Blockchain turned ten years old in October, and even though it may be one of the hottest buzzwords for raising money, few definitive use cases have been proven so far aside from digital currencies. Yes, speculative use cases for the technology exist and people are experimenting with the technology in everything from supply chain, to healthcare, to real estate, and even tipping people for their tweets. However, there has yet to be one area or vertical that has seen a total transformation from using the technology. Many feel that this is because the technology isn’t developed enough yet or people don’t understand it fully, but others have begun to wonder whether blockchain is a solution searching for a problem that may or may not exist. It seems like a new article pops up every day for some startup raising millions of dollars for their new technology promising “Blockchain + IoT or, AI, or Drones, or all the above…”. At Consensus Networks, we’re focused on finding projects and use cases that are technically sound and have significant potential. We’re big believers in blockchain and are getting our hands dirty exploring the various protocols, looking for concrete use case examples. One such example we’re excited for is IoT.
In 2018, there were over 17 Billion connected devices around the world, 7 Billion of which were IoT enabled. These numbers are projected to double or triple over the next 6 years. IoT devices communicate with one another by gathering and exchange data through sensors embedded in the device, enabling greater automation and efficiency. Devices that are seemingly unrelated can communicate with one another, driving the convergence of many verticals ranging from smart homes, cities, and cars to medical and industrial IoT. For example, IoT enabled machines in a manufacturing plant could communicate information regarding system health and other mechanical data via an IoT platform. Plant operators could then take corrective action before a malfunction occurs, easily conduct more preventative and informed maintenance, and be able to more accurately predict production rates. In fact, studies have found that over 90% of tech, media, & telecommunications executives feel that IoT is critical to nearly all of their business units and will drive the greatest business transformation over the next 3 years.
Now you’re probably thinking, “Okay so if IoT can fix all of the worlds problems where does blockchain fit in the mix?”. While IoT is a powerful emerging technology, it has critical flaws. First and foremost are issues surrounding data privacy and security. IoT devices are great for communicating streams of data and allowing real time device monitoring, but often have extremely poor endpoint security. In 2017 the FDA recalled over 500,000 internet enabled pacemakers after finding vulnerabilities through a transmitter that sent data to physicians, allowing hackers to gain control of the device. Beyond healthcare, IoT data privacy and security issues are a major concern when looking into the future of autonomous vehicles, smart homes, and maybe even the car wash? Another shortcoming of current IoT networks lies in their scalability. Conventional IoT network architectures are centralized with the network of devices sending data into the cloud, where it is processed and sent back to the devices. With the projected wave of IoT devices entering into the market scaling this infrastructure will be difficult, and expose a wide range of security vulnerabilities to hackers to take down an entire network or intercept and gather your data.
Enter blockchain. Integrating blockchain with IoT networks has the potential to overcome the scalability, privacy, and security issues facing IoT today and facilitate the growth of both technologies. As opposed to having a centralized system where a single point of failure can collapse the entire network, blockchain would create a decentralized system of devices acting as nodes that communicate in a peer-to-peer manner with the devices. The benefits from using blockchain to structure an IoT network like this are twofold. First, the network would have no single point of failure, so even if a node/device was compromised the remaining nodes would remain operational. Second, due to the functional programming capabilities through smart contracts, IoT devices could function securely and autonomously without the need for third party oversight. Hence, the network would be more scalable, secure, and autonomous without the need for third party verification of every transaction and the inability of individuals to override the contract and access the data. However, perhaps the most important benefit blockchain provides IoT networks comes from its cryptographic security. Sharing data across a cryptographically secured network makes it incredibly less susceptible to hackers, as it is difficult to discern where data is flowing or what devices are transacting on the network. Whereas security in IoT today was added as an afterthought, blockchain was designed with encryption and cryptographic keys in mind. With some consensus protocols now beginning to incorporate zero-knowledge proofs, IoT devices could even share data in total anonymity, providing total privacy and enhanced network security.
While there have been a few projects that have attempted to tackle IoT and blockchain, the one that we’re focused on is IoTeX. Founded by a team of cryptography and computer science experts in 2017, IoTeX is a privacy and security centric protocol that aims to create a decentralized network designed specifically for IoT devices. IoTeX uses a network architecture consisting of a root chain managing many different subchains. Designing the network in this manner allows IoT devices that share an environment or function to do so with increased privacy, with no risk to the root chain if this subchain is compromised. Aside from enhanced privacy and security, this design allows for greater scalability and interoperability as subchains can transact with the root chain directly or across the root chain to other subchains. IoT devices on the IoTeX network are also able to transfer data with one another in total privacy through the incorporation of lightweight stealth addresses, constant ring signatures, and bulletproofs. IoTeX also incorporates a Randomized Delegated Proof of Stake (RDPoS) mechanism for achieving consensus that they refer to as Roll-DPoS. Using this mechanism, nodes on the IoTeX network can arrive at consensus much faster with instant finality and low compute cost, making it much more friendly to IoT devices. With their mainnet launch coming soon, it will be interesting to see IoTeX tackle the issues IoT faces today and we’ll be along with them, helping to develop and roll out their technology.
More articles to come about use cases for IoT and Blockchain and what the marriage of these two technologies could look like for Web 3.0 and Industry 4.0. Let us know what you think and find us on twitter or discord if there are any questions or areas you’d like us to explore! Thanks for reading!