IoT In Blockchain: Benefits, Use Cases, and Challenges

• By Jignen Pandya
• 28-02-2023
• Internet of Things

Internet of Things (IoT) and Blockchain, both are powerful technologies that have revolutionized the world with their potential.

Both technologies offer a wide range of possibilities and opportunities. However, when you combine IoT with Blockchain, you can unleash the potential of both of these technologies and address various issues, including security.

However, before we delve into it, we will separately understand both these technologies in brief.

What is the Internet of Things?

The Internet of Things, also called IoT, is a technology that connects various devices with the help of a wide range of sensors to transmit data. You will need an active internet connection for data transmission and information exchange between two devices.

You can make an IoT app that can help scale your business. All you need to do is to hire IoT app developer who has a real-time experience and expertise in the domain.

Whether it is a TV remote or a heavy industry tool, you can connect devices with each other and start transmitting data between them with this powerful technology.

The Internet of Things has completely revolutionized the world with its limitless potential and is used in almost all industry verticals such as healthcare, IT, manufacturing, pharma, construction, household, entertainment, and others.
Within seven years, there will be more than 25 billion connected IoT devices in the world. It simply shows how rapidly technology is growing.

From kitchen households to baby monitors to industrial generators to thermostats, you can connect any devices over the internet for data transmission.

It has made possible seamless communication between people, products, and other things. Also, you don’t need any human intervention for data transmission, which is an added advantage.

IoT makes a highly powerful connection between the physical world and the digital world possible, which has the potential to transform the world.

What is Blockchain?

Blockchain is another revolution in the tech industry that has shown immense potential in recent years. It is a highly advanced database mechanism that facilitates business networks to share highly sensitive data and information securely and safely.

Here, a database saves data in various blocks and these blocks are linked together in a chain. The best thing about Blockchain technology is that you cannot delete, add, or modify the chain without getting consent from the network and its stakeholders. It makes the data consistent.

You can use blockchain technology in almost all sectors to develop an unchangeable ledger to track orders, track payments, and make other transactions.

There were many issues and challenges in the existing traditional database technologies, especially when it comes to financial transaction recording.

For example, if you have purchased a property from a seller by paying him a certain amount of money. The property ownership is transferred to you. Now, both, you and the seller have monetary transaction records, but these sources cannot be trusted.

The seller may claim that he has not received any money from you. Similarly, you can also claim that you have paid the amount to the seller even if you have not.

That is the reason, all laws of the world demand a third party as a witness in such transactions. This third party is actually a central authority which might complicate things. If the third party appointed by you and the seller is corrupt or compromised, you and the seller might suffer.

That is where blockchain technology comes into the picture. Here, it creates a decentralized, error-proof, and tamper-proof environment to record financial transactions.

In the above case example, it develops separate ledgers for you and the seller. You have to take permission from the seller to make a transaction and vice versa.

Furthermore, the transactions are updated in the system automatically. You or the seller cannot tamper with the transactions. If you try to do so, it will corrupt the entire ledger and the seller will also come to know about it.

Hence, it is a very powerful, transparent, and highly secure technology that is used by various sectors.

You can hire IoT app development services to develop a unique, impressive, and feature-rich IoT app for your business.

If there are seven stakeholders in a particular ledger, you will need the permission of all seven stakeholders to edit, alter, or delete any data or record. As it is a decentralized network, it is less dependent on local storage facilities.

What is the need to combine IoT networks with Blockchain?

One of the main concerns with IoT technology is security. This is the reason why large enterprises and organizations resist using the technology on the large scale.

IoT-connected devices have security vulnerabilities and cybercriminals are well-versed in them. They take no time to attack such vulnerable devices. Targeting IoT devices with Distributed Denial of Service (DDoS) attacks is very common in the domain.
DDoS is a type of security attack where cybercriminals use multiple compromised computer systems to attack a target, for example, a central server.

The attack is in the form of a huge volume of data requests from different systems. It causes a denial of service for users who, in a normal scenario, get the services when asked.

In recent years, such DDoS attacks have increased in large numbers, creating worry for individuals and organizations. They are scared of using IoT technology as unsecured IoT devices are highly vulnerable to such attacks.

They can breach the security system in just no time and launch DDoS attacks.

Apart from security, scalability is also another concern with IoT networks. For example, if you keep adding more devices through an IoT network, the centralized system will find it difficult to authenticate, authorize, and connect multiple nodes in the network, which might result in a bottleneck.

To avoid this, you will need huge investments in servers that can handle such massive information exchange. In case a server goes through any issues, the whole network can go down.

IoT-connected devices are growing rapidly worldwide. They are becoming an integral part of our lives today. To unleash the full potential of the technology, concerns like security and scalability must be addressed perfectly and accurately.

Blockchain technology can come to the rescue here.

Blockchain has a decentralized, distributed digital ledger that is shared between all the stakeholders of the network. All the transactions and events are first validated and then recorded in the ledger.

You will need permission from participants before adding, deleting, changing, or modifying any data stored in the ledger.
Here, within the network, some selected members have separate copies of the ledger. A consensus process is followed when it comes to accepting new requests in the form of transactions or records.

The main security concern with IoT-connected devices is that the network collects and processes data transactions across many devices. Now, these devices are owned, maintained, and administered by different organizations.
It is almost impossible to find the culprit of any data leakages if cybercriminals launch an attack.

