Distributed IoT on blockchain

Imagine your washing machine, which can automatically contact the supplier when it is low on detergent, place self-service orders, perform self-maintenance, download new laundry programs from external resources, arrange the most economical laundry schedule according to the changing cycle of electricity prices, and interact with its sensors to determine the most optimized laundry environment; imagine a car, connected to the Internet in real time, which can intelligently select the most appropriate parts and services; and a manufacturing plant whose machinery knows when and which part of itself needs repair without human intervention.

All of the above scenarios will become a reality with the help of the Internet of Things (IoT). In fact, industries that were not adapted to computers have been changed by billions of IoT devices connected to the Internet; industries that have not been changed will eventually be forced to keep up with the pace in such a wave.

The possibilities for the future are endless, especially when the power of IoT is combined with other technologies, such as machine learning. However, when billions of smart devices want to interact with each other or with their owners, some big problems will arise. When existing models that support IoT communication cannot meet such challenges, related technology companies and some researchers hope to solve them through blockchain technology, which is the cornerstone behind the famous Bitcoin.

Problems with the centralized model

The current IoT ecosystem relies on a centralized system, a mediated communication model, also known as the server/client model. Cloud servers with huge computing power and storage space are connected to tagged and verified devices. Devices are only connected through the Internet, even if they are only a few feet apart.

This model has worked for decades in general-purpose connected computing devices, and it will work in small-scale IoT networks, such as those we are seeing today. However, it will be ineffective in the future as the IoT ecosystem grows into a large-scale one.

Existing IoT solutions are expensive because of their high infrastructure and maintenance costs. They require central cloud services, large-scale server clusters, and network equipment. When IoT devices grow at a rate of billions, the amount of communication between them will be staggering, and the cost will increase significantly.

Even if this economic and engineering challenge is not a problem, the cloud server still has bottlenecks, and a single failure point will cause the entire network to collapse. If human life and health depend on the Internet of Things in the future, then this problem is very, very serious.

In addition, the diverse ownership of different devices and the diverse cloud service architectures they support make machine-to-machine (M2M) communication difficult. No single device can connect to all other devices, and different cloud service providers do not guarantee interoperability and compatibility between them.

Distributed Internet of Things (IoT) Networks

The distributed solution of IoT can solve many of the above problems. It uses a standardized point-to-point communication model to handle transactions between thousands of devices, which effectively reduces costs, including the cost of deploying and maintaining large data centers, and can decentralize computing and storage needs through thousands of IoT devices. This will avoid the collapse of the entire network due to the failure of one node.

However, establishing peer-to-peer communications has its own problems, the first of which is security. As we all know, IoT security is more than just protecting sensitive data. Solutions must protect privacy in large-scale IoT networks and provide some form of verification and consensus for transactions to avoid fraud and theft.

Blockchain Solution

Blockchain provides an ingenious solution to the problem of peer-to-peer communication platforms. This technology creates a mutually shared distributed digital ledger between network nodes to record transactions, rather than storing these transaction ledgers on a central server. Participants record transactions through blockchain. This technology uses encryption technology to authenticate and identify participating nodes, ensuring that they can safely add transaction records to the ledger. Transactions are verified and confirmed by nodes in this network, so this eliminates the need for central verification.

This ledger is tamper-proof and cannot be modified by malicious actors because it does not exist locally on a separate device, nor can it be attacked by a man-in-the-middle because the transaction is not a single thread that can be intercepted. Blockchain makes trustless, peer-to-peer communication a reality, and its value in the financial services sector has been proven by cryptocurrencies such as Bitcoin, which secure peer-to-peer payments without the involvement of a third-party payment.

Technology companies are now trying to adapt blockchain's practicality to the internet.

This concept can directly solve the scale problem of the Internet of Things, allowing billions of devices to share the same network without the need for traditional expensive resources. Blockchain can also resolve authority conflicts between different suppliers, providing a standard that gives everyone equal rights.

This will open up M2M (machine-to-machine) communications that are not possible with current models, making some entirely new use cases a reality.

Hybrid use of blockchain in IoT

The combination of IoT and blockchain is gaining momentum, with startups and tech giants very optimistic. IBM and Samsung introduced their proof of concept, ADEPT, which uses blockchain technology to support the next generation of IoT ecosystem, which will generate hundreds of billions of transactions every day.

IBM is one of the earliest companies to study the use of blockchain in the Internet of Things. Paul Brody of IBM describes it this way: new devices are registered in a universal blockchain after being assembled by the factory, and are transferred to a regional blockchain after being sold, where they can interact autonomously with other devices.

The combination of IoT and blockchain makes circular economy and asset fluidization possible, where resources can be shared and reused instead of being consumed once and disposed of. In the IoT hackathon held by Ethereum, the leader of blockchain platforms, a blockchain-driven IoT concept was tested, and there were many very creative projects, including those in the fields of energy sharing, electricity and gas bills, etc.

Filament is a startup company that is involved in the Internet of Things and blockchain, focusing on industrial applications such as agriculture, manufacturing, oil and gas, etc. Filament uses a wireless sensor called Taps to form a low-power autonomous mesh network to collect data and monitor assets without the involvement of cloud services or central network servers. The company uses blockchain technology to identify and authenticate devices and earns revenue by providing such network and data services, of course in Bitcoin.

Chain of Things is a consortium whose mission is to explore the role blockchain can play in addressing the scale and security issues of the Internet of Things. They recently demonstrated blockchain and IoT use cases at a hackathon in London, including a solar stack design that can provide reliable and verifiable renewable resource data, accelerate incentive settlement, and reduce fraud. The system strengthens the connection process between solar panels and data loggers, tracks solar energy production, and securely submits this data to nodes, which record this data in a distributed ledger and then synchronize it with a wider global network of nodes.

Warnings and Challenges

Applying blockchain technology to the Internet of Things is not without its drawbacks, and there are still some issues that need to be resolved. One of them is the fundamental issue of blockchain, which is constantly debated among Bitcoin developers. This problem arises from the increasing volume and size of transactions as the network develops, and it is inevitable when blockchain technology is applied to the Internet of Things. Technology companies also admit that this is a challenge, but there are some solutions being tested, including sidechains, treechains and mini-blockchains.

Energy consumption is also a problem. Encrypting and verifying blockchain transactions is a computationally intensive operation that consumes a lot of power resources, which IoT devices lack. At the same time, a large storage space is also required. As the ledger grows, the storage space requirements of the node are also increasing.

Also, as Jeremy Green, a researcher at Machina Research, said, the biggest challenge for manufacturers in blockchain-driven autonomous IoT is to find a business model that includes long-term partners that are continuously profitable, and requires a major transformation of business and economic models.

The Internet of Things industry is developing rapidly. It is too early to conclude whether blockchain is the key to solving the difficulties faced by the Internet of Things. It is not perfect yet, but it is very promising to combine with the Internet of Things. Distributed autonomous networks will become the key factor in solving problems.

For more information, please see "Blockchain and Internet of Things Special Topic"