Blockchain is a relatively new technology that distributes data from different sources and provides a verifiable overview of how this data interacts and changes. Devices in the IoT are also physically decentralized - they do not share common hardware and can be in different locations at the same time. Blockchain technology can therefore improve the Internet of Things (IoT) by providing greater visibility of connected devices.

Blockchain is a distributed ledger technology (DLT), meaning it is specifically designed for archiving and transacting data. As such, it can help IoT companies protect both individual devices and the data they store and connect, increasing customer and partner trust while helping to improve the security of the IoT.

Applications of blockchain in the IoT

There are various ways in which blockchain can improve IoT applications. For example, it can be used as a kind of extended archive for data and devices, mapping when and what changes were made, but also who last accessed the data or device, how trustworthy the device in question was in the past and, in some cases, what caused the change. This distributed information chain can also be used with regard to process automation: based on preconfigured conditions, the blockchain can not only process data but also trigger automatic processes. If the conditions are met, the corresponding action is executed. Here are a few more questions from the IoT spectrum that blockchain can already help answer today:

1. where does my data come from?

Companies are increasingly using data collected via IoT sensors and devices as a basis for business decisions and processes. The amount and importance of this data is growing exponentially - but at the same time, the risk of data misuse is also increasing. It is therefore becoming increasingly important for companies, governments and private individuals to control the origin of the data - especially if it originates from third parties who may want to change it in some way. Data could eventually be altered by a company to hide fraud, or manipulated by the state to influence policies or distort public opinion.

2 How healthy is my IoT device?

Even without the blockchain, errors, downtimes and inconsistencies in IoT networks can be detected and rectified - however, such incidents are usually viewed in isolation and not automatically linked to past malfunctions of a particular device. With thousands of IoT devices within a network, it is not easy to keep a constant eye on the history of each individual component. However, if a device repeatedly causes problems, companies should be able to reliably identify the source of the fault rather than always reacting to failures in the short term.

With blockchain, each device can be assigned a unique key that can be used to send encrypted request and response messages. Over time, these keys can be used to create a profile of each device and track its history. This allows companies to determine which devices need to be replaced and whether the failure is an isolated incident or a pattern of erratic behavior in a particular device.

3. optimize automation

Automation is one of the key benefits of IoT. Many incidents that IoT sensors detect can very quickly have extreme negative consequences for a company: A drill head that is likely to break down soon due to wear and tear and whose spare parts delivery can take several days, leads to high downtime costs in a very short time in an emergency. It is therefore extremely important that a sensor not only provides information about the defective component, but also triggers an automated response to rectify the fault. In this case: delivery of a suitable replacement part.

Blockchain enables the implementation of smart contracts that automatically approve processes for individual devices in advance under certain conditions. In the predictive maintenance example above, the blockchain acts as a trusted "authority" that legitimizes the transaction of the spare part order triggered by the sensor.

4 How can IoT security be increased?

The amount and importance of IoT-generated data in companies has increased enormously in recent years - a fact that has not escaped the attention of cyber criminals. As a result, attempts are often made to hack IoT devices in order to use them in botnets - a group of automated malware programs known as bots. In this way, attackers can steal valuable data, infiltrate private networks, commit identity theft or simply disrupt basic device functions. Given the sensitive nature of IoT data and its proximity to other vulnerable systems, security is a constant concern for organizations that rely on connected devices.

Blockchain's decentralization makes it harder for attackers to penetrate servers, and it documents every attempt and change to the stored data down to the smallest detail, making attacks and resulting damage more traceable.

By storing biometric data in different locations, the blockchain can ensure that no unauthorized person with physical access to a device can access its data or functions. However, storing this information in a blockchain also poses security risks, as this sensitive information could be stolen in the event of a break-in.

Challenges for the IoT

The author: Martin Giess is CTO and co-founder of Emnify.

© EMnify

Blockchain offers enormous advantages for the IoT of the future - however, these cannot yet be used to the full extent that the industry would like.
Technical challenges, such as the limited battery life of IoT devices, are still hindering the full use of extremely data-intensive blockchain technologies. But there is also still a lot to do in terms of data protection and guidelines: To date, there are hardly any regulations that accompany and safeguard the use of blockchain in the IoT, and companies are still largely on their own when it comes to the rollout. Particularly with regard to data protection, this is a risk that many can only take to a limited extent: There is a possibility that the transparency offered by blockchain could reveal too much information to third parties. The extent of this risk ultimately depends on how much access individual parties have and how clearly the parameters for sharing are defined. It is therefore crucial that companies take their time with the rollout and agree the parameters for the blockchain as precisely as possible. Without a fixed legal framework, however, this is a requirement that small and medium-sized companies in particular find difficult to meet today.