BIoT: Blockchain based IoT

What is Blockchain Technology?

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

BIoT: Blockchain based IoT

Four ways IoT can exploit blockchain technology:
1. Trust building
2. Cost reduction
3. Accelerated data exchanges

4. Scaled security
Blockchain and IoT
Blockchain technology can be used in tracking billions of connected devices, enable the processing of transactions and coordination between devices; allow for significant savings to IoT industry manufacturers. This decentralised approach would eliminate single points of failure, creating a more resilient ecosystem for devices to run on. The cryptographic algorithms used by blockchains, would make consumer data more private.
The ledger is tamper-proof and cannot be manipulated by malicious actors because it doesn’t exist in any single location, and man-in-the-middle attacks cannot be staged because there is no single thread of communication that can be intercepted. Blockchain makes trustless, peer-to-peer messaging possible and has already proven its worth in the world of financial services through cryptocurrencies such as Bitcoin, providing guaranteed peer-to-peer payment services without the need for third-party brokers.

BIoT: Blockchain based IoT

The decentralized, autonomous, and trustless capabilities of the blockchain make it an ideal component to become a fundamental element of IoT solutions. It is not a surprise that enterprise IoT technologies have quickly become one of the early adopters of blockchain technologies.
In an IoT network, the blockchain can keep an immutable record of the history of smart devices. This feature enables the autonomous functioning of smart devices without the need for centralized authority. As a result, the blockchain opens the door to a series of IoT scenarios that were remarkably difficult, or even impossible to implement without it.
By leveraging the blockchain, IoT solutions can enable secure, trustless messaging between devices in an IoT network. In this model, the blockchain will treat message exchanges between devices similar to financial transactions in a bitcoin network. To enable message exchanges, devices will leverage smart contracts which then model the agreement between the two parties.
One of the most exciting capabilities of the blockchain is the ability to maintain a duly decentralised, trusted ledger of all transactions occurring in a network. This capability is essential to enable the many compliance and regulatory requirements of industrial IoT applications without the need to rely on a centralised model.
Combining blockchain and IoT
There are several clear advantages to the idea of building smart machines able to communicate and operate via blockchain.
Firstly, there is the issue of oversight. With data transactions taking place between multiple networks owned and administered by multiple organizations, a permanent, immutable record means custodianship can be tracked as data, or physical goods, pass between points in the supply chain. Blockchain records are by their very nature transparent — activity can be tracked and analyzed by anyone authorized to connect to the network.

BIoT: Blockchain based IoT

If something goes wrong, breakages occur, data leaks where it shouldn’t, then the blockchain record makes it simple to identify the weak link and, hopefully, take remedial action.

Secondly, the use of encryption and distributed storage means that data can be trusted by all parties involved in the supply chain. Machines will record, securely, details of transactions that take place between themselves, with no human oversight.Without the private keys giving write-access to the blockchain (which in this case would be held by machines), no human will be able to overwrite the record with inaccurate information.
Thirdly, the “smart contract” facilities provided by some blockchain networks, such as Ethereum, allow the creation of agreements which will be executed when conditions are met. This is likely to be highly useful when it comes to, for example, authorizing one system to make a payment, when conditions indicate that delivery of a service has been provided.
Fourthly, blockchain offers the potential of greatly improving the overall security of the IoT environment. Much of the data generated by IoT is highly personal — for example, smart home devices have access to intimate details about our lives and daily routines. This is data that needs to be shared with other machines and services in order to be useful to us. But it also means there are far more openings for hackers to potentially attack us. Business and governments invested in IoT also have to contend with this increased scope for a data breach by criminals, rivals or foreign enemies.
Above the fact that it will offer new opportunities, it is even possible that blockchain and IoT convergence will become a necessity at some point. If the current IoT paradigm — devices connected via a centralized cloud storage and processing service — continues, then systems are likely to become increasingly bloated, as data volumes, as well as the number of connected devices, continue to increase.
These cloud services are likely to become bottlenecks as the amount of data pumped through them increases. Blockchains can remedy this thanks to their distributed nature. Rather than an expensive, centralized data center, a blockchain data storage network is duplicated across the hundreds (or potentially thousands, or millions) of computers and devices which make up the network. This huge amount of redundancy means data will always be close at hand when it’s needed, cutting down transfer times and meaning one server failure will be of no consequence to business activity.

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