How significant is the Blockchain in the Internet of Things?

The spotlight was recently reported on the Internet of Things (IoT) when Bosch, the multinational of engineering and electronics, tweeted on November 12th their Cross Domain Development Kit (XDK), a programmable sensor device and the IoT prototyping platform, in collaboration with IOTA.

There are a number of definitions for IoT, of which Ernst and Young (EY) describe it in the simplest terms:

"Internet of Things (IoT) describes the connection of devices – any device – to the Internet using integrated software and sensors to communicate, collect and exchange data with each other".

The industry has taken off significantly in recent years and the estimates and forecasts for its future growth and the impact of the Internet abound.

The research and consulting company Gartner estimates that the number of installed IoT devices will reach 20.4 billion by 2020, BI Intelligence expects it will be closer to 24 billion, while IDC, a global provider of intelligence services and market consulting , estimates that there will be about 30 billion connected devices by 2020.

According to IHS Markit, a source of critical information composed of 5,000 analysts, data scientists, financial experts and industry specialists, the figure will increase up to 125 billion IoT devices installed by 2030.

IDC also predicts that IoT's revenue will reach $ 357 billion by the end of 2019 and Bain & Company, a management consulting firm, expects to rise to $ 450 billion by the end of 2020. McKinsey & Company, an & Another international management consulting firm, estimates that the IoT will have an impact of $ 11.1 trillion on the global economy by 2025.

It is clear that this is an already large sector, destined to grow exponentially in the next decade and beyond.

How exactly does IoT work?

IoT refers to a network of connected devices that are able to collect and exchange data. IoT-enabling platforms provide a common network for devices that download their data and a common language for these devices to communicate with each other, allowing people to use it to their advantage.

Communication devices – or sensors – are incorporated into everyday objects such as telephones, TVs, indoor air conditioning systems, home appliances, automobiles, traffic lights and industrial equipment. These sensors continuously output data on the operating status of the connected devices and allow them to send and receive data from each other via the cloud (internet).

The IoT platforms will then analyze the data to extract valuable information and share it with other devices to launch specific commands or actions. The result is a better human experience, greater automation and better efficiencies.

In production, for example, all the different components and machines in the factory could be equipped with sensors that continuously transmit system integrity data to the operators' mobile apps. Potential problems can then be identified and resolved before a failure occurs, saving time and money for companies.

If we look at a product directed to the consumer, such as air conditioners, the units can be incorporated with a sensor that emits health and temperature data of the system. The data will be continuously downloaded and analyzed in an IoT network. If a problem occurs, customer service can be contacted for repair work before you even know that there is a problem.

The use cases of the IoT are almost endless, from maintaining medical devices in patients in good operating condition to combat rapid deforestation in rain forests around the world.

But IoT networks are not perfect. The devices constantly share critical information back and forth over the Internet, making it a primary target for hackers. Privacy and security are therefore important concerns.

Some of the most notorious IoT attacks include the Mirai Botnet DDoS attack (distributed denial of service) that hit internet service for almost the entire east coast of America, including Twitter, Netflix and Reddit.

There was also the planned hacking of a Jeep to expose some of the vulnerabilities in IoT devices in the cars and the catastrophic consequences it could have once overcome, along with the actual FDA recall of 500,000 pacemakers connected to IoT in September 2017 because security holes were discovered this could allow hackers to tamper with medical devices once implanted in patients.

How effective is the blockchain in the IoT sector to overcome centralized bottlenecks?

Blockchain inside is a cryptographically distributed distributed ledger that allows secure transfer of data between the parties.

Traditional IoT systems depend on a centralized architecture. Information is sent from the device to the cloud where data is processed by analysis and then sent to IoT devices. With billions of devices destined to join the IoT networks in the coming years, this type of centralized system has very limited scalability, exposes billions of weaknesses that compromise network security and will become incredibly expensive and sluggish if third parties have to constantly monitor and authenticate each micro-transaction between devices.

Smart contracts in blockchain networks will allow devices to operate securely and autonomously by creating agreements that only execute upon completion of specific requirements. Not only does it allow more automation, scalability and cheaper transfers (no third party is needed to monitor transactions), but these smart contracts can also prevent substitutions by individuals who want to use data to their advantage. Information is shared on a decentralized and encrypted network, which means that it becomes very difficult to compromise network security.

Finally, with a centralized network, the risk of a single point of failure that disables an entire network is a very real possibility. A decentralized blockchain network mitigates this risk with millions of individual nodes that transfer data on a peer-to-peer (p2p) basis to keep the rest of the IoT network running smoothly.

IoT platform blockchain notes

Several blockchain platforms focused on IoT are emerging as the industry grows larger.

One of the first IoT blockchain platforms is IOTA. It is designed specifically for the Internet of Things and provides a level of transaction and data transfer for connected devices.

