How Blockchain can change the future of Internet of Things.
Updated: Jan 4
As the Internet of Things (IoT) adds more and more devices to the digital fold every day, organizations of all sizes recognize the IoT's potential to improve business processes and, ultimately, accelerate growth.
Blockchain's significant advantage is that it is public. Everyone participating can see the blocks and the transactions stored in them. However, that does not mean everyone can see the actual content; a private key protects it.
A blockchain is decentralized, so no single authority can approve transactions or set specific rules to accept transactions. As a result, the model involves a great deal of trust, as all the participants in the network must reach a consensus to accept transactions.
According to Gartner, by 2020, there will be more than 20 billion connected things globally, powering a market that will be worth north of $3 trillion. The Internet of Things (IoT) is a fast-growing industry destined to transform homes, cities, farms, factories, and practically everything else by making them smart and more efficient.
But the uncontrolled growth of IoT will introduce several challenges, including identifying, connecting, securing, and managing these devices. It will be incredibly challenging for the current infrastructure and architecture underlying the Internet and online services to support substantial IoT ecosystems.
It is solving by utilizing The Blockchain, the distributed ledger technology behind cryptocurrencies such as Bitcoin and Ethereum, which proves its worth in many other industries, including IoT.
Blockchain will enable IoT ecosystems to break from the traditional broker-based networking paradigm, where devices rely on a central cloud server to identify and authenticate individual devices.
While the centralized model has worked perfectly in the past decades, it will become problematic when the number of network nodes grows into the millions, generating billions of transactions. It will exponentially increase computational requirements and, by extension, the costs.
The servers can also become a bottleneck and a single point of failure, making IoT networks vulnerable to Denial of Service (DoS/DDoS) attacks, where servers are targeted and brought down by being flooded with traffic from compromised devices.
A prime illustration of security's importance is the first distributed denial of service (DDoS) attack in October 2016. This massive assault affected millions of Internet addresses and temporarily crippled the servers of popular services such as Facebook, Twitter, Netflix, AOL, and PayPal, to name a few.
One source of traffic for the attack: the many IoT devices infected and hijacked by Mirai, a simple malware program readily available online, and used against the servers.
This can critically impact IoT ecosystems, especially as they take on more sensitive tasks. Moreover, centralized networks will be difficult to establish in many industrial settings, such as large farms, where IoT nodes will expand over vast areas with low connectivity gear.
Blockchain technology will enable the creation of secure mesh networks, where IoT devices will interconnect reliably while avoiding threats such as device spoofing and impersonation.
With every legitimate node registered on the Blockchain, devices will quickly identify and authenticate each other without the need for central brokers or certification authorities. The network will be scalable to support billions of devices without the need for additional resources.
Several companies are already putting Blockchain to use to power IoT networks. One example is Filament, a Startup that provides IoT hardware and software for industrial applications such as agriculture, manufacturing, and oil and gas industries.
Filament's wireless sensors, called Taps, create low-power autonomous mesh networks that enable enterprise companies to manage physical mining operations or water flows over agricultural fields without relying on centralized cloud alternatives. Device identification and intercommunication are secured by a bitcoin blockchain that holds each participating node's unique identity in the network.
Australian telecommunication giant Telstra is another company leveraging blockchain technology to IoT ecosystems. Since most smart home devices are controlled through mobile apps, Telstra further expands the model and adds user biometric information to the blockchain hashes to tie in user identity and prevent compromised mobile devices from taking over the network.
This way, the Blockchain will verify both the integrity of IoT devices and the people's status interacting with those devices. Northern Trust Bank, a Chicago-based administrator of funds, and IBM. They have devised a blockchain-based solution for the private equity world that should cut out months of pinging emails back and forth, waiting for documents to arrive and be signed, and swapping share certificates. They claim that it is the first commercially deployed blockchain solution for finance to date. Sony Global Education, Inc. Has adapted Blockchain* technology to the educational field and has developed technology that enables open and secure sharing of academic proficiency and progress records.
Catering to the future of IoT
While still in its early development stages, IoT is mostly comprised of technologies that allow for data collection, remote monitoring, and device control. As we move forward, IoT will transition toward becoming a network of autonomous devices that can interact with each other and with their environment and make smart decisions without human intervention.
Blockchain can shine and form the basis to support a shared economy based on machine-to-machine (M2M) communications.
We are already seeing initiatives emerging in this field, including ADEPT (Automated Decentralized P2P Telemetry), a decentralized IoT system created by IBM and Samsung, enabling billions of devices to broadcast transactions between peers and perform self-maintenance.
The platform has been tested in several scenarios, including a smart washing machine that can automatically order and pay detergent with bitcoins or ether when it runs out. We will negotiate for the best deal through smart contracts based on its owner's preferences.
As the backbone of all these interactions, Blockchain creates a secure and democratized platform that is independent and levels the field for all involved parties, ensuring everyone plays fair and no single entity is in control.
Blockchain will also enable data monetization, where owners of IoT devices and sensors can share the generated IoT data in exchange for real-time micropayments.
Tilepay, for example, offers a secure, decentralized online marketplace where users can register their devices on the Blockchain and sell their data in real-time in exchange for digital currency.
Blockchain and IoT also have compelling use cases that can help make renewable energy sources mainstream. The energy produced by IoT solar panels generates cryptocurrency value registered on the Blockchain.
Anyone joining the network can make investments in renewable energy technology. Organizations such as Nasdaq and Chain of Things, a think tank that researches alternative Blockchain and IoT applications, are exploring this field.
Blockchain presents many promises for the future of IoT. Challenges remain, such as consensus models and the computational costs of verifying transactions. But we are still in the early stages of blockchain development, and these hurdles will eventually overcome, opening the path for many exciting possibilities.
Source: Garnering. 2017