Blockchain Applications in Internet of Things (IoT)

Blockchain Technology for Internet of Things (IoT)

Blockchain Internet of Things (IoT)

Blockchain technology is the missing link to settle scalability, privacy, and reliability concerns in the Internet-of-Things.

According to Cisco, 50 billion devices are due to come online by 2020. With so many connected devices all sending, receiving and processing instructions to turn on, dial down and move up, the sheer amount of data due to come on-stream could come with unprecedented costs. Other issues include how exactly we can track and manage billions of connected devices, storing the metadata that these devices produce, and do it all reliably and securely. Before mainstream Internet-of-Things consumer adoption can really take hold, these issues will need to be resolved.

Blockchain technologies could perhaps be the silver bullet needed by the IoT industry. Blockchain technology can be used in tracking billions of connected devices, enable the processing of transactions and coordination between devices, allow for significant savings for IoT industry manufacturers. This decentralized approach would eliminate single points of failure, creating a more resilient ecosystem for devices to run on. The cryptographic algorithms used by blockchains, would also help to make consumer data more private. The benefits of decentralizing IoT are numerous and notably superior to current centralized systems.

However, blockchain is a newer invention and, similar to IoT, current applications sometimes fall short when it comes to scalability and integration. As tech professionals start to troubleshoot issues and further innovate applications and solutions that are blockchain-based or IoT industry they have quickly realized the potential for blockchain to support IoT and relieve many of the glaring pain-points current systems suffer from. Many tech professionals view blockchain and IoT as a perfect match.

This guide will help to discuss exactly why transferring centralized servers that support IoT devices to a decentralized infrastructure will help to revolutionize IoT. We will explore the following topics to address the overall need, benefits, and future of blockchain applications in IoT in the following sections:

  • What is the Internet of Things (IoT)?
  • Issues IoT Currently Faces
  • How IoT Can Benefit from Decentralization
  • Blockchain Internet of Things (IoT) Use Cases
  • The Future of Blockchain Applications in IoT

What is the Internet of Things (IoT)?

 Devices, vehicles, home appliances, handheld electronics, thermostats, mobile phones, and sensors…These items are denoted by the word “Things” when referring to the Internet of Things. Basically, The Internet of Things it is an umbrella phrase used to address the growing amount of digital devices that are able to connect to a larger communication network.

The Internet of Things has been discussed as a network of smart devices as early as the 1980s. Now it encompasses AI, real-time analytics, machine learning, sensors, tracking systems, and cloud storage. Home and wearable automation ushered in more devices for daily personal use and corporate use than we have ever had before. As more and more technological innovations get added to the list, the way the devices interact with each other becomes more layered and complicated, yet increasingly intertwined.

The IoT industry aims to connect these physical things to enhance our existing infrastructure and operational systems. Most of these previously listed devices can connect to the Internet or go offline and be controlled and monitored remotely. Now as we introduce more and more automated ‘things’ the web continues to spread and the responsibility the network acquires increases.

Facility management, highway systems, and manufacturing equipment all fall under IoT. Many industry-specific functions require high-functioning interaction between these physical things. While IoT might sounds like a tech-exclusive term, it is very broad and refers to even blenders and washing machines or a pair of headphones. Anything that can be connected to the internet, though it can be narrowed to define objects that communicate with each other online.

What is the purpose of IoT? Mainly, to create a system that stores data without human input. Then using that data, systems can operate more efficiently.

Harnessing IoT has opened the door for near endless combinations and possibilities of ways to leverage the connectivity in order to build a cohesive and optimally functioning IoT network. While the future looks bright for IoT, it is important not to overlook the problem areas that must be ironed out.

Blockchain Internet of Things (IoT) News

Issues IoT Currently Faces

 Since it was first conceptualized in the 1980s, IoT has come a long way to the bleeding of edge technology we are standing at today where there is even an Internet of Self Driving Cars. The number of IoT devices projected to be a part of the average household is expected to jump from around 10 to near 500 by 2022. IoT connectivity is a given when purchasing tech products before customers can even demand it, the product design now leans towards interconnectivity despite current IoT snafus. What are the main issues IoT currently faces that hinder its effectiveness and even put consumer data in danger?

