Decentralizing IoT networks with blockchain

Baozou Comment : The current IoT ecosystem relies on a centralized proxy communication model, where all devices are connected through cloud servers with powerful operation and storage capabilities. However, this can no longer meet the needs of the growing IoT ecosystem, because the infrastructure and maintenance costs of centralized cloud servers, large servers, and network equipment are very high. Therefore, blockchain technology uses digital currency to verify the nodes of participants, and securely adds transactions to the ledger. Transactions are verified and confirmed by other nodes participating in the network, so there is no need for a central server. Blockchain technology is not perfect yet, but the combination of IoT and blockchain is promising, and decentralized autonomous networks will play a decisive role in the future of IoT.

Translation: Nicole

Imagine a washing machine that automatically contacts suppliers to place orders when the amount of detergent is low, performs self-service maintenance, downloads new washing programs from external resources, schedules time periods to reduce electricity costs, and negotiates with peer devices to optimize the environment; connected cars that can find the most cost-effective services through intelligent operations; and manufacturers that produce machines that know when to order parts without human intervention.

All of these scenarios—and more—will be enabled by the Internet of Things. Many industries that don’t currently use computers are already being disrupted by a swarm of connected devices; others will join the fray.

There are countless examples like this, especially when the power of IoT is combined with other technologies such as machine learning. But the main obstacle in the emergence of smart devices is the interaction between devices and between devices and their owners. When the current models that support IoT communication fail to solve these challenges, technology companies and researchers hope to solve these problems through blockchain technology, which is the backbone of the famous Bitcoin.

Problems with the centralized model

The current IoT ecosystem relies on a centralized proxy communication model, or a server/client model. All devices are connected through a cloud server that has powerful operation and storage capabilities. The connection between devices will only be achieved through the Internet, even if it only occurs within a few meters.

While this model has been used to connect general-purpose computing devices for decades and still supports small-scale IoT networks, as we are seeing today, it is not enough to meet the needs of the growing IoT ecosystem.

Current IoT solutions are very expensive because the infrastructure and maintenance costs of centralized cloud servers, large servers, and network equipment are very high. When the number of IoT devices increases to tens of billions, a large amount of communication information will be generated, which will greatly increase costs.

Even if unprecedented economic and engineering challenges are overcome, cloud servers remain a bottleneck and point of failure that can upend the entire network. This is especially important as human health and life increasingly depend on the Internet of Things.

There is no single platform that connects all devices.

Moreover, the diverse ownership of devices and the supporting cloud service infrastructure make machine-to-machine communication more difficult. There is no single platform connecting all devices, and there is no guarantee that cloud services provided by different manufacturers can be interoperable and compatible.

Decentralized IoT devices

The decentralized solution of IoT network can solve many of the above problems. The standardized point-to-point communication mode is adopted to process a large amount of transaction information between devices, which will significantly reduce the cost of installing and maintaining large centralized data centers, and at the same time, the computing and storage requirements can be dispersed to the various devices that make up the IoT network. This can effectively prevent the failure of any single node in the network from causing the entire network to collapse.

However, establishing peer-to-peer communications itself brings many challenges, the most important of which is security. As we all know, IoT security is more than just protecting sensitive data. The proposed solution must protect privacy and security in the IoT while providing some method of transaction verification and consensus to prevent electronic fraud and theft.

Blockchain Solution

Blockchain provides an elegant solution to the problem of peer-to-peer communication platforms. It is a technology that allows the creation of a distributed digital ledger of transactions that is shared by all nodes in the network rather than stored in a central server. Participants registered with the blockchain can record transactions. Blockchain technology verifies the participants' nodes with digital currency and securely adds transactions to the ledger. Transactions are verified and confirmed by other nodes participating in the network, eliminating the need for a central server.

Distributed ledgers are tamper-proof and cannot be manipulated by malicious criminals because there is no single point of presence at the root of the distributed ledger, and middleman attacks will not occur because there is no single-threaded communication that can be intercepted. Blockchain can truly realize trusted peer-to-peer messaging, and has proven its value in the financial services world through digital currencies such as Bitcoin, which can ensure peer-to-peer payment services without third-party brokers.

Technology companies are now looking at bringing blockchain to the IoT space.

Processing power and energy consumption are also a concern. Blockchain transaction encryption and verification are computationally intensive operations that require a lot of horsepower to perform, which many IoT devices lack. Storage is also a problem, as the amount of information recorded in the ledger increases, and too many ledger records are stored in network nodes.

Jeremy Green

Machina Research analyst Jeremy Green explained that autonomous IoT networks powered by blockchain will challenge manufacturers’ search for business models that include long-term subscription relationships with ongoing revenue streams, while requiring radical changes to business and economic models.

It is too early to say whether blockchain is the solution to the problems that arise in the rapidly developing IoT industry. Blockchain technology is not perfect yet. Nevertheless, the combination of IoT and blockchain is promising, and decentralized autonomous networks will play a decisive role in the future of IoT.