How Can Blockchain Benefit IOT?
The Internet of Things (IoT) continues to gain popularity. Despite the fact that IoT is quickly becoming one of the most popular IT trends, blockchain – the technology that underpins cryptocurrencies such as BitCoin – is easily keeping up.
IoT is changing the way businesses function by utilizing sensors and other edge devices and infrastructure. Enterprises are thus faced with a huge issue since they must secure data at all levels of the IoT ecosystem. Unfortunately, with the increasing number of linked devices, data security has become very difficult. This is where blockchain comes in, by assisting in the prevention of security breaches in IoT systems.
Blockchain and IoT:
Blockchain, according to ISG, is a distributed ledger technology that, when combined with IoT, enables machine-to-machine interactions. It is validated by various sources and placed into a shared ledger distributed across all nodes using a series of transactions that are recorded in a database. The marriage of IoT with blockchain allows a smart device to operate autonomously without the need for a centralized authority, which has a number of advantages. It can also monitor how gadgets interact with one another.
Though blockchain’s decentralized nature is an architectural plus, it might pose a challenge for IoT networks, which rely on centralized authority via client-server or hub-and-spoke design. Although a decentralized IoT platform would help ensure interoperability with a blockchain network, configuring IoT sensors to manage their own computation and data storage might be difficult since they can rely on storage resources and central compute.
Integration of Blockchain:
Blockchain has been used with IoT in a variety of industries, including financial services, banking, agriculture, and automobiles. It’s also been utilized in supply chains, smart homes, smart contracts, and logistics with the Internet of Things. Smart contracts, a relatively new concept, use blockchain to automate contract execution in IoT ecosystems when specific circumstances are fulfilled. The smart contract is what enables a smart device to operate independently of a centralized authority.
This use of blockchain technology allows businesses to manage data on edge devices in an IoT system, lowering the costs of device maintenance and data transfer. Because there is no centralized data repository, the ledger is not subject to cyberattacks, lowering the risks of data management. It also removes the need for an IoT gateway or any other intermediate device for data sharing, cutting down on the amount of time it takes to process the data.
With the aid of distributed, decentralized ledgers, blockchain enforces high-level security by approving and validating encrypted device-generated data. Data storage and computation are dispersed over millions of devices in a distributed ledger. As a consequence, the failure of a device, network, or server would not have the same impact on the whole IoT ecosystem as it would in the old paradigm. In many situations, a blockchain network’s fortitude will approach fault-tolerance, meaning the network will continue to function even if nodes are taken down.
Due to poor access control and client/server designs, many IoT ecosystems are easy targets for hijackers. DDoS assaults (distributed denial of service) have grown more common. By flooding the target or nearby infrastructure with internet traffic, these attacks interrupt regular traffic to linked devices. A distributed security architecture of a blockchain can defend IoT networks and devices from botnet-driven DDoS attacks. Every device in a network is protected separately using a peer-to-peer blockchain network in this design.
Benefits of Blockchain and IoT:
While blockchain and the Internet of Things (IoT) are both strong technologies in and of themselves, according to Enterprise Digitalization, the combination of these technologies may be used by businesses in remarkable ways. The combined blockchain and IoT industry are expected to reach $254.31 billion by 2026, according to a 2018 report by Aftrex Market Research. Here are five particular blockchain and IoT features that will drive industry development in the next few years.
Accelerated Data Change
According to Aftrex Market Research, one of the most significant advantages of combining IoT with blockchain is the ability to modify data more quickly. According to reports, the present blockchain implementation has limitations in this area since it limits the number of transactions per second. To manage the volume of data, the number of IoT devices, and the speed at which two parties trade, a more enterprise-grade solution, such as a permission-based blockchain, is necessary. To address the performance needs of IoT, a blockchain that can decrease transaction validation time by using trustworthy nodes is required, as is one that can handle the pace of IoT data interchange.
The potential to minimize operating expenses is one of the most recognized benefits for businesses. Blockchain enables data to be submitted peer-to-peer without centralized control, lowering company costs. The cost of scaling a highly reliable centralized infrastructure is unavoidable. While tackling the size of IoT, decentralization allows for a more cost-effective method to minimize single points of failure.
Due to its capacity to legitimate data and ensure that it originates from a trustworthy source, one of the inherent characteristics of blockchain is security. This feature is especially useful in the IoT because of the large number of devices. The combination of technologies has the potential to reinforce privacy agreements and improve the security of communications. It’s not only about gadgets; it’s also about human-to-human, device to device, and human to device interactions. A significant benefit is having this trustworthy ledger that indicates who has access, who is transacting, and a record of all those transactions. Security mechanisms such as device authentication are commonly used by businesses that use a mix of blockchain and IoT, but this is only the tip of the iceberg. To guarantee complete protection, many security layers must be built to prevent unauthorized access and to cut off access if a bad actor is identified.
Accounting is one of the first departments in a company to gain from the increased transparency brought on by blockchain and IoT. It is critical for entities to understand which organizations are sharing/sending money/data via a time-stamped, linear chain. It’s a tried-and-true sequence of transactions that can’t be tampered with.
A More Efficient Supply Chain:
Making supply chains more efficient is a top objective for many businesses. Nonetheless, several economic and geopolitical issues exacerbate the difficulty of this process. Blockchain and IoT can enhance supply chain efficiency by removing the middleman, speeding up transactions, and decreasing costs. Fees are paid for each hop in a typical supply chain transaction, which takes four or five hops to validate. Untrusted parties can trade data directly with one another, eliminating the costs associated with each hop, thanks to the blockchain acting as a validator to some extent.
Scope for Growth:
Due to operational constraints and technological issues, IoT-blockchain technology adoption is still limited. In blockchain systems that maintain a big centralized ledger, storage and scalability are key challenges, and keeping the ledger on edger nodes is inefficient since smart devices at the edge are not yet capable of processing massive quantities of computing power or storing enormous volumes of data.
Despite the fact that the notion of IoT-blockchain technology is still in its infancy, it is expected to have a significant influence in future years. The adoption of IoT-blockchain technology will be aided by the implementation of legislation and uniform security norms. Blockchain can provide a new level of security to the internet by establishing new peer-to-peer communication and data transparency requirements.