How is Blockchain Improving Internet of Things?
The Internet of Things (IoT) connects people, places, and products, offering new opportunities to generate value in products and business processes. Sensors and chips are transforming the way we work. However, security is a major concern when implementing this technology on a large scale.
Blockchain technology is critical to revolutionizing the security and performance of IoT devices. It can pave the way for better data encryption and improve trust.
Let’s take a look at the relationship between the two and how Blockchain will address the potential shortcomings of IoT.
Benefits and Challenges of the IoT and Blockchain Convergence
Large-scale IoT deployment is now within our reach in the form, for example, of Smart Cities. These promise to make our lives more efficient, with cities that are traffic jam-free, energy-efficient, and more sustainable.
However, this massive deployment faces several challenges:
- Network security. Thanks to the advances offered by 5G networks and the connectivity it provides, these networks can be a very tempting target for hackers.
- Data from various sources must interact and integrate on the same level, preserving privacy, data ownership, and data security.
- Potentially insecure IoT devices, since a compromised device could be used to attack other devices on the network.
In short, the big problem is preserving the security and privacy of the data transmitted from one network to another, and this is where the union of blockchain technology with IoT can be the key to these problems.
According to Knud Kegel, some of the benefits that we find by combining Blockchain with IoT are:
- Data authenticity for quality assurance: Thanks to its immutability, blockchain technology can add a robust framework to processes to quickly and accurately detect data manipulations.
- Device tracking to catch errors: IoT networks can be gigantic, making failure patterns difficult to detect. Blockchain technology assigns a unique key to each IoT endpoint that helps identify inconsistencies.
- Smart contracts for faster automation: IoT technology alone enables automation but coupled with smart contracts, automated responses can be authorized through this network.
- Decentralization for improved security: regardless of the connectivity methods used, because the blockchain is decentralized, cybercriminals will not be able to attack a single server and corrupt its data.
- Usage logs for employee performance: going one step beyond sensors, blockchain technology can also track user actions to let you see who, when and how they have used a device.
Blockchain for IoT Security and Privacy
Moving on, let’s look at the results of integrating blockchain into IoT devices for an enterprise.
Connected IoT devices can process a large amount of data managed by different organizations, making it difficult to locate the source of a data leak in the event of a cyberattack. It is also difficult to know the ownership of this data.
Therefore, blockchain technology can help ease the associated security and scalability issues:
- Using blockchain to store data collected by IoT networks would add another layer of security, making it more difficult for hackers to gain access.
- The blockchain also provides a more robust level of encryption, where it is virtually impossible to overwrite existing records.
- It brings transparency by allowing any authorized person to access the network and track past transactions.
- Applying blockchain speeds up transaction processing and coordination among billions of connected devices.
- By increasing trust between parties, it enables companies to reduce their costs, as processing overhead related to IoT gateways is eliminated.
- By relying on a tamper-proof system, a single organization’s control over the data generated by IoT devices is eliminated.
IoT and Blockchain Use Cases
The combination of blockchain and IoT has a lot of potential in creating a marketplace of connected devices and for companies to create value from the data collected.
We have already listed the applications we can find when the two come together regarding security and privacy, but there are more. In fact, there are some examples of companies that are already putting it into practice. Some examples are:
- Financial sector: Banks such as ING, Deutsche Bank, and HSB are introducing blockchain technology to create a scalable and decentralized environment for IoT devices, platforms, and applications.
- Supply chain and logistics: A supply chain network involves many stakeholders, complicating end-to-end visibility. In addition, it can consist of many payments and invoices. As a result, many companies are working to enable vehicles to be enabled for IoT devices to track the shipping process. Due to the lack of transparency, the combination of both technologies improves the reliability and traceability of the network.
- Automotive sector: The automotive industry is investing in developing automated vehicles enabled by IoT sensors, allowing crucial information to be exchanged easily and quickly. Combined with blockchain, automated fuel payments, autonomous cars, smart parking, or automated traffic control are achieved.
- Smart homes: It is obvious that to enable these smart homes, the role of IoT is crucial. The union of IoT with blockchain makes it possible to remotely manage your security system, eliminate centralized infrastructure or store sensitive data securely (biometrics, facial or voice recognition).
- Pharmaceutical industry: Drug counterfeiting is a problem that is increasing every day. The transparency and traceability of blockchain technology help to control the shipment of medicines from their origin to their point of destination along the entire supply chain.
- Agriculture: This is one of the essential sectors for human subsistence, and technology has the potential to reshape it, from production to the grocery store. IoT sensors can be installed on farms and send their data directly to a blockchain network to improve the supply chain.
These are just a few examples, but the potential of IoT and blockchain goes far beyond these sectors. The billions of devices that IoT can enable worldwide lay the foundation for creating a new ecosystem of smart mechanisms, and the union with blockchain makes them more secure.
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