They created the Tangle platform, which developers describe as "going beyond the blockchain". It is a blockless, cryptographic, and decentralized network in which, instead of outsourcing the verification of the network, users verify the transactions of other users.

The advantage is twofold: it allows greater scalability and eliminates the need to pay transaction costs to miners. Both of these factors are essential in a practical IoT network that may require the processing of billions of micro-transactions between devices on a daily basis.

The IOTA has also entered into several important partnerships including:

• Bosch: The Bosch XDK (Cross Domain Development Kit) is a programmable sensor device and an IoT prototyping platform used to collect specific data in real time that can then be sold via the IOTA data marketplace.
• Fujitsu – the company is using the IOTA protocol in a proof-of-concept and immutable data storage support for audit trails in industrial production environments and supply chains.
• Den Norske Bank is currently engaged in an exploratory partnership to find ways in which the IOTA Tangle platform can be applied to improve the bank's existing services and products.
• Volkswagen – the car manufacturer is working with IOTA on a project called "Digital CarPass", which is essentially a report card for cards stored on a distributed ledger that ensures critical factors such as mileage are reliable and accurate.

But IOTA is not the only blockchain platform focused on IoT, others include:

HDAC

The Hyundai Digital Asset Company (Hdac) is applying blockchain technology to communicate quickly and effectively, manage identity verification, authentication and data storage between IoT devices. The system incorporates a dual-chain system (public and private) to increase transaction speed and volume, making it ideal for IoT devices.

The technology is applied to smart factories, smart homes and smart buildings for machine-to-machine transactions and IoT-device operations.

VeChain

VeChain is a global public-level blockchain platform. Blockchain is used in various ways, with a focus on advanced IoT integration in cold chain logistics using proprietary IoT devices to track key metrics, such as temperature, throughout the entire journey. In addition, the platform can hold automotive passports by creating digital car registrations, including repair history, insurance, registration and even driver behavior throughout its life cycle.

Medical and healthcare applications are also possible using end-to-end monitoring of medical device manufacturing processes and allows patients to securely share their biometric data with their physicians to enable real-time monitoring. VeChain also uses IoT technology for luxury goods by incorporating smart chips into luxury products so that brands can monitor their sales channels in real time, thus avoiding overstock trading and allowing consumers to verify the authenticity of the luxury product.

Waltonchain

Waltonchain is created through a combination of RFID and blockchain technologies for effective IoT integration.

They focus mainly on tracking processes and products in the supply chain, where technology can be applied to the identification of high-end clothing, food and drug traceability and logistics traceability by implanting RFID tags and chips reader-writer control in products. Information on the status of the products is then downloaded for analysis on a secure blockchain.

Streamr

Streamr is an open source blockchain infrastructure to feed the world's data economy and to give people control of their information. Their technology can be implanted in everyday objects – such as cars – to record data including traffic, potholes and local fuel prices. The user can then choose to sell this data to other car users or highway agencies or purchase information from other users that will help them make real-time decisions in a connected smart city.

The information travels through the decentralized peer-to-peer network to be published on the network nodes and is powered by the network's native cryptocurrency (DATACOIN).

This is just a small example of blockchain-based IoT platforms and the list continues to grow as the industry evolves. Other projects include Ambrosus, IoT Chain, Atonomi, Chain of Things, IoTeX, OriginTrail, Slock.it, BlockMesh, Helium, Moeco, FOAM, Fysical, Grid + and Power Ledger.

Challenges to overcome for blockchain in IoT

In this area, great progress has been made in development, but blockchain application in IoT is far from perfect and many key challenges will have to be overcome before we can see the complete benefit of IoT blockchain. .

scalability

Can blockchain networks cope with the volume of data expected to be produced by IoT devices over the next 5 to 10 years without slowing down the speed of transactions or the flow of data? IOTA addresses this problem in particular by not using a decentralized blockchain-based network, opting instead for their Tangle platform. But this is just a project. Blockchains better known as Ethereum and Bitcoin have long suffered from scalability problems and are not suited to the amount of data that IoT devices are producing.

Safety

The decentralized blockchain networks offer a high level of security, but what level of weakness (if any) do IoT devices create at the point where they connect to the network? Even the devices themselves will need to be protected to prevent hackers from tampering with them.

interoperability

Transversal interoperability will need to be addressed and improved if we really want to take advantage of interconnected smart devices. Otherwise, we may find ourselves in a situation where we are connected to multiple isolated decentralized networks that work well for their purpose but can not necessarily talk to other devices for which they have not been specifically designed.

Legal, compliance and regulation

The division of responsibilities must be examined carefully. We will also have to establish how to regulate intelligent contractual actions in the world outside the blockchain. For example, who takes responsibility if a medical device connected to an implanted IoT in a patient undertakes an action based on certain intelligent contract rules but ends up causing harm to the patient? Is this the responsibility of the manufacturer or the IoT platform? If the IoT platform is based on blockchain, it will be decentralized without a controlling entity, so identifying a responsible party could present a problem.