Use Cases

MEDILEDGER NETWORKUse Case: Pharmaceutical Supply Chain
Industry Sector: Pharmaceuticals

Industry Vertical: Shipping

Use Case Description: This blockchain-based system allows pharma competitors to collaborate
on a shared platform to raise drug safety, for instance, without sharing sensitive information.
MediLedger Network is a consortium focused on pharma supply chains, which includes Gilead,
Pfizer, Amgen, Genentech, AmerisourceBergen, and McKesson. Chronicled provides theunderlying technology. The first solution in production from MediLedger is a productverification system that makes it easier to verify that a returned drug is authentic. When drugs
reach their final destination, it’s as if they arrive with a black box of data to assure not only
authenticity but they have complied with business rules during their entire journey.
Business Value: Supply Chain integrity
Application: Supply Chain: Pharma Traceability DLT Type: Blockchain
What challenge does this use case address? Tracking pharmaceuticals along the supply chain.

ALIBABA FOOD TRACEABILITY
Use Case: Alibaba Food Traceability
Industry Sector: Transportation

Industry Vertical: Shipping

Use Case Description: Alibaba is applying blockchain technology to enhance the traceability offood with a view of curbing counterfeits. In 2017, Alibaba partnered with postal services entity
Australia Post and natural health firm Blackmores in using DLT to ensure that only genuine foodproducts were shipped to China from Australia.
Business Value: Supply Chain integrity
Application: Supply Chain: Food Traceability

DLT Type: Blockchain

What challenge does this use case address? Tracking food along the supply chain.

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Use Cases

AMAZON MANAGED BLOCKCHAIN AND QUANTUM LEDGER DATABASE
Use Case: Amazon Managed Blockchain
Industry Sector: Infrastructure

Industry Vertical: Cloud & Computing

Use Case Description: Amazon Web Service’s (AWS) Blockchain service makes it cost-effective
to create, manage and scale blockchain networks for multiple parties to transact in adecentralized manner. It supports Ethereum and Hyperledger Fabric. AWS’s Quantum Ledger
Database (QLDB) is a new class of database that provides a transparent, immutable andcryptographically verifiable ledger that customers can use to build applications that act as asystem of record where multiple parties are transacting within a centralized and trusted entity.
QLDB removes the need to build complex audit functionality into a relational database or relyon the ledger capabilities of a blockchain framework. Amazon Managed Blockchain makes it
easy to replicate transactions to Amazon QLDB. This gives customers the ability to gain
advanced insights on how to optimize the blockchain network by querying the change historyof their network.
Business Value: Managed Blockchain Service
Application: All Industries

DLT Type: Blockchain, Ethereum andHyperledger

What challenge does this use case address? Rather than developing and managing your own
blockchain service, you use the cloud.

WALMART FARM-TO-STORE
Use Case: Walmart/Sam’s Club Farm to Store
Industry Sector: Transportation

Industry Vertical: Shipping

Use Case Description: In the United States, Walmart and its Sam’s Club division are using a
farm-to-store DLT tracking system for some produce and expect to require their suppliers ofleafy green vegetables to use blockchain tracking technology. The technology has reduced theamount of time it takes to trace the source of food from 7 days to 2.2 seconds. Unlike a publicblockchain, Walmart’s ledger system is designed for its supply chain partners only and is not
yet a fully public database. Each entity that handles food along the chain of custody isrepresented by a section of the blockchain node. This makes for a much more efficientdiscovery process if there is contaminated produce in the supply.
Business Value: Supply Chain integrity
Application: Supply Chain: Food Traceability

DLT Type: Blockchain

What challenge does this use case address? Tracking food along the supply chain.
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Use Cases

DUN & BRADSTREET BUSINESS IDENTITY
Use Case: Dun & Bradstreet Business Identity
Industry Sector: Finance & Banking

Industry Vertical: Investment

Use Case Description: Dun & Bradstreet provides a continuously updated view of eachparticipant to a transaction. They provide an Oracle, which is a trusted source of data that is
not part of the blockchain, which lives as a node with signature authority on your network. They
monitor events and handle API calls so data is requested at the smart contract level. This
provides a trusted source of multi-sourced identity validation information. Immediate
counterparty profiling prevents pushing high-risk transactions into flight and provides better
insight into potential risk, fraud and compliance issues.

Business Value: Transaction integrity
Application: Identity validation for transactions DLT Type: Blockchain
What challenge does this use case address? Validating all parties to a transaction.

