Blockchain and Internet of Things: how do they add up?

Blockchain and IoT

 

You’ve heard both terms many times before, but did you know that there is quite a bit of synergy between these 2 areas? You’re surely thinking “great, another combination of overhyped buzzwords in order to generate clicks on tech websites.” Not so!

The 2 technologies have significant overlap, and it will be interesting to observe how they will continue to jointly evolve in the future. Internet of Things (IoT) is a blanket term for technologies based on networks of devices whose primary use isn’t computing (such as sensors and drones) that are connected to the internet, gather data and can be remotely controlled.

Blockchain, on the other hand, is a decentralized, distributed ledger. Simply put, an encrypted record of transactions that is stored simultaneously on individual “nodes” (computers) of a network. The main idea behind blockchain is that if a complete record of all transactions is stored on each individual node of a network, then the cross validation between the nodes allows to easily verify any transaction on the record. The distributed storage on the decentralized network ensures that falsification of records is impossible.

 

READ MORE about IoT here

So where do these technologies intersect?

 

1. Both technologies are built on a network:
   
   The very nature of IoT implies a decentralized network of devices, connected to remote users. Blockchain, on the other hand, by its very nature requires a network of nodes, between which all transactions are cross-checked and then stored.

2. For both technologies, security is key:
   
   This is where blockchain and IoT are truly complementary. Blockchain is said to be “secure by design” – the very paradigm on which it is built is independent verification of records by individual network nodes. To be sure, this is costly on a computational level, but where security matters, it matters. Would you send or receive money over a financial network that couldn’t be trusted?
   
   Which brings us to the question of security in IoT. There is no greater threat to IoT development then security concerns. Especially with the arrival of 5G, the applications of IoT are limitless, in both a consumer and an industrial setting. Imagine being able to gather data in any context, and then being able to use artificial intelligence to increase relevance or forecast. For example, a digital billboard outside that shows umbrella advertisements when it is raining.
   
   But the network of devices needs to be secure! If we take the most terrifying example, Abbot’s (formerly St Jude Medical) was ordered by the FDA to issue a security patch to its cardiac monitoring and pacemaker devices. It turned out that the very basic type of encryption made the cardiac devices vulnerable to outside control. There’s no need to explain just how scary that is: the device that is keeping a human being alive can be easily hacked into and controlled, because the company didn’t bother to take security seriously!  We have all witnessed how groupthink in large organizations leads to …ahem, suboptimal outcomes, but this one certainly blows the competition out of the water.
   
   In the IoT context therefore, an architecture (blockchain) that is secure by its very design has a lot going for it. As we see in the above example, there are many scenarios where if there is so much as a hint of a doubt hovering over the security of a device, then it doesn’t fulfill minimum requirements.
   

3. Both technologies demand high computational optimization:
   
   Encryption is central to blockchain, as it is required to verify transactions at each individual node in the network. Have you have wondered what all this talk about bitcoin “mining” was? Yep, that’s it!
   
   The individual nodes need to run the encryption/decryption algorithms to verify the transactions, and this requires processing power and electricity. And the larger the blockchain becomes, the more energy is required. Bitcoin consumes more electricity than all of Nigeria!  For this reason, the encryption algorithms and network protocols need to be computationally efficient.
   
   This is also a demand for IoT, as many applications require the installation of a very high number of low powered devices, so the encryption algorithms need to be able to run with minimal resources. This can require using low level programming languages like C that interact directly with the hardware.

There are currently a number of startups linking up blockchain and IoT. As blockchain gains ground with more use cases and wider industry use, the intertwining of these areas is likely to grow. One notable application is using Blockchain as a platform for self-driving cars, an area where cyber security is paramount.