Blockchain in the Internet of Things

How Blockchain is impacting the Internet of Things

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Blockchain's Impact on the Internet of Things

Did you know that the first IoT device — a toaster — was created all the way back in 1990? Today, IoT devices are proliferating, promising convenience and comfort. Adjust your thermostat without getting out of bed. Have your printer automatically order ink when it’s running low. Start warming up your car while you finish breakfast. Any internet-connected device, from a smart fridge to a pacemaker to a FitBit to a smartphone, can be part of the internet of things. These devices send information to us, to cloud-based applications, and to each other to provide improved functionality for consumers and valuable data for manufacturers.

But IoT devices have a major shortcoming: security. The flaws are so serious that some observers think they could threaten national security. And they can certainly breach personal privacy and cost companies millions.

Internet of Things Industry Challenges Blockchain Can Help Solve

  • Internet-connected devices and their associated data are vulnerable to security breaches
  • The more IoT devices we have in our lives, the more opportunities there are for hackers to disrupt our lives in ways both annoying and potentially deadly
  • IoT devices don’t have the authentication standards required to protect users’ data
  • Devices can improperly verify, connect with, or spend with other devices
  • Poorly protected devices can be marshalled for distributed denial of service attacks on public infrastructure such as power grids and water works. In other words, not only are IoT devices susceptible to being attacked themselves, they are also susceptible to being used to orchestrate attacks
  • Many IoT devices are made by unknown companies that don’t have the resources to provide security updates and that use factory-set administrative passwords that are difficult or impossible to change
  • IoT devices from different manufacturers with different operating systems and different communication protocols can’t use traditional methods for identity assertion and verification, opening the door to attack

Before blockchain and IoT can become fully integrated and these challenges addressed, problems with blockchain transaction speed and computational complexity must be solved. Currently, transaction speeds are too slow and IoT devices are too simple. It isn’t possible for hundreds of thousands of IoT devices to simultaneously transact on today’s blockchains. Device authentication, control, and security provision are more complex than moving bitcoins from one wallet to another. New protocols must be put in place before the internet of things can function with blockchain. Bitcoin SPV and Ethereum Light Client Protocol might have the necessary capabilities.

In addition, the transparency of public blockchains may be a stumbling block to their use with IoT. Companies that use IoT devices in supply chain management, for example, do not want to share confidential information with competitors. Certain information needs to remain under wraps. Privacy is also important for IoT medical devices and for vulnerable public utilities. In addition, companies may not find the cost to adopt blockchain worthwhile.

How Blockchain May Disrupt the Internet of Things Industry

That being said, blockchain holds plenty of potential for IoT. With blockchain, we can:

  • Track the data measured by IoT sensors and protect it against tampering
  • Identify and authenticate IoT devices
  • Securely transfer IoT device data without a third party
  • Reduce operating costs for IoT devices by eliminating intermediaries
  • Create accurate and immutable records of IoT data to improve analytics, network performance, legal compliance, and safety
  • View accurate and immutable records of IoT data when necessary for troubleshooting
  • Use smart contracts to manage IoT transactions and interactions
  • Limit the threat of denial of service attacks
  • Track and distribute security software updates for IoT devices
  • Validate a shipment’s time, place, temperature, owner, and origin to provide traceability, transparency, and accountability
  • Easily share with regulators operational records for critical machines to verify compliance
  • Allow IoT devices to check in automatically with a blockchain to get security updates

How It May Impact Consumers

Thanks to IoT devices such as smart locks and internet-connected machinery plus blockchain-based smart contracts, integrating IoT with blockchain could allow consumers to:

  • Share ownership and maintenance of self-driving cars, reducing transportation costs
  • Share the production and use of solar power and share solar panel upkeep responsibilities and expenses
  • Share ownership and maintenance of expensive machines used in production processes
  • Share the use of workspaces and homes, reducing ownership and rental costs
  • In general, allow for collaborative consumption and pay-per-use systems
  • Experience faster repair times for devices and machines that could sense when they’re broken and order replacement parts or set up service calls
  • Receive purchases faster

How It May Impact Employment

Blockchain in IoT, or “blockchain for things,” may:

  • Reduce employment at companies that act as intermediaries, such as Uber, ZipCar, and Airbnb
  • Increase employment for developers who can solve existing blockchain challenges that prevent it from being a good fit for IoT, such as developing private blockchains and faster blockchains
  • Cut manual inspection jobs that IoT devices can perform instead, such as examining equipment and verifying shipments

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