IoT (Internet of Things) is a cutting-edge technology with a lot of promise. It can add transformational value in many sectors like industrial, supply chain, healthcare, and natural resource management. Realizing its true potential requires much more work though. Blockchain can help businesses, governments, and non-governmental organizations to unlock the true value of IoT. Read on, as we explain how.
Setting the context: The promise of IoT, and the challenges that need resolution
A Mordor Intelligence report states that the global market of IoT will grow to $1,386.06 billion by 2026 from $761.40 billion in 2020. The report estimates a CAGR of 10.53% during the 2021-2026 period.
This significant growth potential is due to the following advantages offered by IoT:
Better data collection capabilities: IoT devices collect data using sensors. An IoT-based system can collect a vast amount of data within a short time period.
Versatility: You can use IoT in a wide range of sectors like energy, industrial, healthcare, natural resource management, supply chain, smart cities, etc. Its superior data collection capabilities make it easier to monitor key parameters.
A wide range of use cases: Whether remote monitoring of patients, using smart meters, or monitoring water resources, you have many IoT use cases.
However, IoT also has the following disadvantages:
Complexities: IoT is still a relatively new technology. As it happens with such technologies, IoT is complex technology.
Data privacy and security challenges: IoT devices collect plenty of data including sensitive information. These devices communicate this data over the Internet to IoT systems. Hackers routinely target IoT systems, and the impact of cybersecurity incidents can be severe. Imagine the consequences of a hacked smart grid!
Why should you use blockchain with IoT?
Blockchain can significantly improve the data privacy and security aspects of IoT. It can help IoT systems to store data collected by IoT devices securely. The following characteristics of blockchain can help here:
Decentralization: Blockchain is a P2P (peer-to-peer) network with built-in decentralization. One can’t shut a blockchain network down by shutting down one or more nodes, i.e., computers on the network. Other nodes remain, therefore, the decentralized network survives.
Distributed ledger: Blockchain involves storing all transaction data on all nodes. As a result, every node acts as a ledger of all transactions. This distributed ledger improves transparency. Everyone can see the discrepancies if there’s an attempt to tamper with data.
Security features: Blockchain uses robust security features like digital signature, encryption, and consensus algorithms. The combination of these security features makes it very hard to tamper with data stored on blockchain networks.
IOTA and Tangle: A cryptocurrency for IoT
Before we discuss how blockchain is helping to realize greater value from IoT, we review an IoT-friendly cryptocurrency. Popular cryptocurrencies like Bitcoin and Ethereum face challenges with scalability and performance throughout. These blockchain networks have transaction fees too.
This poses some challenges when conducting IoT-related transactions using cryptocurrencies. IoT systems can have millions or more IoT devices on their network. These IoT devices frequently interact with the system, and there are many micro-transactions.
What if you try to use a blockchain network like Bitcoin or Ethereum to conduct these micro-transactions by cryptographic tokens? The vast number of IoT devices will create scalability-related challenges. Transaction fees for such a large number of micro-transactions will reduce the economic viability of the system.
IOTA, a cryptocurrency designed specifically for IoT systems solves this challenge. Tangle is the underlying technology of IOTA. It’s different from traditional blockchain networks like Bitcoin.
Tangle uses DAG (Directed Acyclic Graph), a mathematical concept. It doesn’t require a large number of transaction validators to validate a transaction. That improves the scalability and transaction throughput. It also eliminates the need for transaction fees. Many organizations looking for a cryptocurrency for IoT are using IOTA.
How blockchain is already helping to unlock greater value from IoT systems: A few examples
The following are examples of how blockchain is helping to realize greater value from IoT:
1. Golden State Foods (GSF) worked with IBM to implement an IoT and blockchain-based system for supply chain visibility
The supply chain is a complex function. There are many stakeholders involved, furthermore, raw materials and products change hands multiple times. Suppliers with questionable credentials can provide counterfeit parts or low-quality raw materials.
Supply chain management for food products is complex. Businesses need to track whether suppliers provide fresh produces in hygienic conditions.
Golden State Foods (GSF) manufactures and distributes food products to over 125,000 restaurants. The company has worked with IBM to implement an IoT and blockchain-based system to improve supply chain visibility.
IoT devices collect the required data. Blockchain secures data. Together, they ensure transparency and quality of data.
2. NetObjex has implemented an IoT and blockchain-based smart parking solution
Smart parking requires real-time collection and processing of data. Furthermore, it requires seamless integration with payment systems. IoT devices can collect real-time data concerning vehicles and parking spots. Blockchain can ensure the sanctity of data.
IoT systems with scalable database engines can help with real-time data processing. This helps to find a vacant parking slot. Cryptocurrency-based payment systems can expedite payment processing.
NetObjex, a company specializing in IoT, AI, and blockchain has implemented an IoT and blockchain-based smart parking solution. The company worked with PNI, a parking sensor company. The smart parking solution detects vehicles and identifies parking slots in real-time.
This system calculates the parking charges. Finally, a crypto wallet-based payment system expedites payment.
3. Telstra has implemented an IoT and blockchain-based smart home solution
Smart home solutions offer convenience. They use IoT systems. They collect plenty of personal information like biometrics, data for voice recognition, and data for facial recognition.
The vast amount of personal data makes smart home systems lucrative targets for hackers. Telstra is using blockchain to secure data collected by IoT devices.
The Telstra smart home solution stores sensitive data on a blockchain. This prevents tampering with the data. Unauthorized parties can’t access the sensitive data either.
4. Pavo is using IoT and blockchain to improve the transparency of the agricultural supply chain
The agricultural supply chain is complex. It involves multiple stakeholders like farmers, distributors, retailers, etc. Ensuring transparency in the agricultural supply chain is hard.
Pavo IoT is a blockchain and IoT start-up in the agritech space. The company provides an IoT system that collects data at various points in the agricultural supply chain. It also uses blockchain to secure this data. This improves transparency while tracking the entire lifecycle of agricultural produces.
IoT has transformative potential. However, ensuring data privacy and security on IoT systems isn’t easy. Blockchain can help due to its decentralization, distributed ledger, and security features. We reviewed how blockchain is already helping to unlock greater value from IoT.