Challenges and solutions for the IoT

Jul 4 · 7 min read

The internet of things, or IoT, is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.

A thing in the internet of things can be for example a person with a heart monitor implant, a farm animal with a biochip transponder, an automobile that has built-in sensors to alert the driver when tire pressure is low or any other natural or man-made object that can be assigned an IP address and is able to transfer data over a network.

There are many challenges in the IoT:

Challenge micro payments

In the IoT countless data are transported. In very many cases it is necessary to provide this data transfer with a financial transfer. This is useful, for example, because data transported to a networked device because needed there, are not free in many cases and thus the data streams have to be connected with financial transactions. It is clear that for this reason countless micro payments will be necessary to reproduce these processes. A technology that can offer financial flows without fees makes sense

Challenge trust

Another challenge is the lack of trust among the companies. The industry has started its way into the Internet of Things. But there are companies that have stopped their digitization process or have not even started yet. Some are not as far as they could be. An important reason is lack of trust to exchange data, information and knowledge. Also, lack of trust in the existing data exchange platforms, mostly cloud applications. Trust in data security is a key factor in the IoT.

Challenge decentralization

With the Internet of Things, the amount of data generated increases exorbitantly. According to estimates, around 44 zettabytes in just a few years. An unimaginable amount of data, most of which would have to be transported to the center and back again. Data transport takes time and is error-prone.

In the Internet of Things, much of the data is generated by large machines, small devices and even smaller sensors. An obvious idea is to process the data decentrally. Where they are produced and where they are needed.

Challenge independence

Decentralized, independent data exchange makes it impossible for individual groups or interest groups such as industry, banks or governments to simply print new money or manipulate data or the price. The stored transactions are immutable and therefore need no management or confirmation by a third party. The decentralization of technology makes it possible to do business without third-party intermediaries.

This creates trust and solves the dependency on large corporations that may eventually pursue other goals. Of course, this principle also benefits those who use such a cryptocurrency through the aforementioned advantages. Cities, industry, including all communication in the IoT.

How is currently dealing with the challenges of the IoT

The data streams in the IoT are often managed via platforms or cloud applications. Outsourced computation, an important service provided by cloud computing, has become more and more popular. In the context of outsourced computation, computationally weak clients (or devices) can outsource their computation and data to a server in the cloud. While this approach has numerous advantages in cost and functionality, it is crucial that the outsourcing mechanism compromises the privacy of the outsourced data and the integrity of the computation, since the server in the cloud may not be fully-trusted. The ultimate goal in secure outsourced computation is to design protocols that minimize the computational cost of the clients, and maintain the confidentiality and integrity of its data.

Cloud Computing — the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer. Cloud Computing can be a heavyweight and dense form of computing power.

Top 3 IOT Cloud platforms, Source:

There are countless IoT platforms and the classic cloud applications like (AWS, Google, Microsoft). The over 400 IoT platforms / solution providers cater to various parts of the end-to-end value chain, but generally fall into one of these buckets:

End-to-end IoT Platforms: fully managed IoT deployments including standard hardware, configurable software, connectivity services, and device management (e.g., OTA upgrades); Example: Particle

Connectivity Management: managed solutions which offer tools (e.g., SIM cards) and services to connect companies to their IoT devices via WiFi, cellular, NB-IoT, and more; Example: Sigfox, Hologram

IoT Cloud & Storage: Infrastructure-as-a-Service (IaaS) providing IoT-compatible tech stacks and backend services (e.g., ETL) which sync to connected devices and data; Example: AWS, Azure, Salesforce

Data Routing & Analytics: tools managing data routing from IoT devices. Third-party services, as well as analytics to extract insights from IoT data; Example: Clearblade, ThingSpeak

The answer to the question why the tech giants have discovered the IoT is very simple. The IOT will have a gigantic financially turnover worldwide and for these tech giants there is another reason and that means: data ownership. Platforms that capture a critical mass of IoT data / devices in the near future are well positioned to dominate the IoT market. In addition, they will be hard to dethrone due to supplier retention strategies. Whoever owns data in the future will be able to dominate the market.

Blockchain and Tangle

However, there are currently further technological developments that can map the above-mentioned challenges. Namely the blockchain and the tangle technology

As a highly secure distributed system with interoperability capabilities, blockchain is a candidate to drive innovation in the IoT industry. Blockchain platforms with smart contracts and support of IoT devices can perform the same functions as traditional IoT platforms, while also enabling interoperability between IoT devices and companies.

With the advent of distributed ledger technologies, it is now possible to distribute and synchronize ledgers of data and money in secure, distributed, decentralized and permissionless environments. By removing the need for trusted third-parties as the gatekeepers and arbiters of truth, enormous efficiency gains, innovation opportunities and new value propositions emerge.

Blockchain technology promised a compelling vision: decentralized networks allowing open innovation and peer-to-peer transactions without intermediaries or fees. Ultimately, they were never built to execute it in full, due to inherent technical flaws in their design. As blockchain adoption has increased over the last decade, early adopters have been hit with sluggish transaction times and skyrocketing fees. As financial rewards for validating blockchain transactions became increasingly competitive, their networks have also become increasingly centralised around a few powerful actors. But the need for decentralized and permissionless systems remains, and has only increased in recent years.


By solving the inefficiencies of the Blockchain, IOTA, based on the revolutionary distributed ledger technology, the Tangle, is the missing link for the Internet of Everything. Powering a secure, scalable and feeless transaction settlement layer, IOTA will empower machines and humans to participate in flourishing new permissionless economies — the most important one being the Machine Economy.

With these features, IOTA has a good chance of becoming the standard protocol in the IoT. I would be delighted if I have introduced you with this article, the challenges and solutions in the IoT. Please stay curious and follow the development of the new Tangle technology.

Economic significance of the IOT?

Many companies, technologies and cryptocurrencies want to get a piece of the cake because the IOT is about unbelievably large cash flows. To be able to make an estimate of what this is, I have used some statistical data. It is predicted that more than 75 billion devices (“things”) will be connected by 2025, with an annual economic impact of $3.9 Trillion to $11.1 Trillion by 2025. And one thing is absolutely clear, these numbers will boost in the coming years.


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Interested in cryptocurrencies especially IOTA and member of the public IOTA project.