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Distributed Ledgers in IIoT

Use Cases

EVERLEDGER DIAMONDS
Use Case: Everledger Diamonds
Industry Sector: Mining & Metals

Industry Vertical: Diamonds

Use Case Description: Counterfeiters flood the market with convincing fake diamonds. It canbe a challenge to ensure you’re buying an authentic diamond. A London-based company,
Everledger, has placed more than 1.6 million diamonds on a blockchain. Entries on the digitalrecord include dozens of attributes for each diamond, including the color, carat and certificate
number, which can be inscribed by laser on the crown or girdle of the stone. They create adigital twin of the object on the blockchain. The technology has enabled diamond suppliers andintermediaries (e.g., border agents) to replace a paper certification process with a blockchain
ledger. The process involves using computer scanning tools to access a digital vault and to
determine the provenance of any diamond.
Business Value: Supply Chain integrity
Application: Track and TraceDLT Type: Blockchain

What challenge does this use case address? Tracking diamonds along the supply chain.

WIEN ENERGIEUse Case: Wien Energie
Industry Sector: Energy & Utilities

Industry Vertical: Electric

Use Case Description: Austrian utility, Wien Energie, experimented with blockchain
applications in commodity trading and plans to market end-customer products (green
electricity provision, electric car charging and land registry services) in a new central Viennese
urban development. The energy industry must handle increasingly complex transactions
between big and small producers and consumers, and corporate entities, as more decentralized
renewable energy volumes arrive. Energy companies are working to consolidate back-officeprocesses, cut down risk, protect against cyber threats and thus save costs in the long run andlooking to distributed ledgers to help.
Business Value: Secure Energy Trading Platform
Application: Product Traceability

DLT Type: Blockchain

What challenge does this use case address? Increased difficulties with energy trading.

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Use Cases

SKYCELL SMART CONTAINERS
Use Case: SkyCell Smart Containers
Industry Sector: Transportation & Logistics

Industry Vertical: Freight Management

Use Case Description: SkyCell containers are equipped with IoT sensors that connect to a datacloud. They can remotely monitor and intervene on every container to ensure quality
standards. Their monitoring software is based on blockchain technology. Containers are cleared
for use when their software indicates it is in perfect condition. Real-time monitoring service
allows them to intervene immediately when deviations occur in the supply chain. For instance,
biopharmaceuticals are exceptionally sensitive to changes in pH, temperature andenvironmental contaminants. Even slight changes can alter the chemistry of the protein under
production, rendering it ineffective or even dangerous. Because biopharmaceutical production
costs are much higher than for traditional drugs, supply chain waste and loss is costlier, andcompanies have a strong incentive to minimize it. SkyCell’s air freight containers are equippedwith a plethora of sensors that monitor temperature, humidity and geolocation. The SkyCell
cloud platform records documentation like bills of lading and customs forms for each container
on a blockchain-like ledger, providing a level of supply chain visibility and security thatcomplements the container’s temperature security.
Business Value: Supply chain integrity
Application: Product Traceability

DLT Type: Blockchain

What challenge does this use case address? Lack of visibility and security of products inshipping containers.

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Distributed Ledgers in IIoT

Use Cases

MAERSK’S & IBM’S GLOBAL TRADE PLATFORM
Use Case: Maersk’s and IBM’s Global Trade Platform
Industry Sector: Transportation

Industry Vertical: Shipping

Use Case Description: Maersk’s and IBM’s goal is to reduce the cost of global shipping, improvevisibility across supply chains and eliminate inefficiencies stemming from paper-based
processes. They built the TradeLens solution from scratch on blockchain technology and madeit open to all supply chain participants. It brings together all parties in the supply chain—including shippers/BCOs, freight forwarders, inland transportation, ports and terminals, ocean
carriers, customs and other government authorities as well as others—on to a blockchain-based
platform with a secure permission and identity framework. It provides for secure sharing of
instantaneous, actionable supply chain information and visibility across all parties to a trade—encompassing shipping milestones, cargo details, trade documents, the structured data
embedded in trade documents, customs filings and IoT data from sensor readings.
Business Value: Secure Supply Chain
Application: Supply ChainDLT Type: Blockchain

What challenge does this use case address? Shipment tracking inefficiencies. Reduce andimprove current inefficiencies.

