BIoT: Blockchain based IoT

Sarangi
Coinmonks
10 min readJun 7, 2018

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The Internet Of Things (IoT) and Blockchain are two topics which are causing a great deal of hype and excitement, not just in the technology circle but in the wider business world, too. However, the idea that putting them together could result in something even greater than the sum of its parts, is something which is starting to gain traction. Put them together and in theory, you have a verifiable, secure and permanent method of recording data processed by “smart” machines in the IoT. Blockchain-based IOT solutions are well suited for simplifying business processes, improving customer experience and achieving significant cost efficiencies. It is being said that IoT needs Blockchain and Blockchain needs IoT.

Four ways IoT can exploit blockchain technology:

1. Trust building

2. Cost reduction

3. Accelerated data exchanges

4. Scaled security

The centralised architecture poses challenges to secure IoT deployments. Handling the enormous volume of existing and projected data is daunting. Managing the inevitable complexities of connecting to a seemingly unlimited list of devices is complicated.The centralised security model common in the enterprise today will struggle to scale up to meet the demands of the internet of things, or IoT.

Adopting a standardised peer-to-peer communication model to process the hundreds of billions of transactions between devices will significantly reduce the costs associated with installing and maintaining large centralised data centres and will distribute computation and storage needs across the billions of devices that form IoT networks. This will prevent failure in any single node in a network from bringing the entire network to a halting collapse.

Internet Of Things

Any material object is a ‘thing.’ It becomes an internet of things (IoT) when it has an on/ off switch that connects it to the internet and to each other. By being connected to a computer network, the object, such as a car, become more than just an object. It is now people-people, people-things, and things-things. How does the IoT affect you? Your printer can automatically order cartridges from Amazon when it runs low. Municipal trash cans will signal when they are full and need emptying.

By definition, the Internet of Things is the internetworking of physical devices, vehicles (also referred to as “connected devices” and “smart devices”), buildings and other items — embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data.

Devices and objects with built in sensors are connected to an Internet Of Things platform, which integrates data from the different devices and applies analytics to share the most valuable information with applications built to address specific needs. These powerful IoT platforms can pinpoint exactly what information is useful and what can safely be ignored. This information can be used to detect patterns, make recommendations, and detect possible problems before they occur.

Present Day IoT Architecture: Centralised

It relies on centralised, brokered communication models (also known as, client-server paradigm). All devices are identified, authenticated, and connected through cloud servers that sport huge processing and storage capacities. Connection among devices happen exclusively over the internet even if they’re a few feet apart. Also, machine-to-machine (M2M) communication is difficult because there is no single platform that connects all devices no guarantee that cloud services offered by different manufacturers are interoperable and compatible.

The centralised architecture poses challenges to secure IoT deployments. Handling the enormous volume of existing and projected data is daunting. Managing the inevitable complexities of connecting to a seemingly unlimited list of devices is complicated. And the goal of turning the deluge of data into valuable actions seems impossible because of the many challenges. The existing security technologies will play a role in mitigating IoT risks but they are not enough. The goal is to get data securely to the right place, at the right time, in the right format; it’s easier said than done for many reasons.

The centralised security model common in the enterprise today will struggle to scale up to meet the demands of the internet of things, or IoT.

BLOCKCHAIN

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

  • Don & Alex Tapscott, authors Blockchain Revolution (2016)

The blockchain network lives in a state of consensus, one that automatically checks in with itself every ten minutes. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”.

BlockChain Implementation

Blockchain is a distributed database existing on multiple computers at the same time. It is constantly growing as new sets of recordings, or ‘blocks’, are added to it. Each block contains a timestamp and a link to the previous block, so they actually form a chain. The database is not managed by any particular body; instead, everyone in the network gets a copy of the whole database. Old blocks are preserved forever and new blocks are added to the ledger irreversibly, making it impossible to manipulate by faking documents, transactions and other information. All blocks are encrypted in a special way, so everyone can have access to all the information but only a user who owns a special cryptographic key is able to add a new record to a particular chain. As long as you remain the only person who knows the key, no one can manipulate your transactions. In addition, cryptography is used to guarantee synchronisation of copies of the blockchain on each computer (or node) in the network.

Blockchain let you prove you’re over 18 without revealing your date of birth, or prove you have enough money in the bank for a financial transaction without revealing your balance or other details. That limits the risk of a privacy breach or identity theft.

Two important properties result from this:

1. Transparency data is embedded within the network as a whole, by definition it is public.

2. It cannot be corrupted altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network.

Two Types of Blockchain

1. In a public blockchain, everyone can read or write data. Some public blockchains limit the access to just reading or writing. Bitcoin, for example, uses an approach where anyone can write.

2. In a private blockchain, all the participants are known and trusted. This is useful when the blockchain is used between companies that belong to the same legal mother entity.

Decentralise IoT Network

Adopting a standardised peer-to-peer communication model to process the hundreds of billions of transactions between devices will significantly reduce the costs associated with installing and maintaining large centralised data centres and will distribute computation and storage needs across the billions of devices that form IoT networks. This will prevent failure in any single node in a network from bringing the entire network to a halting collapse.

Blockchain and IoT

Blockchain technology can be used in tracking billions of connected devices, enable the processing of transactions and coordination between devices; allow for significant savings to IoT industry manufacturers. This decentralised approach would eliminate single points of failure, creating a more resilient ecosystem for devices to run on. The cryptographic algorithms used by blockchains, would make consumer data more private.

