Opinion | How can blockchain solve the vulnerabilities of the Internet of Things?

The Internet of Things and blockchain are two disruptive technologies that have been used to innovate across multiple industries and niches. But have you ever wondered how these two technologies might impact each other?

Well, it is an interesting question whether blockchain strengthens the Internet of Things. Let’s first understand what the Internet of Things is?

The Internet of Things (IoT) connects products to people and places. In doing so, it helps to provide opportunities, capture and create value.

The working mechanism of the Internet of Things includes embedding specially designed precision sensors, chips and actuators into physical objects, which then continuously transmit data to the Internet of Things. The analytical capabilities of the IoT system can transform the collected data into insights and actions. These technologies for collecting and exchanging data introduce the concept of "intelligence".

What are some standard IoT (Internet of Things) applications?

• Wearable devices

• Smart TV

• Smart Home

• Smart Cars

• Smart Agriculture

• Smart Health

• Smart City

• Smart appliances

After understanding how IoT performs actions, we must discuss how blockchain can enhance the application of IoT in our daily lives.

Blockchain and the Internet of Things

As you may all know, the core of blockchain is a distributed ledger based on cryptographic technology that can securely transmit data between parties.

And, as we all know, all traditional IoT-based systems rely on a centralized architecture. Data is collected from devices connected to the IoT system, processed for analysis, and then sent back to the IoT devices.

As more and more devices are connected to the IoT (the number is expected to reach billions), such centralized systems may not be able to provide the required scalability, putting the entire system at risk.

IoT inefficiencies in handling data and connections can compromise network security, with costs growing exponentially over time. Additionally, if authenticity and security checks on the network need to be performed frequently, the system may become slow.

The vulnerability of the Internet of Things

Based on the above discussion, we can conclude that the increased use of IoT may lead to potential issues in terms of its security and scalability.

IoT devices with security vulnerabilities put them under constant threat. They can easily become targets of Distributed Denial of Service (DDoS) attacks. These unsecured IoT devices can also become targets for cybercriminals who can quickly exploit their weak security to hack and launch DDoS attacks. There have been multiple DDoS attacks in the past that have caused turmoil to organizations and individuals.

According to Gartner's forecast, the compound annual growth rate of IoT terminal devices will reach 32%, and the number of terminal devices will reach 25.1 billion by 2021. As the number of devices connected through the IoT system grows, scalability becomes another issue that needs to be considered.

How can blockchain solve IoT vulnerabilities?

Blockchain technology can be effectively introduced and embedded into the core network of the Internet of Things to alleviate scalability and security issues.

• Bring transparency to the system. Blockchain will allow only authorized personnel to access the network and check transactions previously performed in the network. This clarity will establish a reliable method to determine the source of any data leak and perform prompt corrective actions.

• Blockchain and its distributed ledger is tamper-proof. It cannot be manipulated by any directly involved party or a third party. Therefore, when no one controls the data of the device, the trust in the IoT is complete.

• Increased encryption level. When storing data generated and collected by IoT on blockchain, an additional layer of security may be added. The highest level of encryption provided by blockchain makes it almost impossible to overwrite or manipulate existing data in any way. This will minimize the attempts of hackers to use this data.

• In a blockchain-based IoT system, we can easily process transactions quickly and establish coordination between billions of connected devices. As the number of IoT interconnected devices increases, transparent distributed ledger technology provides a viable solution to support the processing of a considerable number of transactions.

• Blockchain technology can reduce costs for stakeholders by cutting processing overhead. In addition, by being transparent and tamper-proof, blockchain-powered IoT systems will build trust among users.

• Blockchain’s “smart contracts,” which are agreements between two parties stored on the blockchain, can also ensure the secure execution of contractual agreements. These smart contracts can be based on specific criteria. For example, if a transaction meets pre-determined conditions, a smart contract can automatically authorize payment without any human intervention.

Why is blockchain attractive for IoT?

Blockchain brings standardization, authentication, and trust to all elements of the IoT. Here’s how to solve multiple trust and security issues on any IoT network:

• Blockchain can effectively track sensor data, measurements and limit any form of duplication and other malicious data.

• Deploying IoT devices can be complex and intricate, but blockchain, with its distributed ledger, can make the data transfer process seamless.

• Through a trusted distributed ledger, blockchain does not need to establish trust through a third party. IoT sensors can effectively exchange data through blockchain.

• Eliminating single points of failure, a distributed ledger will protect the data of IoT devices from any tampering.

• Blockchain can eliminate technical bottlenecks and inefficiencies, promoting device autonomy, data integrity, and peer-to-peer communication.

• There is no intermediary in the system. By introducing blockchain in the Internet of Things, the operation and deployment costs of the Internet of Things can be reduced.

From the above analysis, it can be concluded that blockchain-based IoT solutions are very suitable for simplifying business methods and achieving significant cost efficiencies and customer experience.