Furthermore, there is no data ownership system available with the IoT networks. Networks generate and distribute a massive amount of data with multiple stakeholders available in the system, making it impossible to introduce any type of data ownership.

Here is a list of ways Blockchain can help address security and scalability issues associated with IoT:

• No Trust Issues

You don’t have to involve any third parties as Blockchain does not need one. Here, the distributed ledger is highly tamper-proof and no one owns the system here.
Data generated by IoT devices are for all. If someone wants to edit data, everyone will get notifications for the same. Everything is transparent and secure when it comes to blockchain.

• An additional layer of security

Store IoT data now without worrying a bit. Using Blockchain for data storage will add another layer of security. It will make the job of hackers tough as they have to deal with an additional layer of security to access the network.
Overwriting existing data records is quite impossible as Blockchain has a powerful and efficient encryption level.

• Transparency

Another reason why to combine IoT with Blockchain is transparency. If you are a part of a particular blockchain network, you can have the access to the network and you can check out any transactions of your wish.
It also helps to identify data leakages as you will come to know who accessed the network previously.

• Fast Transactions

Blockchain can handle billions of connected devices and transactions between them. There is no limit. The system will never shut down. Being a distributed ledger, blockchain solutions support a large number of transactions securely, without any data loss.

• Cost Reduction

You can reduce your costs to a great extent by eliminating IoT gateway-related costs such as communication overhead costs, hardware-related costs, etc. You can enable trust among the network stakeholders by ensuring secure transactions and data exchanges.

• Smart Contracts

Smart Contracts, as the name suggests, is an agreement between two parties stored in the blockchain system. You can write down various contractual arrangements between stakeholders if you wish so.

For example, if you don’t want any human intervention while receiving payments, you can write the smart contract accordingly. When defined conditions are met, the payment will be processed automatically.

Some Other Benefits of Combining IoT with Blockchain

• No data tampering can happen as blockchain has native cryptographic processes which don’t allow any stakeholder to tamper with data.
• IoT devices can track and log highly sensitive data and sensor management. Also, they can prevent storing duplicate or malicious data in the system.
• No need to trust any third-party entities for data exchanges. Blockchain is highly secure and robust with data exchange facilities.
• The distributed ledger architecture is highly seamless and error-proof, making IoT device authentication, registration, identification, and data exchange secure and safe.

IoT+Blockchain Used Cases

Let’s understand some of the used cases for IoT and Blockchain to understand how both these technologies, when combined, work in your favor.

• Supply Chain and Logistics

The supply chain industry has stakeholders such as brokers and raw material suppliers. Sometimes, the delivery might get delayed due to many suppliers in the network.

This is the reason supply chain players across the globe are planning to make IoT-enabled vehicles to track them during the whole shipping process. You can use IoT sensors such as motion sensors, GPS, temperature sensors, and connected devices to track your vehicles.

This sensor information is stored in the blockchain and then supplied to all the stakeholders in the network. They can take necessary actions based on this real-time data.

• Automotive Industry

We all have heard about fully automated vehicles. Well, it is all about IoT technology. They use IoT-enabled sensors and exchange and distribute key information and data among multiple users through a decentralized blockchain network.

IoT and Blockchain, combined, help the automotive industry can enable automated fuel payments, automated traffic control, smart vehicle parking, autonomous cars, etc.

• Smart Homes

We all use a wide range of IoT-enabled devices in our day-to-day lives. One such example is Alexa, a powerful voice assistant. Not just that, when you use IoT+Blockchain combined, you can address many home security concerns as well.

You can use biometrics, voice recognition, facial recognition, and other sensitive data that can be stored in the blockchain network to take home security to the next level.

Also, you can remove centralized infrastructure with the help of blockchain technology.

• Pharma Industry

Drug counterfeiting is a concerning issue and with the help of IoT Blockchain solutions, it can be addressed excellently by tracing and monitoring the drug shipment from the factory to the supply destination.

Apart from the above mentioned use cases, IoT and Blockchain technologies can be used in sectors such as agriculture, water management, healthcare, etc.

You can also use technologies such as AR & VR in IoT development process to make more feature-rich and technically advanced IoT apps.

IoT and Blockchain Challenges

Though together blockchain and IoT can address many security and scalable issues across various industry verticals, there are some significant challenges as well.

First of all, you will not need any centralized servers in the blockchain, but smart contracts are immutable and this is a problem. Once you have deployed the smart contracts in the network, you cannot change or alter them. They become susceptible to bugs and errors.
Hackers know about this vulnerability and they constantly try to take advantage of it. You need a mechanism that can review smart contracts from time to time to implement these technologies successfully.

Again, the existing regulatory environment is also making it difficult for organizations to adopt IoT systems.

Furthermore, as we have discussed earlier, there are many security issues with IoT technology that must be addressed. For example, an IoT device’s sensors can be compromised, which might jeopardize the security of the transactions.

However, even with these limitations and challenges, IoT and blockchain are powerful technologies that can be used to streamline various processes and mitigate security risks to a great extent.

Conclusion

IoT and Blockchain are powerful technologies and combined, they offer a wide array of possibilities for organizations and enterprises. You can hire IoT app developer if you are looking for scalable, secure, and feature-rich IoT applications.
Blockchain can help address security and scalable issues associated with IoT technology. Organizations and enterprises are finding limitless opportunities with these two technologies to streamline processes and improve the efficiency and productivity of operations.