The “Internet of things” (IoT) is becoming an increasingly hot topic of conversation and the rapid advancement of the technology is already felt throughout our daily lives. Broadband Internet is becoming more widely available, the cost of connecting is decreasing, and more devices are being created with Wi-Fi capabilities and sensors built into them. The principle of connecting billions of smart devices capable of exchanging information to automate networks while changing their state dynamically and adaptively is absolutely thrilling. And according to Statista, the global IoT ecosystem won´t stop growing, turning from 157B in 2016 to $457B by 2020, disrupting existing processes across a variety of industries including manufacturing, agriculture, healthcare, the financial sector, and virtually all mechanically intensive industries.
Despite this excitement, security remains a top concern for the IoT ecosystem. As the connections of various IoT devices increases, the entry points for cyberattacks also increase, exposing huge amounts of data, supply chain partners, and the entire ecosystem to security breaches. Therefore, lightweight, scalable, and distributed security measures are required, making blockchain the perfect candidate to ensure IoT reliability and security.
Why combine blockchain and IoT?
IoT security flaws typically revolve around three areas: identification, authentication, and transaction. Devices improperly verifying, connecting, or transferring data with other nodes are all major security concerns. Blockchain as an encrypted, distributed computer filing system designed to allow the creation of tamper-proof, real-time records can alleviate all these areas. By providing IoT devices reliable identification, authentication, and secure data transfers, Blockchain facilitates secure sharing of IoT datasets and systems.
Auditable: Tracking the actions of multiple networks owned and administered by multiple organizations is something blockchain can provide. Such auditability improves analytics, network performance, legal compliance, and safety. The blockchain’s permanent, immutable record means custodianship can be tracked as data and analyzed by anyone authorized to connect to the network. Being transparent by nature, if something goes wrong, breakages occur, data leaks where it shouldn’t, then the blockchain, making IoT devices directly addressable, provides a history of connected devices for troubleshooting purposes.
Transactions: Blockchain enables device autonomy, individual identity, integrity of data and supports peer to peer microtransactions as it removes technical bottlenecks and inefficiencies. Especially for machine-to-machine interactions, micro-transactions are a key part to ensuring economic feasibility and optimality. And since there is no intermediary, the deployment and operation costs of IoT can be reduced through this technology.
Distributed: Deployments of IoT devices can be complex, and a distributed ledger is well suited to provide IoT device identification, authentication and secure data transfers. Unlike centralized technologies in which addresses are assigned in a hierarchical context, a blockchain-based approach is more agile because it enables devices to register directly. This obviates the need for accounts at centralized host servers, which are often subject to external cracking and internal leaks. In addition, the decentralized nature of these technologies reduces the threat of denial of service (DoS) attacks of the kind that have been launched against the DNS. Furthermore, a distributed ledger eliminates a single source of failure within the ecosystem, protecting an IoT device’s data from tampering.
Let´s now analyze a concrete example on how combining blockchain is useful for IoT in the smart homes industry, where devices related to environmental control, entertainment, household electronics, and home security systems are interconnected. Through blockchain, authorized parties such as the homeowners can observe and control all the networked IoT devices of a smart home from a remote site. The information from sensors and other devices is sent to a central server or gateway from where it is presented to an enabled controlling device such as a cell phone or a tablet. Maintaining the security of this information is critical not only from a reliability point of view but also from the point of view of intrusion detection and documentation. Using blockchain the security and privacy of smart home systems can be achieved by recording communication and control information as transactions in the distributed ledger. Cryptography techniques can provide confidentiality, integrity of transactions and authenticity/non-repudiation of known and unknown devices. With the addition of time-stamping and proper encapsulation, a robust security can be ensured. Any investigation could immediately verify this information and the added benefit of its distributed storage would make it difficult to erase or corrupt. Efforts to disrupt the system can be immediately detected and troubleshooted. A DOS, DDOS, or man-in-the middle attack can be thwarted with a robust security mechanism. Transactions between nodes and between nodes and cloud can be verified and any unauthorized transaction can be rejected.
Even though blockchain in IoT is relatively new as both technologies are in the frontline of innovation, initiatives focused on this sector are quickly gaining attention. In the following lines, I´ll offer a brief analysis of the most honorable mentions:
IOTA was one of the first projects focused on IoT. Early on, the company built a grand vision for what effect distributed ledgers could have in IoT and pursued that vision with passion. Incredibly, the IOTA platform through its tangle ledger system, claims to have zero transaction costs and sets no limits to the number of transactions per second, crucial for the IoT industry. Besides convenience, micro-transactions are an important part of sustaining an IoT network and high transaction fees make micro-transactions unfeasible.
In terms of its architecture, IOTA operates on a data structure called a directed acyclic graph, referred to by IOTA as the tangle. The tangle is similar to a blockchain and still falls under the category of distributed ledger technology, but it features a different consensus structure. Notably, the tangle’s structure makes the platform blazing fast. Blocks are added to the ledger by referencing an array of interconnected prior transactions, rather than the single stream of a normal blockchain. Recent network performance has clocked the tangle at nearly 1,000 transactions per second, which is an enormous improvement over standard blockchain rates.
The aim of IOTA is to provide an easy, safe and fast way of trading, buying or exchanging datasets to its users. The more number of people gets connected to the IOTA, the more data will be available on demand. Millions of servers will be constantly collecting the data which may be unused today but may be useful in the future. Even though IOTA have consistently been one of the top 10 cryptocurrencies by market cap, the project still has immense room for growth in the coming time.
