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Blockchain and IoT

What is Blockchain?

Blockchain is one of the series of latest technology trends radically changing different industries had its first application in Finance i.e. Bitcoins. In simplest terms Blockchain can be thought of as a block of data structure that holds a transactional data, timestamp and cryptographical hash which links each block to the previous block in the blockchain and while ensuring security, transparency and decentralized ledgers to monitor and validate the blocks in the blockchain. Due to the use of encryption and digital signatures, the data stored on the blockchain is tamper-proof and cannot be changed.

In the image, the Green Block is the genesis block (first block of the chain) and the black ones form the main blockchain and the purple ones are orphaned blockchains.

How Blockchain can improve IoT?

An IoT network usually consists of edge devices connected to a gateway which in turn communicates to the cloud. And also, IoT devices generate large amount of data and with time the data scales higher and higher. And it is no new fact that handling enormous volumes of both existing and projected data is not only daunting but also impossible via conventional approaches. Not to forget that transforming massive volumes of data into actionable and valuable business insights is another challenge. Handling such vast amounts of data inevitably raises security concerns what with the incidence of cybercrimes increasing significantly over the last decade. With millions of devices connected to the Internet, each becomes vulnerable to possible security breaches (hacking, phishing, etc.) if proper security measures aren’t put in place.

Furthermore, the current IoT ecosystems operate on centralized, brokered communication models, better known as the server/client paradigm. In this infrastructure, all devices are identified, authenticated, and connected through cloud servers.

However, with a decentralized approach such as Blockchain, these challenges are overcome by adopting a standardized peer-to-peer communication model to process the massive volumes of transactions between connected devices will reduce the installation and maintenance costs of large centralized data centres. Also, it will distribute computation and storage needs across the billions of devices. Thanks to this, even in the instance of the failure of a single node will not bring the entire system to a halt.

Real World Applications of Blockchain IoT:

  • Pharmacy Industry

The Biggest problem faced by pharmaceutical industry is manufacturing and distribution of Counterfeit below quality medicines. This starts with the leak of the original constituents of the medicine during the manufacturing process. Blockchain brings transparency and traceability in the network. It enables all the stake holders of the pharmacy life cycle like the manufacturers, distributors, delivery units and consumers to capture and update data in real time using the blockchain. From the procurement of raw materials to shipping of finished medicines to the distributors everything can be tracked using blockchain in real time and this data can also be accessed using connected devices and any tampering or anomaly in the data will trigger an immediate alert causing the blockchain to fail which can then be inspected.

  • Supply Chain and Logistics

A logistic network involves many parties, and this primarily causes the delay in shipment or distribution as the biggest challenge in supply chain industry. While the IoT enabled devices and sensors collect data and allows the companies to track shipment and status at each stage, blockchain will provide security and transparency to the entire transaction process. IoT sensors can offer details like motion data, GPS data, temperature data, count which act as transactional data for each block in the blockchain. This information once recorded in the blockchain is now decentralized and all parties can access in real-time. Any unintended change in the block transactional data raises an alarm and can easily rectified by copying the block data from the decentralized ledger between the nodes. Together blockchain and IoT can help improve reliability, security and traceability in the supply chain network.

  • Automotive Industry

In Today’s world automotive manufacturers rely on digitization and leveraging IoT sensors to develop fully automated vehicles. Blockchain along with IoT in automotive industry can improve many things like autonomous cars, smart parking and automated traffic control. The main concept of blockchain is smart contracts where involved parties reach an agreement or consensus after verifying the authenticity of the blocks or the data exchanged between them. Smart contracts can be used to agree upon various things like payment, authenticity of data, authenticity of partner etc…,

This smart contract can be applied here in the case of Large fleet management of Taxi cars by the Owner for managing the large transactional data from each vehicle in the fleet. Such data can be reliably stored and accessed using blockchain without worrying about any tampering. Another example is Smart Parking system where IoT sensors in a Parking are can gather information on the current occupied and empty spots. This data can be pushed to the blockchain and when a customer seeks to park in the area, smart contracts can be used to cryptographic payment and assigning the empty parking slot to the customer making the entire process automated. IoT enabled devices can then direct the customer upon successful payment to his assigned parking spot.

  • Smart Homes

Smart Homes and Automated Homes operate on a centralized network consisting of intelligent home automation devices like Cameras, TV, Intelligent AC’s and LED Lamps. But with such a centralized framework, it becomes difficult to maintain security and even with the best security all centralized networks have a single point of failure. Once the network is breached, all devices connected pose a risk with varying threat levels.

Now if we replace this centralized network with blockchain and its decentralized framework and a compatible smartphone application, it improves the security of the entire network by many folds. Firstly, it will nullify the single point of failure. Every device now communicates with each other and the controller using blockchain network. This improves the way an Owner (App user) is identified and controls the devices in the network. Any breach in the network from external source can easily be identified and blocked instantly without causing any further disruption.


IoT while being revolutionary can be a pain to manage with its large array of devices, centralized storage & processing and weak security of network. As seen above adopting blockchain communication along with IoT can solve majority of the problems and shortcomings in a plain old IoT system. It adds an extra layer of robust security and tightly controls how information flows, who can access the information and who can update the information in a decentralized block of data. A thoroughly architected solution involving IoT and blockchain would be invulnerable to most of the attacks due its underlying nature of being completely transparent and use of its cryptographic verification.

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