Blockchain In IoT: The Future Of Smart Connectivity
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Blockchain In IoT: The Future Of Smart Connectivity

Hussain Fakhruddin - August 30, 2017 - 0 comments

Blockchain in IoT


Internet usage, connectivity, and the digital infrastructure, as we know it, are changing. The value of the global IoT (internet of things) market is set to zoom past the $3 trillion mark by the end of 2020, with more than 20 billion connected devices being in active use. However, this growth is not going to be all smooth, and challenges – particularly in the form of cybersecurity threats and the ever-increasing volumes of data/network connections – are bound to crop up. A recent IDC report has predicted that 9 out of every 10 firms that have already implemented IoT standards are likely to face security breaches this year. The blockchain distributed ledger technology – which powers bitcoins and have been hailed as the ‘internet of value’ – can go a long way in refining IoT, cutting out key performance issues, and ensuring greater security. In today’s discourse, we will put the spotlight on how blockchains can help in making IoT stronger:

  1. Moving on from a centralized system

    Irrespective of the particular nature of an application, IoT typically depends on a central cloud server/gateway for device identification, authentication and data transfer. Now, as the domain of internet usage expands across industries – establishing such gateways is likely to prove problematic, particularly in remote areas where the connectivity or signal strength is poor. A blockchain is, by definition, decentralized, and it does away with the need for such centrally located servers. Instead, data resides in all the ‘nodes’ of the distributed, trustless network – ensuring smoother, autonomous operations.

  2. Making smart devices ‘smarter’

    In early-2015, IBM and Samsung collaborated to launch the decentralized ADEPT (Automated Decentralized P2P Telemetry) platform. It was tested on a ‘connected washing machine’, that was able to track the usage of detergents, place orders, and make bitcoin payments for buying detergents – all on its own. This is a classic example of how blockchain technology can make IoT-powered smart devices well and truly autonomous – with robust self-maintenance, M2M communicability, and peer-to-peer transaction capabilities. In ‘smart homes’, a blockchain-based IoT infrastructure can enhance the efficiency/productivity of the devices, while minimizing the electricity and/or energy consumption levels. Private blockchains can be used to boost the security of ‘connected homes’ – with biometric user-authentication data stored in the network (Australian telecom company Telstra is already doing this). The technology can be used to pull up the performance and reliability of driverless cars as well.

  3. Peer-to-peer data transactions

    The number of connections and transactions through IoT systems is going up at an exponential rate. That, in turn, is resulting in an ever-increasing need for computing/processing power. The usage of blockchains too requires uniformly high levels of CPU performance. The system can manage this issue, by opening up the possibility of buying and selling anonymous data (i.e., data monetization), originating from the connected devices. Apart from all authorized, independent third-party agents, the OEMs and the data providers will be able to perform this data-trading (payments will, of course, be via bitcoins). The prospect of buying and accessing this data would motivate the external parties to provide additional CPU power and invest in digital renewable resources – increasing the strength of the overall blockchain and IoT setup.

Note: The energy generated by the IoT solar panels can be traded in exchange of cryptocurrencies. The corresponding transactions would be stored on the blockchain.

     4. Greater security assurance

Nearly one-fifth of the yearly security budgets of organizations will be accounted for by IoT security expenses in 2020. Concerns over the reliability of ‘connected systems’ have been rising – with reports of data hacks, digital identity thefts and distributed denial-of-service (DDoS) becoming rather alarmingly frequent. Blockchains can easily add an additional layer of security to IoT – since they do not have vulnerable centralized servers, which have been traditionally viewed by malicious agents as single points of attack. With blockchain technology, a mesh network can be created – and risks of ‘data impersonation’ and ‘device spoofing’ will be kept at an arm’s length. The distributed ledger is immutable, ensuring that data/transaction records cannot be modified or deleted by unauthorized hackers. Even if someone goes through the trouble of altering each stage in the overall chain, the process would be too costly and troublesome. A distributed, decentralized control would facilitate higher latency and throughput levels, while ruling out chances of security breaches.

