Imagine two disruptive technologies come together to democratize transparency and connectivity in the tech world. That’s exactly what’s happening with blockchain technology, once synonymous with powering cryptocurrencies including Bitcoin, has the potential to be a disruptor in a number of verticals and the internet of things (IoT), with blockchain addressing key IoT security concerns.
The blockchain is the transaction recording distributed computer ledger. Its major use traditionally has been in securing the transaction of cryptocurrencies over the internet. Different users have their own wallet, which serves as a node in the blockchain network connected to the internet. Transaction messages can be sent in an encrypted form, which acts as a digital signature and does not allow tracing of the user’s wallet or tampering with any data stored there. Each wallet is controlled by a public key and a private key. To initiate a transaction, the user broadcasts an encrypted message in the network using the private key and the message can be decrypted by other network members using the public key. To materialize a transaction between the users, it needs to be approved by the majority of the nodes to help detect any fraud or data-breaching attempt before finalizing the transaction. So, it is the public that is controlling transactions, unlike banks or other financial institutions.
IoT is a concept of embedding everyday-use items with sensors and other electronic components for enabling connection and data exchange between these objects. It is growing at a fast pace, and internet-connected devices increasingly are being used in different industries. IoT has made life easier, with smart devices that can be controlled using mobile apps, and can even be programmed using artificial intelligence.
To function most effectively, IoT devices generally take user information, which means there are security risks. As a result, IoT development is lagging and IoT vulnerability to cyberattacks due to the lack of a robust centralized security model is a real concern.
Blockchain and IoT Complement Each Other
It is evident from history that whenever two complementary technologies merge, new, dynamic products are formed. The greatest advantage provided by blockchain technology is security of data, which happens to be the most difficult challenge faced by IoT. Immutability, decentralization and transparent data-sharing are the most significant advantages of blockchain that are lacking in IoT, and the IoT community wants to integrate these features for data security. User privacy can be maintained in cases where desired by grouping and classifying anonymous individuals or groups under an über Do Not Track (uDNT) system. The smart IoT devices can use the data and information stored on blockchain efficiently for performing various tasks. Blockchain also can help in IoT scaling as it struggles for growth.
Blockchain also benefits from being paired with IoT, as it is showing its worth in a new domain of application apart from cryptocurrencies that most would consider to be much more useful on a daily basis. Thus, the two disruptive technologies complement each other and can reap dynamic solutions for different industries when used in conjunction.
Security of Data is Enhanced
IoT needs a robust centralized security model to grow in acceptance and use—something blockchain technology and the cryptographic processes driving it can offer. More and more offline objects are being converted into online assets with IoT, thereby increasing the risk of cyberthreats. Businesses, therefore, need to plan strategically for the protection of not just the smartphone and desktop computer, but almost everything connected to the internet. The objects in IoT ecosystem can act analogous to the nodes in blockchain technology, thus making connected home, connected cars and other connected devices more reliable and secure with blockchain-based IoT.
Data Analysis and Intelligent Use of Data
By leveraging other technologies such as artificial intelligence (AI), businesses using IoT along with blockchain can uncover useful insights through data analysis and understand the consumer requirements and market trends in a better way.
User Interconnectivity is Enhanced
With the transparency provided by blockchain, the users can make the best use of the interconnectivity provided by IoT to the networks of smart devices. IoT users can connect with each other in more beneficial ways and discuss their issues and queries more openly to gain different insights.
Privacy and Integrity of Data is Increased
With the increased amount of data, the privacy of data is gaining more importance as powerful IoT companies are tracking almost everything about the users. Lack of proper encryption and data leakage not only put individuals at risk, but also makes industrywide business models vulnerable. Using blockchain with IoT not only makes data immutable, tamper-proof, verifiable and transparent, but the data also is encrypted correctly to preserve user privacy.
Transactions are Fast and Small
Certain companies plan to incentivize users with small rewards for sending data, such as by paying a percentage of their electricity bill, providing points or paying the user, thereby creating a new route for earning a passive income. However, with banking fees often outweighing the transaction itself, this idea currently is not feasible. Blockchain can help to solve this problem.
Transactions can be Automated
Using blockchain, the services and transactions made by IoT devices can be automated without human interference. For instance, an autonomous car would be able to pay for a refill, parking fees or mechanic fees by enabling smart contracts that follow the “IFTTT (IF-this-THEN-that)” command.
Infrastructure, Operational Costs are Reduced
Using blockchain, the infrastructure for projects can be outsourced and the cloud side of IoT can be handled by the network. The need of any middleman and the legal and contractual costs, along with the maintenance, update, and supervision costs are cut down. This leaves ample time and money with the companies to focus on the hardware, application, and innovation side of things.
How will Blockchain Combine with IoT?
In the near future, a conventional, centralized model will not be able to manage the data produced by IoT, so, the decentralized approach of blockchain technology will be necessary for data management to avoid data tampering, single-point failures and third-party interference. The entire data is shared across the network like a shared ledger updated in real time.
Comprehensive Blockchain-IoT Approach
To face growing competition in the market, businesses that adopt the blockchain-IoT approach earlier are bound to be more successful. A suitable blockchain-IoT app development company is one that has the following characteristics:
Domain-specific knowledge: Data intelligence needs to be applied along with the knowledge of specific domain to derive the warranted performance or result from investments.
Development intricacy: With the growing business needs and customer expectations, businesses expect a high-performance computing infrastructure. Thus, the company should be able to deal with the business operation and data processing complexities.
Data management on a large scale: For storing and processing large amounts of data, AI and machine learning need to be used. The company must have a hands-on experience in data handling and processing using these techniques.
Blockchain and IoT together can be a game-changing technology for the mobile world. Many companies will benefit from the added security and automation offered by blockchain. In the very near future, we are going to see how blockchain solutions will rule the commercial IoT world and futuristic companies will undertake the process of developing and implementing it themselves.