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Distributed Ledgers in IIoT

Use Cases

END-TO-END DELOITTE SUPPLY CHAIN WITH INTEGRATED IOT AND ERP
Use Case: Optimizing Supply-Chain Traceability and Transparency with AWS IoT and Amazon
Blockchain service
Industry Sector: Supply Chain

Industry Vertical: Automotive

Use Case Description: Lack of transaction and inventory visibility continues to be a significant
challenge. Companies today are asked to ensure that their supply chain operations canwithstand disruptions caused by geopolitical events, climate-related disasters, public healthcrises and more. Investments made to avoid supply chain disruptions from customer demand,
materials supply and logistics services fail when they rely on outdated or rigid systems andstrategies that cannot provide a complete view across the end-to-end dependencies both insideand outside of the enterprise. IoT-Enabled Blockchain solutions powered by AWS provide thetraceability needed to track product quality, store SAP supply-chain events data with a tamperproof solution, sustain product lifecycle information as a single source of truth inside a
distributed ledger and create an efficient communication mechanism to share information
between supply chain participants. Enhancement via secure voice-enabled applications further
increase convenience and flexibility.
The solutions provide end-to-end visibility of product quality, ownership and stated change
information, thereby enforcing transparency and trust throughout the supply chain.
Business Value: Secure Supply Chain
Application: Product Traceability

DLT Type: Blockchain

What challenge does this use case address? Real-time IoT telemetry and ERP reporting.

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Distributed Ledgers in IIoT
Blockchain Scalability & Security

BOSCH & TÜV ODOMETER
Use Case: Bosch & TÜV Automobile Odometer Integrity
Industry Sector: Transportation

Industry Vertical: Automotive

Use Case Description: Prevent odometer fraud by using a certificate, connected to a blockchain,
which ensures a car’s mileage data is correct. Bosch and TÜV installed a connectivity device inthe car to read its mileage data. Using the device, they then transmitted the data to a backend
which is connected to a blockchain. They also developed an app for consumers that enables
them to view the mileage history of their car. Users can access an online service to get a digital
certificate indicating whether the mileage has been manipulated or not. By using this live
service, consumers can easily create a digital certificate for their cars and even share theinformation with other entities in order to create trust in the specific car data. The companies
are collaborating with an original equipment manufacturer and have a fleet of about 100 carsin Germany and Switzerland that is connected to the blockchain.
Business Value: Secure Supply Chain
Application: Product Traceability

DLT Type: Blockchain

What challenge does this use case address? Automobile odometer fraud.

BLOCKCHAIN SCALABILITY & SECURITY
While blockchain technology has great potential for disrupting and improving enormous
industries, it must be able to scale to meet the requirements of a variety of industrial applications.
Due to the decentralized nature of blockchain operations, scaling a blockchain-based application
poses significant challenges in practice.
The scalability trilemma posits that blockchains can generally have only two of the following
three properties: decentralization, security and scalability.
1. Decentralization can be quantified by the number of block producers,
2. Security, which is the most important aspect for a blockchain network with mutually
untrusted participants, refers to the cost for adversaries launching an attack that alterstransaction ordering,
3. Scalability depends on the number of transactions per unit time that a blockchain network
can process.
Balancing decentralization, security and scalability is a complex issue and multiple technologies
have been developed to address the scalability challenges specifically, as detailed below.
Hardware-layer solutions: For those blockchain platforms in which a small group of nodes is
responsible for producing blocks (i.e., permissioned blockchains), the transaction throughput of- 13 -

Distributed Ledgers in IIoT
Blockchain Scalability & Security
the system can be significantly improved using high-end machines for accelerating blockchain
operations, such as transaction validations and signature verifications.
Data-layer solutions: The transaction throughput can be boosted by increasing the block size andreducing the interval at which blocks are created. One can also compress the information in theblock using signature aggregation techniques and alternative data structures (e.g., Sparse Merkle
Trees (nakamoto.com/merkle-trees/)). Conventional database scaling technology, such as
sharding, is also applicable to blockchain by dividing the blockchain state into small shards thatrun parallel to one another. Each shard is responsible for processing transactions within thegroup, thereby increasing the overall throughput.
Network-layer solutions: Most blockchain protocols rely on a trustless peer-to-peer networkmodel, in which information must be propagated to and validated at every hop in the network.
Although there are physical limitations to network latency and transmission capacity, optimizing
network bandwidth usage and increasing connectivity among blockchain nodes can improve thetransaction throughput to some extent.
Consensus-layer solutions: The performance of consensus algorithms has a significant effect on
the throughput of blockchain platforms. Multiple high-performance consensus mechanisms havebeen developed to allow for greater scalability. Examples include delegated proof-of-stake andpractical Byzantine fault tolerance (http://nakamotoinstitute.org/static/docs/on-stake-andconsensus.pdf). Other forms of distributed ledgers, such as those built upon DAGs, may scale withhigh throughput capabilities.

