How Oracles Can Be Used For Machine-to-Machine Communication

For machines to talk to each other without manual intervention or human intermediaries, they need to be connected to the cloud or a network. This means that they need a software component that interlinks the hardware to a network.

However, there is no established industrial standard yet for such software components. Many machines or components from different vendors have their own proprietary software. This can cause compatibility issues that make it difficult for independent systems to work together. Many companies try to “force” such systems to work together using ad-hoc “band-aid” solutions, but that only creates security vulnerabilities exposing them to hackers.

Machine-to-Machine Communication using DApps
There are basically three ways machines can communicate with other machines in production facilities using DApps:

1. Install software on machine’s OS.
2. Directly install software on programmable logic controllers (PLCs).
3. Use an oracle to physically connect machines with PLCs.

The third option allows direct connectivity with the communication layer and blockchain ledgers. This makes it possible to use integrated M2M DApps installed on manufacturing sensors and factory equipment. The Industry 4.0 era brings an increasing need for autonomous M2M communication and automatic transactions, and this need can now be met using an oracle.
What Is an Oracle?
An oracle is a hardware device (or software agent) that collects data on real-world events from interconnected sensors, and sends that information to smart contracts on a blockchain. Because blockchains cannot access data outside of their networks, oracles feed data into the blockchain and trigger the execution of smart contracts when predefined conditions have been met. In manufacturing, these conditions may include sensor statuses, RFID location scans, temperature, humidity, payment transactions, and anything that can be granularized and quantified.

Oracles are primarily designed to securely send data to a smart contract. Upon meeting predefined conditions with the provided data, the smart contract executes programmatically by changing state, running predefined algorithms, and automatically triggering events on the blockchain. When machines communicate with each other on the blockchain, an oracle would find smart contracts associated with these machines, extract machine data from these contracts, and execute production events. As manufacturers produce their goods, machine events are recorded on the blockchain within the relevant smart contracts via oracles.
Hardware Oracles for the Manufacturing Industry
Smart contracts would need information directly from sensors and machines in manufacturing facilities, or from RFID scanners that record movement of materials and products along supply chains. However, these oracles must be extremely secure to ensure maximum protection from breaches or tampering.

Such an oracle could be an industrial IoT node with highly secure protection of private keys, which is ideal for a blockchain based application for manufacturing and supply chain management. If an IoT node could transact on a blockchain using a M2M DApp, it could act as a hardware oracle that provides data about sensor statuses and production events.

This oracle can contain a secure hardware wallet to provide a budget to each machine, with the ability to make blockchain-based micro-payments for each service rendered. All of this is done automatically without any manual intervention. For example, the ARXUM Connection Box, a hardware oracle with a secure wallet, solves the problems of data security and making micro-payments while enabling machines in production facilities to communicate with each other.