Blockchain for Industrial Control Systems

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By Michela Menting | 3Q 2018 | IN-5204

Xage Security is a U.S.-based startup leveraging blockchain technology to secure industrial control systems. The firm came out of stealth mode in December 2017, and this week it received US$12 million in Series A funding from four investors: March Capital Partners, GE Ventures, NexStar Partners, and City Light Capital. GE’s investment is of particular interest as it intersects with the research themes of its Edge Lab, part of GE Global Research, which focuses on Artificial Intelligence (AI); machine learning; robotics; software; and analytics, including blockchain. Xage Security is already a customer of GE Renewable Energy, which is exploring ways to connect producers and consumers of solar and wind power in a secure manner.

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GE Invests in Startup Xage Security

NEWS


Xage Security is a U.S.-based startup leveraging blockchain technology to secure industrial control systems. The firm came out of stealth mode in December 2017, and this week it received US$12 million in Series A funding from four investors: March Capital Partners, GE Ventures, NexStar Partners, and City Light Capital. GE’s investment is of particular interest as it intersects with the research themes of its Edge Lab, part of GE Global Research, which focuses on Artificial Intelligence (AI); machine learning; robotics; software; and analytics, including blockchain. Xage Security is already a customer of GE Renewable Energy, which is exploring ways to connect producers and consumers of solar and wind power in a secure manner.

The startup’s expertise lays in creating a security fabric through a network of gateways and clients at the Operational Technology (OT) edge that can offer tamper-proofing, authentication, identity, role-based access control, and device lifecycle management to industrial operators. This fabric is connected back through a broker on the Information Technology (IT) side for policy setting, central data handling, and auditing purposes, and is supported by a cloud platform for configuration, monitoring, and management. The fabric works autonomously in a decentralized manner to not only securely communicate and exchange data but also detect and prevent intrusions.

Blockchain for Smart Industries

IMPACT


Xage Security is one of a handful of startups exploring blockchain usage in the industrial sector, a niche but growing segment of the Internet of Things (IoT) blockchain movement. Guardtime is another high-profile outfit in the space, offering a keyless signature infrastructure that is optimized for the industrial Internet.

Certainly, blockchain is a compelling technology that fits in well with the digitization of industrial operations, whether in smart factories, smart cities, smart utilities, or smart transportation. The smart movement aims to improve efficiency and flexibility, increase productivity and value, as well as cut costs, streamline processes, and ensure resilience. Its success is predicated on increased connectivity, two-way communications, automation, big data, analytics, intelligent systems, sensors, and security among other technologies. Through smart contract applications, blockchain can leverage all of these to create autonomous platforms capable of monitoring, detecting, responding, and adapting to changes in a large and dispersed environment.

For Original Equipment Manufacturers (OEMs), such as GE, that develop and manufacture a wide range of products in the OT space, blockchain is an appealing technology. GE strives to remain relevant in a world where modernization and digitization continually threaten its traditional business model. The firm needs to embrace new technologies and find ways to augment its products through them, rather than let new tech replace them and render GE obsolete. In particular, technologies that leverage connectivity can provide new value and additional service opportunities for physical products. Xage Security’s device lifecycle management play is an interesting example of how GE can connect the blockchain back to its products, providing services to clients and its end users.

To Blockchain or Not?

RECOMMENDATIONS


Of course, blockchain is just one of many technologies that can be used. Edge and fog computing can be delivered through any number of other infrastructure technologies. Startups such as Xage Security will need to prove why blockchain can work better than using simple distributed computing or a managed cloud platform. Blockchain can be an interesting technology where the supply chain is highly fragmented and crowded with third-party providers and contractors, providing transparency in an often murky chain. A number of industries, which were previously siloed and controlled end to end by one or two entities, are increasingly breaking up pipeline ownership between multiple smaller entities. The energy sector in the United States is one such example, where demand for increased competition, deregulation, grid modernization, and new energy sources are significantly transforming the power grid. Distributed energy systems are driving decentralization of energy resources and therefore diversification of operators. In such an environment, there is potential for decentralized technologies such as blockchain to stake a claim in the smart energy movement by enhancing OT functionalities.

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