OFF-CHAIN SOLUTIONS
Various efforts have been made to move scalability solutions to a second layer wheretransactions are off-loaded from the main blockchain to reduce network traffic. The off-chain
solutions are usually in the form of state channels, side chains and trusted execution
environments (TEEs).
State channels: State channels enable two parties to establish a private communication channel
so that transaction processing and state updates can be outsourced to them. With state channels,
users reduce their on-chain operations by transacting with one another directly off-chain of theblockchain. A smart contract, for instance, is deployed to lock parts of the blockchain state,
followed by the continuous off-chain transactions and state updates between two parties.
Finally, both parties submit the state back to the blockchain.
Side chains: Side chains are separate blockchains that are compatible with the main blockchain
and linked to it via a two-way peg mechanism. The two-way peg facilitates interchangeability ofassets between the main blockchain and side chains. In this layered architecture, the main
blockchain is responsible for resolving disputes and ensuring overall system security, while side
chains operate more efficiently.
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Distributed Ledgers in IIoTOpen Source & Standards

TEEs: A hardware-based TEE (e.g., Intel SGX (https://software.intel.com/en-us/sgx)) solution isable to guarantee an off-chain trusted execution via a hardware-based digital signature. An offchain execution signature (an execution attestation) signed by a private key protected by asecured TEE can be then verified by blockchain based on-chain network to prove the correctnessof the off-chain execution.
Scalability: Scalability is the capacity of the blockchain network to improve performance (e.g.,throughput and latency) as the number of users and the complexity of Decentralized Applications(DApps) increase, without making a difference to the user experience and security. The networkarchitecture must be able to adapt to new demands as adoption increases, not the other way
around. With decentralized cloud computing backed by TEE, the blockchain on-chain network
can offload intensive workloads to off-chain without compromising user experience and security.
Privacy preserving: The core of blockchain is decentralization and sensitive data can be used withapplications on decentralized nodes and can be easily inspected and tampered with by superprivileged administrators of any decentralized node. A hardware-based TEE solution is so far the
only scalable solution to preserve the privacy of the data in decentralized networks. With TEE,
data is strictly encrypted before sending to decentralized networks and then the decryption only
happens inside a hardware secured enclave. The decrypted secrets can never be disclosed toanyone including the owner of the node that hosts the data storage and applications execution.
TEE can be widely used in different blockchain-based use cases, such as multi-party computing
and dataset monetizing without losing data privacy and ownership.

OPEN SOURCE & STANDARDSThere are several open-source and standards-based communities for developing architectures
around distributed ledgers. It will be important to follow, and contribute to, these initiatives
which are relevant to Industrial distributed ledger (IDL) interoperability.
OMG Finance Domain Task Force DLWG: The OMG DLT Working Group (omg.org) was
superseded by the creation of a Blockchain PSIG in December 2018. The new Blockchain PSIG
takes on the activities of the earlier FDTF DLT WG including the ongoing proof of concept activity
for semantics and FIBO usage.
IEEE P2418: IEEE recognizes the vital role standards will play in the development and adoption ofblockchain technologies. IEEE Standards Association, a globally recognized standards-setting
body within IEEE, has been actively pursuing blockchain standardization efforts through activities
in multiple industry sectors, including the launch of the world's first Advancing HealthTech for
Humanity™ virtual workshop (https://blockchain.ieee.org/standards/virtual-blockchain2016/about).
ISO TC 307: The International Organization for Standardization (iso.org) is an independent, nongovernmental international organization with a membership of 164 national standards bodies. In- 15 -