    5. Reduced costs

With billions of connections and trillions of transactions, managing communications through IoT devices is likely to become an expensive affair over time (if it is not so already). The need for establishing full-featured gateways/control centers/servers take up the expenses further. With blockchains, this need for a ‘middleman’ or a ‘central gateway’ is done away with – and hence, significant amounts of hardware costs, protocol costs and communication costs are removed. All communications, right from device details to data exchanges, happen on a direct, peer-to-peer basis. IoT gateways are costly – and they are not required in a blockchain framework.

    6. Trustless messaging and smart contracts

The blockchain technology enables IoT devices to exchange protected, trustless messages among smart devices – making them truly ‘autonomous’. Smart contracts, pre-specifying the rules of the transaction(s) (generally as ‘if-then’ condition statements) can be created between two parties easily, ensuring that operations can be managed remotely – and without the interference of a human agent/centralized brokerage system. For instance, a ‘smart irrigation’ system can be ‘instructed’ to release/stop the flow of water by the field sensors. The trustless messaging system powered by blockchains can be just like the communications in a bitcoin network. The absence of a central control unit also reduces the required processing times and speeds up data exchanges – establishing accelerated data exchanges.

    7. Blockchains as independent agents

Peering into the future, it can be reasonably expected that blockchain networks (and not only the IoT devices included in them) can evolve into completely independent entities. These autonomous, independent blockchains (often referred to as ‘distributed autonomous corporations’, or DACs) will have immense potential of getting adopted in the banking and financial arbitration industry. The components of a decentralized system (say, e-couriers) can gradually replace the centralized human management layer – removing the risks of human errors in the process. A DAC can also send update requests to the underlying software of other, similar independent blockchains. Things can become more automated, and more seamless, than ever before.

    8. Increased scalability

The volume of IoT operations (and along with that, the number of devices, gateways and other smart accessories) will continue to increase in the foreseeable future. The existing systems have to be scaled up on a regular basis – something that is not really possible with a centralized server. Blockchains, once again, offer an easy, and mighty effective, alternative. The distributed ledger system offers easy scalability, and can deliver improved security to the expanding sets of smart gadgets. What’s more, it also become fairly simple to locate a compromised device (for instance, captured in a botnet or infected with malware), and prevent it from putting the health of the entire system (which can be a smart home, an enterprise setup, or even a smart vehicle network) at risk. Additional devices can be supported in a blockchain infrastructure, without any significant need for extra resources.

    9. Transparency and ownership

Blockchain transactions take place after mutual trustless consensus of all the interested parties in the network. A single, secure record of all the transactions is maintained in the distributed ledger. Since tampering with these records is, for all practical purposes, impossible – potential confusions over the ownership of digital assets are ruled out. The level of transparency of the recordkeeping is further enhanced by the fact that each IoT transaction on the platform is timestamped. Individual users and organizations are encouraged by the trustworthiness of blockchains – built by the device information records and transaction/exchange records maintained in the ledger. The communications might be named ‘trustless’ (since the transacting parties are not acquainted, and generally use pseudonyms)…but blockchains actually build trust in IoT frameworks in a big way.

    10. Tracking the history of IoT devices

With billions of smart devices in the IoT ecosystem, maintaining the history of transactions carried out with any one device is a huge challenge. A distributed ledger system can help in this regard. When a IoT system is bolstered by the blockchain technology, participants can view the records of all the data exchanges that have taken place between the concerned device and human agents as well as the internet. History of transactions with other ‘connected devices’ can also be maintained and viewed, as and when required. These records would also offer an insight into the current health and performance potential of devices (something on the lines of ‘predictive maintenance of devices’).

We are well on our way in the journey towards a ‘decentralized, shared future’ with blockchain-powered IoT operations. Being a relatively new technology, blockchains still have several challenges to overcome. For starters, the huge computational powers required for transactions might prove to be a roadblock, while determining the best computational models, establishing the infrastructure, monitoring data access levels and managing the initial costs require close attention too. The ‘51 percent attack’ problem (changes in transaction records can be validated, provided 51% of the blockchain network approve it) is, arguably, the biggest point of concern – particularly when blockchain is used in relatively small IoT systems (say, a home or an office). There is no scope of doubting the importance of blockchains in IoT – but a few rough edges have to be ironed out, for realizing the full benefits of the technology.


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