With the number of interconnected and intercommunicating devices set to rise to more than tens of billions over the next few years, next generation networks will require a secure and efficient way to track all interactions, transactions, and activities of every device within the network.
Hurdles including interoperability, compliance, reliability, security, and privacy still stand in the way of the IoT’s full potential, amongst this, people’s trust is a major concern.
Many suggest that blockchain technology will solve all these problems, it will give energy to the rapid growth of IoT leverage, and alleviate all fears, whereas others believe that both IoT and blockchain remain emergent technologies and not even close to being ready for widespread adoption.
Blockchain was first mentioned when Bitcoin was introduced - a virtual currency which relies on this technology to ensure security and virtue. Blockchain, Bitcoin’s underlying technology allows for a secure exchange between entities by cultivating a continuously growing list of incorruptible data records whilst being protected from tampering and modification.
Blockchain’s biggest pull is that it can ensure the integrity of any kind of transaction over the network and between any entities, for example, tracking ownership rights, tracking interactions between devices, authentication, or even voting rights.
At this stage, IoT topology is based on having all data from devices enter a centralized location, such as a physical server or cloud to use and store the data. All connected devices are identified, authenticated, and connected through a platform that provides services like device management, data collection, data processing, analytics, and storage. The sheer number of different IoT device types, versions and models make device management far from easy.
As the number of connected devices increases so does the amount of data, which in turn can and will eventually cause a centralized cloud server to bloat and overload. The ability to develop a cloud service that connects all devices and guarantees interoperability can be technically and economically challenging and difficult to scale.
Blockchain technology goes about this process differently. Instead of managing and storing all transactions at a central location, blockchain creates a distributed digital ledger which holds permanent, unmodifiable data records that are available to any node within the IoT network. All subnetworks and nodes can recognize and authenticate transactions before adding them to the ledger, where they are available to other nodes sharing the network, enabling cost savings by not having to spend on expensive, centralized data centers and also eliminating the need for intermediaries.
There are several benefits to combining IoT with blockchain technology:
But who will be directing the traffic in a multi-blockchain world?
Blockchain twinned with IoT essentially eliminates the need for a central, trusted intermediary between smart devices and could, in fact, remove the requirement for a middleman in most transactions.
Though there are those that sit on the fence, there are also many within a wide variety of industries that are taking both blockchain and IoT technologies enthusiastically with open arms and adopting it into their enterprises. With a great deal of speculation as to where each technology will lead, a collective effort into combining the two looks to be crucial to ensuring security and reducing the business risks associated with high-tech change.