Distributed Ledgers in IIoTOpen Source & Standards

ISO Technical Committee (TC) 307 they have created: blockchain and DLTs–use cases,
terminology, privacy and personally identifiable information protection considerations, security
risks, threats and vulnerabilities, overview of identity management using blockchain and DLTs,
reference architecture, taxonomy and ontology, legally binding smart contracts, security
management of digital asset custodians and guidelines for governance.
ITU FG DLT: International Telecommunication Union (itu.int) is a specialized agency of the United
Nations that is responsible for issues that concern information and communication technologies.
The Focus Group on Application of Distributed Ledger Technology was formed to identify andanalyze DLT-based applications and services; to draw up best practices and guidance which
support the implementation of those applications and services on a global scale; and to propose
a way forward for related standardization work in ITU-T Study Groups.
Hyperledger is a multi-project open source collaborative effort hosted by The Linux Foundation(hyperledger.org), which was created to advance cross-industry blockchain technologies.
Interledger (interledger.org) is an open protocol suite for sending payments across different
ledgers. Like the internet, connectors route packets of money across independent networks. The
open architecture and minimal protocol enable interoperability for any value transfer system.
Interledger is not tied to a single company, blockchain or currency.
ETSI Permissioned Distributed Ledger: ETSI’s Industry Specification Group Permissioned
Distributed Ledger (https://www.etsi.org/committee/1467-pdl) analyzes and provides thefoundations for the operation of permissioned distributed ledgers, with the ultimate purpose ofcreating an open ecosystem of industrial solutions to be deployed by different sectors, fostering
the application of these technologies, and therefore contributing to consolidate the trust anddependability on information technologies supported by global, open telecommunications
networks.
NIST Blockchain: Engineers at the National Institute of Standards and Technology (nist.gov)
needed a way to secure smart manufacturing systems using the digital thread, so they turned toblockchain. According to a NIST report, blockchain provides tamper-proof transmission of
manufacturing data and traceability of that data to all participants in the production process.

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Distributed Ledgers in IIoT

Challenges

Figure: Blockchain Identity Verification
Credit: N. Hanacek/NISTEnterprise Ethereum Alliance (https://entethalliance.org/) is a member-led industry organization
whose objective is to drive the use of Ethereum blockchain technology as an open-standard toempower all enterprises.
CORDA: Built specifically for businesses, Corda (corda.net) is an open source distributed ledger
platform that allows developers to freely build applications, or CorDapps, on top of Corda. Corda
benefits from a large community of developers and ecosystem participants.

CHALLENGES
There are challenges to be aware of when considering the deployment of an IIoT distributed
ledger solution.
Interoperability: Although standards and open source bodies are working on interoperability,
there is little interoperability between DLT/blockchains ledgers today. If one plant or factory uses
one type of distributed ledger and another factory uses another, there is currently nointeroperability solution between the two.
Distributed key management: Key management, at scale, including provisioning and rekeying, ishard to implement successfully. Blockchain makes implementation of a key management
program more difficult.

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Distributed Ledgers in IIoT

Authors and Legal Notice

Data privacy: Data is immutable and encrypted on a ledger forever. Even though encryption is
being used and not realistically comprisable today, it could be exposed in the future, perhaps
using quantum computing. Hackers are always chasing new algorithms.
Scalability: As the number of transactions grow, so too does the ledger’s size, resulting in moredata being processed and stored on each node. Deploying additional nodes may make theproblem worse because more time is needed for verification. Because each node must process
every transaction, it’s inevitable that users will be confronted with performance and reliability
issues as latency increases, throughput decreases and storage costs rise.
Garbage in, garbage out: As with any other technology, there is no guarantee that the data being
input into a distributed ledger is valid to begin with. This is where the previously described offchain trust systems exist. Trusted third-party solutions, such as Dun and Bradstreet’s Oracle
solution, are available to help ensure the integrity of the data input into a DLT.

CONCLUSION
Distributed ledgers are a nascent technology, there are very few wide-scale, production-grade
distributed ledgers in use today; however, they are already being used in some IoT environments.
To remain competitive, to prevent fraud and to add simplicity to existing ledgers, distributed
ledgers have a current and future place in IIoT. There are weaknesses with DLT, as there are withall technologies; as such, due diligence in testing must be maintained. Permissioned IDLs appear
to currently be the most successfully deployed solution today, particularly with the supply chain
use case.

AUTHORS AND LEGAL NOTICEThis document is a work product of the Industrial Internet Consortium’s Industrial Distributed
Ledger Task Group, chaired by Mike McBride (Futurewei), Anoop Nannra (Trusted IoT Alliance)
and Xinxin Fan (IoTeX).
Authors: Mike McBride (Futurewei), Pieter van Schalkwyk (XMPro), Bassam Zarkout (IGnPower),
Lei Zhang (iExec), Xinxin Fan (IoTeX), Alex Ferraro (PwC) and Anoop Nannra (Trusted IoT Alliance).
Technical Editor: Stephen Mellor (IIC staff) oversaw the process of organizing the contributionsof the above Authors, Editors and Contributors into an integrated document.

Copyright© 2020 Industrial Internet Consortium, a program of Object Management Group, Inc.
(“OMG”).
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Distributed Ledgers in IIoT

Authors and Legal Notice& Notices, as posted at http://www.iiconsortium.org/legal/index.htm#use_info. If you do not
accept these Terms, you are not permitted to use the document.

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