The Internet of Things and Industrial Internet is about to get a boost from blockchain technology, the distributed ledger that secures digital currencies such as Bitcoin, as Filament, an enterprise technology company that creates smart connected networks for machinery, equipment, and wireless sensors, announced the closure of the Series A funding round raising $5 million in venture capital. This round is led by Bullpen Capital and is joined by Verizon Ventures, Crosslink Capital, Samsung Ventures, Digital Currency Group, Haystack, Working Lab Capital, Techstars, and existing investors.

Filament intends to remain on the forefront of Internet of Things technology infrastructure by integrating blockchain capabilities into its networks that will allow businesses to easily deploy and operate sensor networks with their already existing infrastructure, with or without the cloud. Most importantly, these networks would be built on a platform and protocol of cryptographic trust that uses a blockchain to secure the transactions delivered over the network, which will provide a trusted layer of communication and storage for interactions between devices, sensors, and people.

“We are very excited about Filament, as it is building essential parts of the future Internet of Things ecosystem,” said Duncan Davidson, partner at Bullpen Capital. “Their vision goes well beyond the idea that [the Internet of Things] is just more connected devices building a scalable architecture. It’s about connecting trillions of things in a secure and trusted way, without crushing the networks.”

The company’s platform intends to use the blockchain for transactions (meaning that they will be securable in a distributed ledger) and use open protocols already in use for these purposes such as  Telehash (private communication), JOSE (smart contracting), TMesh (mesh networking), and BitTorrent (over the air firmware and management updates). Filament expects that by using the blockchain as the underlying infrastructure it will be able to provide payment processing, enforcement of smart contracts, and ensure digital trust.

As a further benefit, being embedded with the blockchain could mean that companies could use sensor networks and smart contracts to capture raw economic value generated by sensors and actuators.

Blockchain technology as an underpinning for autonomous networks

While the Bitcoin blockchain would provide the most secure network for any industrial application applying to the Internet of Things (IoT), there have been examples of smart contracts already in the field using Telehash (one of the protocols Filament intends to use) from the Ethereum blockchain.

During CES 2014, IBM and Samsung displayed an example of an IoT application using a washing machine that could order the delivery and supply of its own detergent when it runs out using the Ethereum blockchain and smart contracts.

With this funding, and further research, Filament intends to do something extremely similar with industrial sensors that could presumably operate without intervention by processing sensor data, packaging it, sending it, receiving updates, and calling for repairs or updates using stored value and smart contracts.

The company calls this “pervasive device independence.”

“We envision a decentralized system where billions of devices – each independently interacting and transacting value with each other – will create a massive opportunity for new business models.” said Eric Jennings, co-founder and CEO of Filament.

To do this, Filament proposes using dedicated cryptographic software to form these mesh networks and secure them with an open platform protocol called Distributed Sensor Transactions (DIST). The company also intends to provide add-ons that can make existing sensors networkable and communicate over long distances (up to 10 miles) without the need for existing WiFi, weird, or cellular connections.

Finally, Filament wants to make revenue streams available to businesses by allowing them to give access to their sensor data over the blockchain—via authorizing access to interested parties who could then use smart contracts and blockchain transactions to pay for the service.

The underlying protocols and policies of these revenue streams and how access is granted is not detailed yet; but it would open up a variety of possible business models involving sensor networks processing data through a blockchain that could then be accessed for a fee, which could then be used to maintain and update said networks and provide profit to the sensor operator.

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