Advantages of the merger of 5G and Blockchain
The implications of the Internet of Things (IoT) has been anticipated by analysts for several years. However, there have been two main roadblocks to its success: capacity and security.
The latest generation of cellular mobile communications i.e. 5G will be introduced by major carriers like AT&T and Verizon . The 5G platform brings a high data rate, reduced latency, energy savings, cost reduction and higher system capacity, according to analysts.
Combination of 5G and blockchain technology has the power to unleash a surge of economic value. In order to understand this relation between 5G and blockchain, one must think of the relationship as a multi-level one. The potential of 5G coverage through its reduced latency, high speeds and capacity allow for IoT devices to become widely used. Simultaneously, these devices can make use of the key features like security, decentralization, immutability and consensus arbitration of blockchains as foundational layers.
As a base or foundational layers, blockchains can provide consensus and security while the majority of IoT transactions and contracts occur on second layer networks, with the opportunity to settle payment channels and transaction disputes on-chain. The network capacity of IoT, however, will be enabled by the potential of 5G coverage.
Furthermore, 5G will have a direct impact and would assist blockchains by increasing node participation and decentralization, as well as allowing for shorter block times, driving forward on-chain scalability — all of which, in turn, further supports the IoT economy.
Network providers have started introducing 5G within selected US cities, while global coverage is expected to come online by 2020.
The advantages of 5G are its high speeds, capacity, low latency and ability to connect with vast numbers of devices. Latency means the time between when a signal is sent and received. When it comes to blockchain, latency is the time between a transaction being broadcast and it being received by nodes. However, for IoT achieving low latency is critical if devices are going to communicate with each other without experiencing long lag times.
When talking about automation, it is a stereotype to think in terms of robots replacing paid jobs currently done by humans. However, in reality, the scope of automation may eventually be quite broader than this, including the replacement of chores and unpaid minimal tasks.
The 5G rollout will encompass an explosion in transactions and payments between these devices. Such volumes will likely reduce the current capacity of centralized and decentralized financial infrastructure. Also, malicious devices could cause chaos within networks, empowered by their interconnectivity.
Public Blockchain can be used as a foundational layer for settling disputes between IoT devices that cannot settle transactions or smart contract conditions. Since these devices can transact with money establishing an underlying protocol layer with robust security is paramount. Blockchains can be very suitable for this.
Unfortunately, the second problem of scalability cannot be directly solved by blockchains. The extent of IoT means that decentralized blockchain architectures are not capable of handling the necessary throughput. It is possible and preferable to defer the majority of the transactions to layer two protocols like the Lighting Network that operate on top of blockchains, through the use of payment channels or sidechains.
Blockchains have the ability to directly benefit from 5G in terms of functionality and performance. For example smart contracting. Blockchain smart contracts mostly depend on oracles. These oracles transfer external data to the contract. This information can only be transmitted with internet access. 5G can facilitate these oracles in remote areas where they otherwise would not be possible.
Also, due to latency reductions, developers would have more space to experiment with reductions in block times, thus increasing on-chain throughput. In return, this would offer far better support for IoT devices using blockchains for settlement, consensus and security.