Blockchain & Internet Of Things Are A Perfect Match
Internet of Things technology has given rise to concepts such as smart factories, cities and vehicles and next-generation agri-tech, among many other use cases. Almost every industry is looking to take advantage of IoT and the world is well set for that to happen. These days, almost everyone owns a smartphone or tablet device, and a great many machines are equipped with Wi-Fi enabled sensors that can send data to a centralized server. Things like factory machines, traffic lights, airplanes - you name it, they all have the ability to talk to one another thanks to IoT.
However, the rise of IoT may present some problems. With so many devices in the world all collecting, sending, receiving and processing data, existing networks will soon become clogged, resulting in very high costs for compute and storage power.
This is why blockchain is often touted as an ideal platform for IoT devices. With blockchain, data is stored on a distributed, decentralized ledger that’s hosted on multiple nodes. Its immutable nature means that the data stored within it cannot be corrupted. The merger of blockchain and IoT results in a reliable and secure method of storing that’s generated and processed by intelligent devices. Moreover, because it’s decentralized, there’s no need for centralized control, management and maintenance, and no expensive costs associated with it.
How Blockchain Benefits IoT
Given the advantages, it’s no surprise that blockchain and IoT have already made considerable progress. In 2019, almost 20% of all IoT deployments were powered by blockchain solutions, according to data from International Data Corp. There’s lots of room for potential growth in this area too, with Statista estimating the total installed base of IoT devices to exceed 75 billion by the end of 2025.
The growth of IoT will result in enormous volumes of data being generated, and dealing with all of that information is likely going to be a daunting challenge if we continue to rely on conventional cloud-based networks. For one thing there’s the enormous costs to consider. Today’s cloud networks can be extremely costly in terms of storage and processing power.
The issue is that existing IoT ecosystems are powered by a highly centralized, brokered communication model based on a client/server architecture. Within this infrastructure, each device is identified, connected and authenticated by cloud servers that use massive amounts of storage and processing power at extremely high costs.
Another issue with cloud networks is the risk of outages, which can cause data to become inaccessible and sometimes even lost forever.
Proponents of blockchain for IoT say decentralized networks will make it simpler to track billions of devices, enabling distributed processing and coordination at much lower costs. By adopting a standardized, peer-to-peer communication model to process large volumes of transactions between connected devices, companies will no longer need to rely on cloud servers.
Furthermore, blockchain will eliminate single points of failure, which is a big problem with today’s centralized cloud networks. Blockchain is incredibly secure too, thanks to its use of cryptography to secure the data it collects.
Problems To Overcome
It won’t all be plain sailing if we’re to migrate IoT workloads to a blockchain-based infrastructure. There are some key issues that need to be overcome, but luckily a number of interesting solutions are already being built.
One of the main challenges with blockchain is that it’s not a low-latency protocol. As such, most blockchains process a very low number of transactions per second, and that presents issues for large-scale IoT device networks, as these require extremely rapid rates of data transfer to keep up. Ethereum, the world’s most popular smart contract blockchain, is only capable of processing around seven transactions per second, for example. Moreover, the Ethereum network is often congested, leading to high transaction costs. In its natural state, it’s not a realistic platform for large-scale IoT deployments.
The answer to this problem may lie in scaling solutions like Boba Network, which is a Layer-2 network and hybrid compute platform that powers lightning fast transactions with much lower costs than traditional Layer-1 networks.
Boba Network relies on a technology called optimistic rollups, which enable multiple transactions to be bundled into one and processed simultaneously. In this way, transactions are not only performed more quickly, but are more cost-effective too, as the gas fees for each bundle are split between them. What’s more, Boba Network’s hybrid compute technology makes it a perfect fit for IoT data, as it enables Ethereum smart contracts to talk to any external Web2 API or sensor to collect and process real-world information.
A second problem that needs to be solved is blockchain’s compatibility issues. SQL datasets have emerged as the standard for IoT networks, but blockchain is not well suited for use as a traditional database as it stores data differently, in blocks, as opposed to rows and columns. Its distributed nature is also not compatible with SQL-type databases. Still, there are some promising projects working to fix these compatibility issues. IOTA, for instance, has developed an IoT compatible blockchain that relies on a Directed Acyclic Graph-based tangle structure, as opposed to standard blocks. This makes it more suited for storing the kind of chronologically-ordered data created by IoT devices.
IoT Blockchain Applications At Work
The combination of blockchain and IoT is an extremely powerful one for many specific application use cases. One of the best examples is in logistics, which is the backbone of most global industries, ensuring that raw materials and finished products are always in stock, and get where they need to go.
The logistics and supply chain industries face numerous challenges, including too much paperwork, lack of control over shipping, issues around traceability, transportation difficulties and more.
IoT and blockchain together can fix many of these issues. For instance, they can combine to collect and store data on things such as locations, times of departure and arrival, the temperature of goods in transit, the status of containers being shipped and so on. Because blockchain is decentralized and immutable, anyone can access this data at any time and be sure that it hasn’t been corrupted.
One company doing this is Ambrosus, the creator of a blockchain-powered IoT network for the pharmaceutical and food logistics industries. It relies on a network of blockchain-connected sensors to provide full visibility into goods throughout the supply chain, leading to faster and more efficient movement of these goods.
Connected cars are another obvious example of how blockchain and IoT can be utilized together. Car manufacturers are increasingly turning to IoT enabled sensors to develop automated vehicles, and the addition of blockchain creates many new possibilities for the industry around smart parking, automated traffic control and more. Take NetObjex, which has created a smart parking solution that’s powered by IoT and blockchain. Through its collaboration with PNI, which designs smart parking sensors, it has created a platform for autonomous vehicles to quickly find an available parking spot with integrated payments using cryptocurrency.
Last but not least is the energy sector, which has already enjoyed the benefits of IoT enabled sensors that led to the creation of so-called smart meters. When IoT is merged with blockchain, smart meters can upload data in real-time and enable better distribution of energy across the grid. A home equipped with solar panels for instance can provide surplus power back to the grid, reducing energy wastage. An example of how this works can be found in Brooklyn, New York. There, solar powered homes are connected through so-called “microgrids” that enable smart meters to talk to one another across a distributed network. Through this network, these homes now have a way to buy and sell electricity from one another, with the blockchain facilitating transactions and ensuring everyone can save money on their energy bills.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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