Blockchains for Internet of Things

What is the issue?

• The Internet of Things is gaining momentum as the much deployed technology in the world across sectors.
• In this backdrop, here is how the blockchain architecture could satisfy the key demands of IoT.

What is IoT?

• The internet of things, or IoT, is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people.
• These are provided with unique identifiers (UIDs) and the ability to transfer data over a network.
• The transfer happens without requiring human-to-human or human-to-computer interaction.

How significant is this becoming?

• Estimatedly, the number of connected devices in the world could grow 2.4-fold, from 6.1 billion in 2017 to 14.6 billion by 2022.
• Traffic from these connected devices is expected to grow seven-fold over the same period.
• With this, there will be an exponential increase in both the number of devices and amount of data transmitted.

What are the challenges?

• With IoT, a large amount of data is being captured from all around people by millions of devices.
• So there are reasonable concerns with respect to scalability, reliability and security, when considering the creation of large IoT networks.
• So it is essential to provide for an acceptable level of confidence in the platforms that will power the Internet of Things.
• Besides, a key question is if optimum economic value could be derived from the vast amount of data generated.
• The answer is not that encouraging as the quality and adequacy of the back-office systems and technologies are not adequate yet.
• Globally, only about 30% of IoT projects survive beyond the pilot phase.
• This is a powerful indicator that much needs to be done to effectively tap this new technology.

How does blockchain help here?

• The blockchain or multi-ledger technology provides the possible solution in handling the large amount of data.
• Blockchain was designed specifically as a back-end for Bitcoin, a crypto-currency.
• [It is a digital public ledger that records every transaction. Once a transaction is entered in the blockchain, it cannot be erased or modified.]
• But the conceptual architecture of blockchain, being versatile, has evolved and found theoretical application in nearly every industry.
• It can work as a distributed network, and safely execute on a wide variety of requirements.
• This makes it an ideal candidate to support the level of innovation and adoption required for IoT to succeed.
• The key issues of scalability, identity management, autonomy, reliability, security and marketing can all be addressed.
• But the IoT - Blockchain combination rarely gets the attention it deserves.

What are the key features of IoT-Blockchain use?

• Decentralisation - The current centralised architectures of IoT networks is problematic when it comes to citywide networks.
• Decentralisation is a core feature of blockchains; the expected points of failure and scalability bottlenecks in IoT can be adequately addressed.
• If implemented appropriately it could allow for a shift to peer to peer network designs, greater fault tolerance and expedited scalability.
• Managing identities - A massive IoT network would also be required to manage identities - of both users and things.
• With blockchain, all identity records can be contained within a single network, thus facilitating their discovery and management.
• Autonomy - The very nature of IoT mandates a certain level of autonomy in the functioning of enabling platforms.
• The reliance on server farms is expected to be significant for any large scale IoT implementation.
• With blockchain, devices would be able to communicate without the need for large server farms.
• Security - In IoT, authenticity and verification of data are critical, especially in the case of digitised citywide networks.
• The tamper-proof nature of the blockchain provides the much-needed security to IoT platforms.
• Powered by smart contracts, the blockchain could enable secure communications between devices, with scope for radical innovation.

How could large scale adoption be ensured?

• The blockchain possesses the ability to increase market access for deployed services.
• Transactions between peers can be simplified to a significant degree, and without the need for authorities or third parties.
• The blockchains’ trustless environment ironically offers unprecedented levels of distributed security.
• This is ideal for the deployment of micro services and for the simplified execution of micro transactions.

Source: Business Line