VeChain is another leading blockchain security platform that aims to connect blockchain technology to the real world by furnishing a robust infrastructure and integration of IoT. VeChain is a blockchain-enabled platform that is designed to enhance supply chain management processes, providing retailers and consumers with the ability to determine the quality and authenticity of the products that are bought. From product source materials, to servicing history, and spare part replacements, every single piece of information about the supply chain movement of a product can be recorded and verified to bring a supply chain management ecosystem that is secure for all participants.
But more interestingly, VeChain is designing a new form of supply chain using blockchain and IoT technology. One of the key features of v4.0, the next upgrade of the VeChain platform scheduled for the end of 2018, is the integration of IoT, which has a lot of tech enthusiasts quite excited. The supply chain will feature an exponential increase targeting to do 10,000 transactions per second. This impressive number of transactions alone would put VeChain ahead of competition, but their ambitions for future developments are what truly sets them apart. Their focus is to become an all-inclusive blockchain platform for enterprise solutions, disrupting traditional supply chain management.
The Hyundai Digital Asset Company (HDAC) is pursuing IoT through a more traditional blockchain route designed to facilitate fast and secure payments and communication between IoT devices, providing confidentiality, immutability and integrity for processing data on the IoT. By tweaking a proof-of-stake protocol and utilizing an intriguing mix of private and public blockchain, HDAC will be functioning on the Hybrid Blockchain acting to support micro-transactions for strongly secured wallets.
The HDAC platform intends to create smart contracts that allow all IoT devices to communicate with each other. The core concept of the HDAC platform revolves around the bridge between the private and public blockchain, using the HDAC token, or HDAC*T. These tokens will be used by IoT devices as a secure micropayment method that can’t be accessed by a third party, giving users complete control over the finances involved in all their IoT device management. This flexibility provides users the ability to select their own transaction fees and create smart contracts unlike most data systems. And by incorporating a double chain system, the platform is applicable for both IoT devices and industry networks.
Another project that combines blockchain with IoT to create a management system for supply chains is Waltonchain, named after Charlie Walton, inventor of RFID. RFID or Radio-frequency identification technology is a communication technology that unlike barcode, does not need line-of-sight communication. To describe the combination of their proprietary RFID chips with blockchain technology, Waltonchain introduces the concept of the Value Internet of Things (VioT).
The VioT comprises of two parts, a hardware part and a software part. The hardware part basically includes RFID tag chips and RFID reader chips. The software part on the other hand consists of the Waltonchain software, Walton protocol, and Waltoncoin (WTC).
Using RFID tags, blockchains can now store physical items (or at least data representations of them) on-chain. RFID tags use electromagnetic fields to identify objects. They’re most commonly utilized in inventory tracking, library systems, and product kiosks. With Waltonchain, a simple scan of the RFID tag provides you with all the information you need to know. What the product is, where it’s been, who’s handled it, and other important data, all stored in the blockchain through these tags. This provides important benefits such as a more accurate tracking of a product back to its origin, anti-counterfeiting through RFID identification, and improved security through blockchain technology.
But more than just a supply chain platform, Waltonchain provides enterprise businesses with the technology to create their own sub chain and benefit from the Walton parent chain. Separating the network into the parent Waltonchain and sub chains has a few benefits. The first one is that each business can customize a blockchain to their specific business needs. But also, in terms of scalability, the separation helps with performance as most of the data resides on a business’s sub chain, their activity won’t bog down the entire network.
IoTeX is another interesting project that aims to bring interoperability to IoT, so all devices and systems can work together autonomously. Given that almost all existing blockchains have limitations when facing IoT environments because they aren´t built to handle such large quantities and heterogeneity of devices, IoTeX is purposely designed to work out the complex IoT needs.
Focused on scalability, cost reduction, and privacy, one of the core innovations of IoTeX is its blockchain-in-blockchain architecture. IoTeX consists of many blockchains that are hierarchically arranged, including a public root chain, subchains provisioned by developers and companies to connect and interact with IoT devices, and cross blockchain transactions on top of this structure, to support the transfer of value and data among chains.
This means that each IoT company can run its own ecosystem based on the IoTeX public chain and create their subchain and token using IoTeX developer tools. And through a smart use of token incentives, tokens can incentivize users to advocate for their application, turning consumers into advocates, marketers, and even service providers. With this, IoTeX aims to empower IoT companies to reconstruct their businesses using blockchain technology to benefit from the fast-growing global token economy, providing support to a variety of IoT ecosystems, such as the sharing economy, smart home, supply chain management, and device identity management.
IoT is already improving many aspects of our lives, and its effect on the world will continue to expand over the next few years. But to realize its full potential, IoT security and privacy are critical success factors. By combining this emerging technology with blockchain and the cryptographic processes behind it, the whole ecosystem can be more secure and reliable, giving space for future innovations. Besides improving the IoT software infrastructure to make identification, authentication, and communication seamless and secure, smart contracts built upon blockchains offers the opportunity to build reliable sensitive IoT applications operating autonomously over trustful environments, creating the building blocks towards a more shared economy.
Even though blockchain projects still have a long way to go before being technically competent to securely handle the IoT network, as Bernard Marr from Forbes wrote, both technologies have still big promises to keep, and combining them could be the key to ensure that those promises are kept, while minimizing the security and business risks that go hand-in-hand with technological change.