Can Internet of Things and Blockchain Combo Offer a Win-Win?
| Updated by Maria Konash · 5 min read
Smart combination of two disrupting technologies – Blockchain and IoT – could open new possibilities, secure devices and make the IoT a part of everyday life.
Owing to the concept of Internet of Things (IoT) there is a big surge in the internet connected devices. IoT is the internet-based network of physical devices which includes home appliances, electronics, vehicles, and other appliances and gadgets that use firmware, software and sensors to not only keep them connected to the Internet, but also enables them to exchange real-time data with other systems resulting in increased efficiency, economic benefits, and less need for human intervention.
The number of IoT devices increased 31 percent year-on-year to 8.4 billion in 2017 and the figure is estimated to hit the mark of 30 billion devices by 2020. The global market value of IoT is projected to reach $7.1 trillion by 2020.
Common electrical appliances like refrigerators, washing machines, vacuum cleaners and water purifiers, which are often classified as white goods are increasingly getting equipped with IoT-compatible new-age microprocessors and sensors to work smartly and efficiently.
The Blockchain-IoT Combination
Blockchain is a technology which, if combined with IoT, could open new possibilities, secure devices and make the IoT a part of everyday life. As it stands, IoT devices have a lot of potential which is not utilized to the fullest.
For example, a present-day IoT-enabled water purifier uses its micro-processor to assess the water quality and configures the water treatment cycle accordingly. If the incoming water is assessed to be of low quality, the processor instructs the device to give it a lengthier treatment through the designated water purifying cartridges. However, once the water treatment is complete, the processor lies idle. Can this processing power be put to efficient use?
The purifier is also equipped to send alerts to the manufacturer’s online system to change the cartridges once their threshold levels are hit. It also records and broadcasts the device status and activities which are vital for quick repairs in cases of device malfunction. Can such data be stored in an efficient manner, and can it be of value?
New options will open for IoT devices when the technology is combined with blockchain. With a huge number of already available internet-connected, processor-equipped household devices, the standard activity of mining can get a big boost. Mining is a standard blockchain process which involves solving a mathematical problem to generate new cryptocoins and to verify and authenticate the transactions occurring on the network.
Due to limited computing power, popular blockchain networks like Bitcoin and Ethereum often hit a snag leading to scalability challenges and delays in transaction processing. Harnessing the limited power of the processors available across the large number of white goods IoT devices can be a game changing means of addressing such common issues of blockchain networks. The device owners contributing towards such mining activity can earn cryptocoins as their rewards.
Blockchain will also offer an ideal, decentralized storage to host all kinds of data generated by these IoT devices. Device owners can consensually sell selected data to interested parties in compliance with necessary regulations like the GDPR law. The data will assist in assessing consumption behavior and usage patterns for the manufacturers and after-sales services also being vital for macro-level initiatives like smart city planning.
Blockchain Platforms in IoT Field
A few blockchain-based projects have been launched to build on the growing ecosystem of the IoT devices. The primary ones are IOTA, IOTW, and IoT Chain (ITC).
IOTA was developed as a “mining-free” solution to the complex mining process which causes high transaction fees on popular blockchain networks. Tangle, IOTA’s authentication mechanism, requires a participant to approve the previous two transactions before their initiated transaction can be processed.
Essentially, Tangle forces a transaction issuing-participant, or node, to contribute towards keeping the network agile and secure by making them approve activities. This eliminates the need for dedicated miners from the system, leaving the transaction-making participants in genuine control.
Essentially, there is no real mining – only authentication which makes it a zero-fee transaction network. IOTA’s mechanism also has a cascading effect – the network speed increases as more users join the network because each user is required to authenticate two transactions to get one of theirs processed. However, IOTA is heavy on hardware – it needs 4G RAM and a micro-computer to run on IoT devices.
IOTW allows lightweight mining (called “micro mining”) by IoT devices. It does so by eliminating the need for transaction ledger storage and maintenance on the physical device delegating the ledger storage to multiple, pre-established, and trusted nodes on the blockchain network.
These nodes perform the necessary task of collecting the transactions and validating them. This “outsourcing” of storage and processing to the trusted nodes significantly reduces the computational power and memory requirements of the IoT devices, utilizing the device’s power without needing added hardware or using up memory from the device.
This mechanism allows even an average microcontroller fitted in devices – like electric fans, cookers, printers, air conditioners, washing machines and dryers – to become a micro mining device on the IOTW blockchain, mining coins for the owner. Any IoT device owner can join the network by downloading the IOTW firmware to their device, or by adding a low-cost Digital Power System (DPS) chip designed by IOTW that also helps in reducing energy consumption.
Another project, IoT Chain (ITC), aims to create a decentralized, secure, and speedy IoT network that allows users to maintain their data sovereignty. With the individual user remaining in full control of the data points they wish to share, ITC is emerging as a “data marketplace” where businesses can obtain the desired datasets.
The space continues to evolve, and success of such projects will depend largely on how widely adopted they will be, which will eventually determine the fate of such developments in future. If they will be able to provide their services whilst maintaining a high level of user experience, implementation and use of the tech will definitely see tremendous growth and mass adoption.
Being a successful graduate of Belarusian State Economic University (BSEU), Maria has acquired competencies in economic and social studies. Given Maria’s previous research working experience, and desire to explore what's really shaping the future, the main research focus is placed on FinTech and Blockchain Technology.