The ledger is tamper-proof and cannot be manipulated by malicious actors because it doesn’t exist in any single location, and man-in-the-middle attacks cannot be staged because there is no single thread of communication that can be intercepted. Blockchain makes trustless, peer-to-peer messaging possible and has already proven its worth in the world of financial services through cryptocurrencies such as Bitcoin, providing guaranteed peer-to-peer payment services without the need for third-party brokers.

The decentralized, autonomous, and trustless capabilities of the blockchain make it an ideal component to become a fundamental element of IoT solutions. It is not a surprise that enterprise IoT technologies have quickly become one of the early adopters of blockchain technologies.

In an IoT network, the blockchain can keep an immutable record of the history of smart devices. This feature enables the autonomous functioning of smart devices without the need for centralized authority. As a result, the blockchain opens the door to a series of IoT scenarios that were remarkably difficult, or even impossible to implement without it.

By leveraging the blockchain, IoT solutions can enable secure, trustless messaging between devices in an IoT network. In this model, the blockchain will treat message exchanges between devices similar to financial transactions in a bitcoin network. To enable message exchanges, devices will leverage smart contracts which then model the agreement between the two parties.

One of the most exciting capabilities of the blockchain is the ability to maintain a duly decentralised, trusted ledger of all transactions occurring in a network. This capability is essential to enable the many compliance and regulatory requirements of industrial IoT applications without the need to rely on a centralised model.

Combining blockchain and IoT

There are several clear advantages to the idea of building smart machines able to communicate and operate via blockchain.

Firstly, there is the issue of oversight. With data transactions taking place between multiple networks owned and administered by multiple organizations, a permanent, immutable record means custodianship can be tracked as data, or physical goods, pass between points in the supply chain. Blockchain records are by their very nature transparent — activity can be tracked and analyzed by anyone authorized to connect to the network.

If something goes wrong, breakages occur, data leaks where it shouldn’t, then the blockchain record makes it simple to identify the weak link and, hopefully, take remedial action.

Secondly, the use of encryption and distributed storage means that data can be trusted by all parties involved in the supply chain. Machines will record, securely, details of transactions that take place between themselves, with no human oversight.

Without the private keys giving write-access to the blockchain (which in this case would be held by machines), no human will be able to overwrite the record with inaccurate information.

Thirdly, the “smart contract” facilities provided by some blockchain networks, such as Ethereum, allow the creation of agreements which will be executed when conditions are met. This is likely to be highly useful when it comes to, for example, authorizing one system to make a payment, when conditions indicate that delivery of a service has been provided.

Fourthly, blockchain offers the potential of greatly improving the overall security of the IoT environment. Much of the data generated by IoT is highly personal — for example, smart home devices have access to intimate details about our lives and daily routines. This is data that needs to be shared with other machines and services in order to be useful to us. But it also means there are far more openings for hackers to potentially attack us. Business and governments invested in IoT also have to contend with this increased scope for a data breach by criminals, rivals or foreign enemies.

Above the fact that it will offer new opportunities, it is even possible that blockchain and IoT convergence will become a necessity at some point. If the current IoT paradigm — devices connected via a centralized cloud storage and processing service — continues, then systems are likely to become increasingly bloated, as data volumes, as well as the number of connected devices, continue to increase.

These cloud services are likely to become bottlenecks as the amount of data pumped through them increases. Blockchains can remedy this thanks to their distributed nature. Rather than an expensive, centralized data center, a blockchain data storage network is duplicated across the hundreds (or potentially thousands, or millions) of computers and devices which make up the network. This huge amount of redundancy means data will always be close at hand when it’s needed, cutting down transfer times and meaning one server failure will be of no consequence to business activity.

Advantages Of BlockChain IoT

Four ways IoT can exploit blockchain technology:

1. Trust building

2. Cost reduction

3. Accelerated data exchanges

4. Scaled security

Here are some ways the distributed architecture of blockchain can help solve many of these security and trust challenges:

1. Blockchain can be used to track the sensor data measurements and prevent duplication with any other malicious data.

2. Deployments of IoT devices can be complex, and a distributed ledger is well suited to provide IoT device identification, authentication and seamless secure data transfer.

3. Instead of going through a third party for establishing trust, IoT sensors can exchange data through a blockchain.

4. A distributed ledger eliminates a single source of failure within the ecosystem, protecting a IOT device data from tampering.

5. Blockchain enables device autonomy (smart contract), individual identity, integrity of data and supports peer to peer communication by removing technical bottlenecks and inefficiencies.

6. The deployment and operation costs of IoT can be reduced through blockchain since there is no intermediary.

7. IoT devices are directly addressable with blockchain, providing a history of connected devices for troubleshooting purposes.

CONCLUSION

Blockchain and IoT convergence will become a necessity at some point. If the current IoT paradigm — devices connected via a centralized cloud storage and processing service — continues, then systems are likely to become increasingly bloated, as data volumes, as well as the number of connected devices, continue to increase.

These cloud services are likely to become bottlenecks as the amount of data pumped through them increases. Blockchains can remedy this thanks to their distributed nature.

Adopting a standardized peer-to-peer communication model to process the hundreds of billions of transactions between devices will significantly reduce the costs associated with installing and maintaining large centralized data centers and will distribute computation and storage needs across the billions of devices that form IoT networks. This will prevent failure in any single node in a network from bringing the entire network to a halting collapse.

Hence, the merger of these two trending technologies is inevitable. These two technologies complement as well as support each other. It is even being said that IoT needs Blockchain and Blockchain needs IoT.

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