Blockchain, The Internet of Things (IoT), and Digital Identity:
Overcoming the Challenges of Emergent Technology Partnerships
This article marks the first entry in our new series on digital identity. A digital identity is the information used by computer systems to represent external agents such as a person, organization, application or device. This article will explore the latter two forms of agent — applications and devices. Bestowing machines with digital identities is known as the Identity of Things (IDoT), a vital component of the Internet of Things (IoT).
IoT, blockchain and DLT have been three of the most discussed concepts in the tech world this decade. As both garner significant momentum in both adoption and technological progress, we investigate how exactly the two can intersect for mutual benefit. Specifically, how blockchains and DLT (like the solutions from IOTA, IoTeX and MXC) can provide fast and secure communication between IoT devices.
The Challenges for IoT
While blockchain technology is yet to achieve widespread adoption, year-by-year IoT becomes a household reality. Smart-devices, from refrigerators to sound systems to washing machines, regularly come with companion apps designed to bring comfort and simplicity to our day-to-day lives.
This convenience comes with risks. IoT’s security leaves a lot to be desired. There are countless examples of unsafe IoT products having their vulnerabilities exposed by security experts and hackers.
For smart devices, having IDoT that is able to reliably, securely communicate and build complex systems of interaction is vital — a challenge that becomes even more pronounced when one considers that these products come from a multitude of manufacturers and brands.
IoT devices are largely required to manage three distinct types of interaction: human-to-device, device-to-device and device-to-service. Each interaction must be able to distinguish between addressees and then reach its intended target. The consequences of failing to do so range from mild inconvenience (an IoT app failing to distinguish between your different smart-plugs) to serious safety and security concerns (someone exploiting vulnerabilities in the accompanying mobile app to allow themselves to interact with your home’s smart devices).
As an increasing number of these devices come online, it’s likely that these risks will increase rather than decrease.
There are various communication protocols used by IoT, including:
Satellite — wireless data transfer, e.g. GSM, LTE, 5G
WiFi — wireless local area networks (WLAN)
Bluetooth — a wireless-technology standard for short-distance data exchange
Radio Frequency (RF) — including low-power radio protocols such as ZigBee or ZWave
Radio Frequency Identification (RFID) — using wireless electromagnetic fields to identify objects
Near-field Communication (NFC) — electromagnetic induction between loop antennas located in proximity of each other’s near-field
These standards have distinct strengths and weaknesses. Yet each requires precise, seamless identification of devices in order to operate effectively.
Enter the IoT Blockchain
Digital identity is crucial to blockchain and DLT. It could be reasonably argued that blockchain’s defining feature is its ability to precisely and immutably identify devices as unique entities via hashing and non-fungible (non-interchangeable) smart contracts. Blockchain uses sequential cryptographic hashing — making it computationally infeasible to rewrite block history.
Furthermore, DLT is decentralized — making hacking or altering records significantly more challenging than in a centralized system. Nodes are hosted by different parties spread across vast systems, disrupting that system would require the near-impossible accumulation of authentication data. Even if the security of a network participant is compromised, the rest of the system’s integrity remains intact.
Theoretically, this means that blockchain and distributed ledger technology has the potential to mitigate the single point-of-failure concerns of centralized IoT systems and devices.
Blockchain + IoT Challenges
Moving from theory to practical DLT solution requires two major challenges to be overcome: scalability and consensus. These two challenges are among the most prominent for blockchain iterations, yet in relation to IoT they have their own unique manifestations.
As previously mentioned, the quantity of internet-connected smart devices is already myriad and widely anticipated to proliferate further. For IoT to operate effectively, they will need interoperability on an unprecedented scale. While there have been many blockchain success stories, none have yet achieved the scaling required for such a system.
Much of the reason for this is a failure to find an effective consensus model. Clearly, traditional Proof-of-Work (PoW) consensus models specifically designed for linear block producing network structures are unsuitable for household smart-devices; having our fridge-freezers performing mining operations would neither be energy-efficient nor computationally realistic. Equally, it seems unfeasible to have them hold excessive amounts of tokens to take advantage of a Proof-of-Stake protocol.
It is reasonable therefore to suspect that IoT requires a distinct consensus protocol.
IOTA: Solving The IoT Blockchain Dilemma
While not technically an example of a blockchain, IOTA is the best-known example of a DLT solution intended to interact with IoT. While IOTA has no blocks or chains, its nodes/users perform micro-PoW operations when validating the two previous transactions.
Unlike other consensus models and DLT solutions, IOTA is programmed to be compatible with both humans and machines. All participants in the system contribute to the machine economy.
IOTA recognizes that for IoT to securely scale, each connected device must have a unique, immutable and tamper-proof ‘identity information tag’. These identity tags can also contain additional, valuable information such as manufacturer, lifespan and data handling policy. Dominik Schiener, co-founder of the IOTA foundation readily admits the complexity of developing this technology, but in an age of increasing data-management concerns, these developments could prove invaluable to the popularity and success of IoT.
IOTA has already embarked upon impressive strategic partnerships, including:
- A partnership with household product giant Bosch. Together, they are developing XDK, Cross-Domain Development Kit — an IoT prototyping platform and sensor node solution which takes advantage of the IOTA Data Marketplace to broker encrypted device data.
- A partnership with Jaguar Land Rover, developing a wallet-based hub for integrated service. For more on this partnership follow our blog for our upcoming digital identity articles on IOTA, autonomous vehicles and the supply chain.
The IOTA foundation are not alone in their efforts to disrupt and innovate the IoT ecosystem with DLT. Machine Exchange Coin (MXC) is targeting the Low Power Wide Access Network (LPWAN) — a wireless telecommunication network designed for long-range communications between connected objects.
MXC aims to minimize data collisions between LPWAN devices that largely operate on the same frequencies. It uses MXProtocol to prioritize communications while taking advantage of machine-generated data to facilitate the development of AI and other complex integrated systems.
Other IoT projects integrating DLT include IoTeX, IOT Chain, and Helium. If you would like us to examine those projects or other cooperations in more depth, let us know in the comment section below.
We hope that you have found our first article on digital identity useful. Be sure to follow us on Medium, Twitter, and LinkedIn for our upcoming digital identity articles on supply chains and autonomous vehicles, as well as plenty of reliable informed content on everything DLT.
