Internet of things (IoT) and blockchain are both trending technologies. Until now these technologies have been working in their separate silos. IoT conjures up images of wearables, health monitors, manufacturing gadgets and more. Blockchain is a lesser known technology. However, most people have heard about the cryptocurrency called Bitcoin. Blockchain is the backbone that supports Bitcoin and other cryptocurrencies. But the usefulness of blockchain goes beyond digital money. It is emerging as a prominent solution for online transactions of every kind. Naturally, the IoT industry has started to pay attention. IoT developers are looking into blockchain as a faster, more secure and lower cost infrastructure.
The challenges for IoT
IoT is being used for smart homes, healthcare, manufacturing, transportation and more. The limitless possibilities have spurred the fast growth of connected devices. But there are some technological challenges that need to be addressed.
IoT endpoints are opening up vulnerabilities for systems around the world. Businesses, government agencies, and regulatory bodies are quickly realizing the threat IoT poses to our institutions. Stories of baby monitors or wearable watches being hacked might seem harmless fun at first but they signify a real threat. Cybercriminals can use these vulnerabilities to exploit more sensitive data. Hackers stealing information through connected IoT devices is in the realm of possibilities today. They have already started to attack systems using IoT devices. Here are few examples:
Most businesses have built their infrastructure for the internet age. The architecture is designed with the idea of dealing with online connections and interactivity. But even for large businesses, the predominant architecture is a centralized model. Companies authenticate, authorize and connect with their users from a central infrastructure. The issues of scalability are addressed in terms of adding and subtracting resources from a central pool. The problem with IoT is that there are going to be too many of them to make the centralized model work.
Businesses will have to adapt to decentralized architectures to deal with the onslaught of IoT devices. Companies have to update their systems to cope with large amounts of data that the IoT devices will produce. They will need to study and understand the challenges of decentralized connectivity models.
IoT is not a new concept. Manufacturing and other industries have been using different connected devices like sensors, scanners, and cameras for a long time. Over time each manufacturer has developed their own machine-to-machine (M2M) protocols. But the lack of standardization poses a huge problem for IoT. Multitudes of M2M communication protocols can make it difficult to integrate products and services across different brands.
Developing a common protocol to work across different manufacturers and brands is in the best interest of both the producers and consumers of IoT. Everyone involved with IoT should put serious effort to create more common protocols and infrastructure for the connected devices to communicate with each other.
What is blockchain?
Blockchain has the potential to address some of the concerns IoT is facing today.
The story of blockchain starts with a mysterious person called Satoshi Nakamoto. In 2009, a proof-of-concept paper was published about cryptocurrency under the name of this person in a cryptography mailing list. Even today there are only speculations about the true identity of this person. The paper got the cryptography community excited. In 2010, the first cryptocurrency Bitcoin was created based on the concepts of Satoshi Nakamoto’s paper.
Bitcoin gained momentum as a digital alternative to fiat money. Even though skeptics thought the technology could not be viable, Bitcoin has been growing until this day. Today the Bitcoin market cap is over $90 billion.
With Bitcoin technology surviving various attacks, scientists and researchers soon started paying attention to the underlying blockchain technology. Soon they realized that blockchain can be used for other important digital transactions besides digital currency.
Blockchain depends on complex mathematics to create secure transactions. But the top level concept is simple.
Blockchain creates distributed digital ledgers. The innumerable copies of the ledger are spread across the internet. The authenticity of the ledger copies is judged using asymmetric cryptography.
Anytime a transaction happens the ledgers get updated. Each update of transaction requires a lot of computing power to authenticate. The process of authenticating a transaction is called mining. People who volunteer computing power for ledger upkeep is rewarded with coins from the blockchain system.
The uniqueness of the ledger is mathematically ensured and the calculations are computationally expensive. As the number of records increases, it becomes impossible for any single party or individual to manipulate or corrupt the digital ledger.
The implication of blockchain technology is that it can become the backbone of a system that can have the highest level of trust without any involvement of a governing third-party.
Benefits of Blockchain in IoT
Blockchain seems like a great solution for the challenges of IoT. The architects and developers who build IoT infrastructures have been paying close attention to the implications of blockchain technology for their industries. It can help IoT in various ways:
End-to-End Security: Implementing a security infrastructure for innumerable devices can be a daunting task. Also, implementing this security in a centralized manner means that it can be a valuable target for cybercriminals. Blockchain’s decentralized nature provides an instant security advantage. It makes it harder for cybercriminals to corrupt the data or coordinate a distributed denial of service (DDoS) attack. Also, blockchain based smart contracts or crypto-contracts can ensure better authentication and access control. Blockchains encrypted messaging can be used to ensure communication security.
Cross-Platform Interoperability: Connected devices are running on multiple platforms. Blockchain can provide the underlying technology to bring all the devices together. It can help create a common M2M protocol. Systems and devices can use blockchain solutions like Ethereum, a blockchain app platform, to create a common channel for communication and transactions. Smart contracts can also help IoT devices to make digital agreements with each other or a larger system. For example, a smart contract stored in a blockchain can help a refrigerator with sensors determine that milk is running out. Then the system can order from an online store using a cryptocurrency of the same blockchain.
Performance and Stability: Blockchain has proved itself to be a robust technology. A lot of skeptics were initially hesitant about it. But it has been a reliable solution for Bitcoin and other cryptocurrencies. The Bitcoin's success has increased people's trust in the technology. IoT can benefit from this stability and robustness. Moreover, blockchain's distributed nature makes it desirable to IoT. Connected devices are everywhere. So having a distributed infrastructure helps with performance. However, there are concerns about the effect of growing number of records on a ledger. The assumption is that it can slow down the performance of a blockchain significantly. It is a valid concern and researchers are looking at the problem.
Flexibility: With various commercial and open source options for blockchain, it’s possible for IoT companies to use it to achieve various goals without investing a huge amount of money in research and development.
Future of Blockchain and IoT
Already various companies and research institutes are developing solutions for IoT using blockchain.
MIT’s ChainAnchor, an architecture for identity and access control within a shared permission ledger, is a promising blockchain for IoT. Modem, a supply-chain operations company, uses blockchain to maintain shipment contracts. Telstra, an Australian smart home company, is using blockchain to build their IoT ecosystem. IBM and Samsung have created ADEPT(Autonomous Decentralized Peer-to-Peer Telemetry) using blockchain to create secure transactions for IoT networks.
Companies are also facing pressure to ensure their infrastructure is more secure than ever. According to Gartner, over 20 percent of enterprises will devote their digital security efforts to IoT related issues. If blockchain proves as effective as everyone is expecting it to be, then more companies will start relying on it to secure their systems. It will save them time and money.
With the proliferation of IoT devices, the need for access control, cross-platform interoperability, trustworthy transactions and resilient networks will only increase. Centralized models cannot ensure this while maintaining an acceptable level of performance. For now, blockchain seems like the most promising candidate to meet the needs of the IoT industry.