How Blockchain Can Enhance IoT

Blockchain technology can improve not just compliance, but also IoT features and cost-efficiency

Ramy Caspi
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A Gartner study estimates that blockchain will add $3.1 trillion in business value by 2030. In another analysis, the global IoT market is expected to grow from $157B in 2016 to $457B by 2020.

Today, the majority of IoT devices are consumer-grade electronics that are mainly home technologies. They're things like smart thermostats, smart plugs and speakers. These internet-connected devices are made by large well-known brand names, like Apple, Google, Microsoft and Samsung, which have both the technological systems and the marketing incentive to fix any security problems quickly. 

As the consumer market continues to grow, we are now just discovering the true scope of IoT, and in the future the tech would most likely replace current rudimentary tasks.

Accenture notes, “The urgency for viable IoT security solutions grows by the day. At front-of-mind for many businesses and government leaders lies the same, nagging question: What do we need to do to secure the IoT?”

Blockchain is predicted to disrupt existing processes across multiple industries including finance, healthcare, manufacturing, shipping, supply chain and trading. Both blockchain and IoT technologies are getting a lot of exposure, with significant media and financial investments which are feeling the hype and marketing.

Calvin Price, a student at UC Berkeley wrote on Medium saying, "IoT connects a web of devices that typically operate with minimal computational power and are embedded with chips for the purpose of connectivity and little else. This is a major security flaw. Thus far, researchers have demonstrated horrifying capability and creativity in breaching IoT devices. Hackers have thus far managed to control implanted cardiac devices, entirely disable cars remotely, and launch the world’s largest DDoS attack."

IoT relies on security and its lack of a shared architecture for interconnections can result in the exposure of multiple devices, with huge amounts of data and the supply chain being compromised due to a potential security breach.

It's not a catastrophe if Amazon’s Alexa temporarily loses connectivity to the cloud, but it would be a catastrophe if a fleet of autonomous cars lost theirs. As more and more IoT devices are deployed, the entry points for hackers will increase and with this, the general standards must improve.

Many companies see blockchain as a powerful way to bring scalable, decentralised security and trust to IoT devices, applications and platforms.

Whats exactly is blockchain?

A blockchain, originally block chain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data. By design, a blockchain is inherently resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way". For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.

Blockchains are secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralised consensus has therefore been achieved with a blockchain. This makes blockchains potentially suitable for the recording of events, medical records, and other records management activities, such as identity management, transaction processing, documenting provenance, food traceability or voting.

Smart Contracts

Scala Blockchain defines "smart contracts" as self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralised blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.

And IoT?

The Internet of Things (IoT) is the network of physical devices, vehicles, home appliances and other items embedded with electronics, software, sensors, actuators, and connectivity which enables these objects to connect and exchange data. Each thing is uniquely identifiable through its embedded computing system but is able to interoperate within the existing internet infrastructure.

The IoT allows objects to be sensed or controlled remotely across existing network infrastructure, creating opportunities for more direct integration of the physical world into computer-based systems, and resulting in improved efficiency, accuracy and economic benefit in addition to reduced human intervention.

The IoT Platform is the unifying element that brings together:

  • application enablement features, e.g. API management, developers portal, customisation features,
  • connectivity management services, e.g. subscription and billing management, provision, connectivity protocols and technologies,
  • device and hardware management services, e.g. monitoring, OTA updates, device libraries, edge analytics,
  • data and analytics capabilities, e.g. dashboards, machine learning and big data
  • Security services and features

So how can Blockchain help IoT?

In a decentralised IOT era, every relevant object needs to have a trusted digital identity.

Blockchain and IOT are almost built for each other.

Blockchain provides: Trustless, Auditable, Smart Contract, Transactions and Device Integrity

Using the blockchain and smart contracts, as well as a decentralised network can be excellent solutions for IoT’s security concerns. In addition, by deploying a decentralised network this ensures a continuous connection should an outage occur. Another great feature of a blockchain based IoT system is the reduced costs and complexity of operating the business. A blockchain-based IoT system would allow the operators to trade any data across the world efficiently and securely without the infrastructure, as data would be traded via a peer-to-peer network.

i-Scoop notes that “blockchain technology can improve not just compliance … but also IoT features and cost-efficiency.” Blockchain is all about “applications that involve transaction and interactions,” work perfectly with smart contracts which are executed when certain conditions are met.

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

  • IoT devices will have a unique and secure machine identity, authentication and seamless secured data transfer
  • IoT sensors will exchange data though a blockchain for establishing trust, instead of going through third party
  • Using blockchain, providers will be able track the data and prevent duplication with any malicious code
  • Protecting a IoT device’s data from tampering, can be achieved through a distributed ledger which eliminates a single source of failure within the ecosystem
  • Blockchain enables device autonomy (smart contract), and the integrity of data which supports peer to peer communication by removing technical bottlenecks and inefficiencies.
  • Since there is no intermediary in blockchain, the deployment and operation costs of IoT are significantly reduced
  • Automated settlement using crypto wallets
  • By using Blockchain, IoT devices are directly addressable, providing a traceability of connected devices for troubleshooting purposes.
  • Guaranteeing product / document provenance

Trusted Execution

A small highly assured operating environment isolated by hardware from the primary operating system:

  • Can be remotely verified cryptographically to be unchanged
  • Has a hardware root of trust that can’t be altered by software
  • Is based on a number of industry standards
  • Only processes code from known developers
  • Can not be altered by software/malware loaded on the operating system


In 2017, there were an estimated 8.4 billion internet-enabled thermostats, cameras, streetlights and other electronics. By 2020 that number could exceed 20 billion, and by 2030 there could be 500 billion or more. With IoT converting more and more offline objects into online assets, homes, transports, manufacturing units, agriculture fields, aquaculture bodies have become more vulnerable to hacks. Using a Blockchain-based IoT solution, we will be able to make our connected devices more reliable and secure.