Let’s keep in mind while reading this section that most emerging IoT platforms are cloud-based and have a central hub that then provides backend services to smart devices. This set up makes it so that the devices are what is receiving data, while on the other end the centralized hub is the service provider.

Here are the most significant problems with centralized IoT:

  • Security

 This issue is brought up time and time again when it comes to IoT. With so many connected devices it makes it difficult for users to secure their personal data and use patterns. The more devices that are connected the more vulnerabilities and security threats. It also creates more gateways for companies to suffer hacks.

  • Cloud Attacks

As stated in the intro to this section, most IoT has cloud architecture. This means that large, and often sensitive, amounts of data will be stored on the cloud. This makes cloud providers easy targets for hackers. Where there is centrally consolidated data in an obvious location there are looming cybersecurity threats.

  • Expensive

Not only is IoT currently expensive to manage and deploy efficiently, the World Economic Forum has estimated that if one cloud provider was hacked it could cost $50 billion to $120 billion dollars in damages. Integration is expensive and it is likely that the cost of devices with IoT capabilities will also rise.

  • Privacy and Data Storage

Companies will be responsible for massive amount of consumer data that they can either sell or leave in insecure centralized repositories. Being able to harness that data, store, and adequately protect it is an insurmountable challenge and hoarded it in the cloud has proven to be an incredibly risky strategy. Centralized IoT ramps up the Personal Identity Information (PII) sprawl crisis that consumers fall victim to daily.

  • Consumer Skepticism

Adoption for centralized IoT has been slow and it is clear that all involved parties have valid concerns about moving forward. Regardless, IoT is a runaway train as manufactuers continue to create IoT devices. Consumers are skeptical that IoT services providers will protect them and also don’t necessarily trust the IoT devices themselves and their ability to store and transmit data securely.

  • Inadequate Infrastructure

There are major connectivity issues with IoT and the sever-client model that facilitates connection. While it does work presently, it lacks long-term scalability. Looking at the numbers predicted for 2022 for how many IoT devices will need network support, it is hard to imagine a functioning network supported by current, already inefficient and insecure centralized models.

How IoT Can Benefit from Decentralization

 Centralized services might be working for now, but they are not a sufficient long-term IoT solution to support device design of the future on a massive scale. Moving data and backend services away from centralized servers will be the key to IoT capabilities reaching their full potential in a secure way.

Decentralized IoT will make device connectivity and data storage trustless through nodes that can operate without a centralized authority. A distributed model is more efficient, secure, affordable, and will unlock even unforeseen residual benefits for IoT that have yet to be predicted.

Here is a list of the top benefits of decentralizing IoT:

  • Improved Security

Blockchain offers devices unparalleled security infrastructure that blows cloud-based storage out of the water. Distributed networks lack a single point of entry or vulnerability for hackers to enter. Cryptographic signatures make hacking incredibly difficult, any messages originating from anywhere other than the authentic origin will be null and void on the network.

  • Tamper-Proof Data

Decentralized applications carry a much lower risk of falling victim to tampering and fraudulent activity. Why? Because distributed ledger technology (DLT) uses asymmetrical cryptography to timestamp and immutably store transaction data and other related information on the ledger.

  • More Affordable

When security vulnerabilities are removed through placing IoT on distributed networks and storing data via distributed ledger technology and blockchains, IoT becomes more affordable. Service providers currently have a monopoly on IoT and the cost of supporting devices. Decentralization will make IoT more accessible and damage costs from hacks can be more easily prevented or avoided all together. Intermediaries that operate centralized IoT systems and all associated costs will also be eliminated through decentralizing IoT.

  • Trustless

Trust between all parties and devices using IoT will use the distributed ledger to verify and smart contracts to automate, never having to place trust in a centralized service provider or other actors to store data or be in control of their device connectivity.

DLT can automate services through code to act as the intermediary for data flow.

  • Autonomy

Blockchains enable smart devices to act independently and self-monitor. These mini “Distributed Autonomous Corporations” could be comprised of a decentralized IoT that is able to operate on its own according to the pre-determined logic of a specific household or industry. This could completely remove intermediary players and central authority to have completely automated financial services or insurance settlement distribution, for example.

