Internet of things (IoT) technology is witnessing rapid adoption across industries. However, the architecture of these networks, combined with their centralized compute and storage resource needs, present significant security risks. With applications across a broad spectrum of industries, the internet of things (IoT) is enabling businesses to harness valuable data, analyze it, and make informed data-driven decisions. While this data provides tremendous value, the introduction of blockchain ensures the maintenance of data authenticity and immutableness without any compromises. Integrating blockchain technology into IoT networks addresses security concerns (end-to-end traceability, data privacy & anonymity, identity verification & authentication, confidentiality, data integrity, and availability) while increasing transaction speed, data management, and processing efficiency. While there are limitations currently holding back blockchain IoT in its current form, its application and impact in the field of IoT are inevitable. However, enterprises are leveraging blockchain technology for its unique range of features, equipped to enhance the functioning of IoT networks and usher in a new paradigm for intelligent, data-driven organizations.
In 2021, there were 13.8 billion units of installed and connected IoT devices, which can grow nearly three times to reach 30.9 billion units by 2025. With rapid developments in IoT technology and its accelerated adoption, industries can now capture data from various sources, glean insights, and leverage them to guide their business decisions. However, can businesses completely trust IoT data and operate confidently based upon the authenticity of the information contained across these devices?
The vulnerabilities of IoT devices and their traditional centralized architecture drive home the impracticality of placing complete trust in IoT information in the current scenario. But, blockchain can ensure confidence in the data captured by IoT networks by designating each device its unique identity at the time of creation and allowing the validation and verification of that identity across its lifecycle by leveraging its distributed ledger technology. Device identity protocols enable each device to have a public blockchain key for control over its identity and the ability to maintain an immutable history of events that organizations can track over time.
Impact of blockchain on IoT: Key differences in IoT implementation with and without blockchain
Blockchain is a distributed ledger technology that combines with IoT to make machine-to-machine transactions possible. The technology records transactions in a database, verify them from multiple sources, and enters them into a shared ledger distributed across each node. Thus, the impact of blockchain on IoT presents several benefits, wherein an intelligent device can function autonomously without depending on a centralized authority. The technology can also track the communication between devices.
The synergy between blockchain and IoT creates a path to address critical IoT issues. Some significant benefits include secure communications, peer-to-peer architecture, database redundancy, privacy in data exchange, and automatic additions of new IoT devices. Table 1 offers an example of data exchange in IoT with and without blockchain.
IoT + Blockchain
Blockchain technology circumvents the need for central deployment of servers and databases. It ensures IoT-related operations in a distributed, secure manner with little opportunity for faults.
Blockchain consolidates the capability of IoT devices to scale up security and transparency in the ecosystem. While blockchain ensures scale and decentralized infrastructure, IoT enables intelligent operations. There are several use cases across industries. For instance, the pandemic saw different initiatives proposed to implement COVID-19 certificates so that individuals with such credentials could be exempt from the physical restrictions to carry out certain activities. The blockchain-based platform can be a promising approach due to its decentralized and transparent features for securely sharing COVID-19 vaccination certificates. The focus on privacy proposes a hashing algorithm that enables users to store the information on the blockchain anonymously using an ID created from their iris. In this case, the blockchain can store vaccination certificate data and a hash of the user ID.
Let’s consider a use case in another industry. IoT sensors provide details through sensors, GPS, shipping details, etc., in supply chain functions across organizations and industries. Combining blockchain enhances reliability and traceability, storing the gathered data securely in the blockchain.
Blockchain can benefit this business nexus across data management and financial and operational functions in the automotive industry.
The convergence of blockchain and IoT technologies
Figure 1: Blockchain IoT networks
Integrating blockchain technology into IoT networks enables device-to-device transactions. These transactions get recorded and stored in the blockchain’s distributed network across many nodes. Multiple sources then verify this record. By leveraging the capabilities of blockchain technology in IoT networks, smart contracts automatically trigger transactions among IoT devices when they meet pre-determined conditions. This technology creates the perfect environment for the autonomous functioning of smart devices by removing the need for a centralized authority while enhancing the security and tracking of device-to-device communication facilitated by smart contracts.
While blockchain’s architecture offers a range of benefits due to its decentralized nature, some challenges exist. IoT platforms have a client-server model with a centralized authority. Organizations should develop IoT platforms in a decentralized manner to ensure compatibility with blockchain, necessitating the IoT sensors to handle their storage and compute resources instead of utilizing centralized resources.
Data decentralization and security
IoT device data is often stored and managed by centralized servers, leaving vulnerabilities that malicious actors can exploit. With a central storage location, the risk of network failure is high. With data computation and storage spread across a vast range of devices numbering in the millions, the network becomes invulnerable to the loss of a single device, server, or central network. This capability contributes to the resiliency of IoT networks with blockchain technology. The network has high fault tolerance and can operate even with multiple offline nodes. High-level security is ensured by authenticating and authorizing encrypted device data with distributed ledgers.
Blockchain can validate transactions by concealing the connections between devices while preceding third-party implementation options. Organizations can avoid data leaks and hacking incidents with blockchain’s ability to optimize IoT protocols and supply encryption.
Blockchain streamlines data management significantly by allowing devices to transfer data directly among them instead of transmitting data via a centralized server, reducing the number of transactions. The absence of IoT gateways and intermediate devices optimizes data processing time. Furthermore, blockchain-enabled intelligent contracts can convert much of the traditional IoT processes into automated processes. By driving efficiencies in data management across edge devices, organizations benefit from reduced costs for IoT device maintenance and data transfer.
The decentralized nature of blockchain IoT networks allows for improvements in transaction speed and coordination between connected IoT devices, which, combined with the ability to share data, paves the way for better scalability.
Decentralized PKIs, used by blockchain networks, are superior to centralized PKIs since only the user has access to the personality identification hidden key. In contrast, the network provider accesses the open key. These keys are cryptographically generated, making them invulnerable to hacking attempts.
With blockchain technology and smart contracts, automatic commands and messages are possible in IoT networks, enabling data analysis and scenarios such as automatic filling of custom documents.
Different approaches for implementing IoT blockchain
This method makes blockchain integration into IoT networks relatively straightforward, using only a sharing register for data storage. Routing mechanisms ensure that data transfers take place out of the blockchain, driving higher transaction speed and reducing lags. Moreover, this approach enables offline capabilities for IoT devices. With the IoT-IoT approach not requiring significant workflow changes for devices on the network, it is relatively a simple solution. It only needs replacing a cloud/server with a blockchain for the transfer, storage, and data extraction.
Here, IoT devices interact through the blockchain, which serves as a kind of cloud for the traditional IoT network, leading to tracing improvements, communication security, workflow automation, and capacity. However, the increased complexity of this mechanism can also lead to delays. It is an approach that requires significant modifications to the workflows of IoT devices and blockchain development. Additionally, it will require a blockchain with high speed, capacity, and zero fees.
Here, the blockchain stores some types of information while sharing most of the data and communication across IoT devices. While it offers a range of advantages, the low delays and high working speeds required of the IoT devices are not practical. Notably, this approach enables fog computing to overcome the limitations of IoT devices and blockchain. Organizations can use this method to store, extract, and analyze private data. Using edge devices instead of a centralized cloud translates into savings in operating costs.
Delivery Head- IoT, iCORE-CIS
Virendra heads the global IoT new-age solutions delivery team. He plays a crucial role in providing next-gen IoT solutions to clients worldwide and developing innovative support capabilities for the global IoT practice. With 24 years of experience and expertise across multiple domains, Virendra has a proven track record for complex solutions delivery, customer-centricity, and a passion for excellence.