Blockchain Internet of Things (IoT) Use Cases

IoT applications in blockchain have the potential to penetrate nearly every part of daily life. As we become increasingly dependent on devices, we become more dependent on IoT. As IoT shifts to a decentralized, blockchain-based future blockchain applications in IoT will be something we use every hour without even realizing we are engaging with “Blockchain Applications in IoT.” Where there is data to be gathered from devices and deployed, there is IoT. Creating cryptographically secure databases for these hubs of device connectivity will be at the center of the use cases for blockchain IoT we explore below.

Here are some innovative uses cases for blockchain applications in IoT:


The auto industry has many uses cases for blockchain because it is a part-intensive industry. The centralized supply chain and trust-based distribution is the current model for how we manufacture and obtain vehicles for daily use. IoT could be used to automatically updated blockchain-based ledgers to keep a transparent and immutable vehicle record. This would work to increase transparency across the industry and make purchasing a “lemon” near impossible. Parts are sourced from so many different vendors and implementing blockchain applications and IoT to help track these moving pieces in a tamper-proof and authenticated system would improve the way vehicles are bought, sold, manufactured, and distributed.

Smart Appliances

Smart appliances are the wave of the future. Newer houses and buildings all have appliances that can connect to other appliances, mobile phone apps, and the internet. Rather than storing this data in a central server or cloud-based storage solution, smart appliance data could be stored on the blockchain. This would help to secure personal information and keep home IoT webs secure. Data could be used to improve things like energy costs for an entire grid without linking the information to the person or specific home using public/private key cryptographic to parse out identity from data, while maintaining the data is authentic.

Supply Chains

 The global supply chain is multi-layered and involves hundreds of parties across time zones. Moving the supply chain to the blockchain is often discussed by distributed ledger enthusiasts. From food distributors to pharmaceutical enterprises, many supply chains could benefit from using a combination of IoT and blockchain to streamline processes. Device authentication through numbering parts and creating provenance and history could help supply chains become trustless. Transfer of ownership and location could be tracked in real-time between IoT instruments, the freights themselves or each object individually. Using the “things” in the Internet of Things ability to connect and migrating the connection and related data to the blockchain to automate supply chain verification and transactions.

IoT On-Chain Data Storage and Decentralized Machine Networks

As the last two use cases stated, IoT accumulates data and normally would store the data in a central and unsecure location. Decentralized machine networks could be the larger “decentralized” answer to centralized IoT data storage and connectivity woes. This machine network would be able to transmit and store data and potentially used Decentralized wireless networks (DWN) to provide an open channel for communication between devices.

Energy Markets

Consumers would be able to have direct access to energy market places via blockchain platform. Devices could be connected to this platform uploading data in real-time and offering energy grid surpluses for reduced waste and new income streams delivering more cost effective utilities to the masses.

The Future of Blockchain Applications in IoT

Blockchain and IoT are transforming not only industry landscapes, but the world as we know it. By 2022 it is likely that we will live in an IoT dominated world and be very dependent on that connectivity. The current centralized IoT model device communication relies on is not a sustainable foundation for the technology’s intended capabilities. It is crucial that progressive organizations continue to explore the relationship between blockchain and IoT.

The two have a lot culturally in common, there is a lot of hype that surround them, and little understanding. There are major security and scalability issues that need to be addressed before we can integrate blockchain applications in IoT confidently. Many of IoT’s issues are solved by blockchain, whereas blockchain innovation simply needs some more time to stew. Thinking about the early days of the internet when we think about IoT and blockchain can give us a realistic frame of reference for realistically discussing potential growth and current obstacles.

The more intricate issue IoT faces when we lift up the application layer, there is the lack of consensus or standard in low power wireless WAN sector. For this reason alone, we could be very far away from that existing and widespread IoT interoperability taking shape. Despite all of these setbacks and problems with IoT, there is much potential to be unlocked once IoT becomes decentralized.

Many organizations are working towards on-chain IoT to transform the untrustworthy and stifled device connectivity industry. Blockchain applications in IoT will work to disseminate security issues that plague IoT and end the cloud-based data monopoly that puts consumers at risk. If IoT and blockchain can reconcile scalability issues over time they will be a match made in heaven that will help to usher in a new era of improved global efficiency and connectivity.