Blockchain-Powered Internet-of-Things: Potentials and Challenges

By Othman Darwish

Device democracy was the idea of the experiment done back in 2015  by IBM, with the collaboration of  Samsung. The trial studied the integration of decentralization technology of blockchain with Internet-of-Things - IoT. The use case revealed by IBM concerning autonomous wash machine, that able to order detergent autonomously;  that machine provided by a sensor that able to detect detergent level, and when it goes low,  it communicated with a smart contract using Ethereum protocols and instantiated an order request to a retailer. Once the retailer received the request and upon approving it, a digital payment automatically released from wash machine and received by the retailer, then an acknowledged of the payment received by wash machine. The negotiations between wash machine and retailer ordering service and resulting transactions logged on the blockchain. The idea behind  that IBM experiment of making these devices autonomous in a decentralized internet of things environment proved the concept of transacting and making payments in a marketplace by them self; and this would transform the Internet-of-Things to something new and radical like the "economy of things."

Usually, IoT applications rely on centralized servers, to manage and store their data. Authentication, and authorization of those applications also controlled by a central server. With such network topology, the server becomes a single point of failure, and target for  DDoS cyber attack. Trust and accountability of submitted data from those devices is a vital issue that challenged IoT applications. Manufactures of IoT devices services raced to market at the lowest possible cost with slight consideration for basic security protections, and this brings down consumer confidence on those devices. A framework of trust, such as Online Trust Alliance -OTA is an initiative of Internet Society that built to addresses the trust issue of IoT devices, by developing a framework and guidelines for IoT manufacturers, service providers, and policymakers to reduce security and privacy risk, and increase trust and enable the IoT applications accountability.

With the advent of blockchain technology and its success as a platform for most of the dominate cryptocurrencies, attention gained for many. The convergence of blockchain with IoT make sense for many reasons; availability, audit-ability, accountability, and integrity, are what blockchain designed to solve. Decentralization is fundamental for blockchain technology, at one hand, this would solve the problem of single point of failure and provide network resiliency for IoT applications, a DDoS attack would not be efficient since there is no single point to attack. From another hand, and more importantly, organizations with a low level of trust or an even that run in trustless environment, would be able to form and to participate in a new efficient business network based on the blockchain. Trust would be established and enforced through protocols itself, transparency and oversight between organizations easily achieved, transactions recorded in blockchain are immutable, thus transforming custody from a centralized body to data collected by IoT devices, and recorded it permanently in the blockchain. An organization would be able to perform transparent – activity to track and analyze data in multiple supply chain points as never done before.  By adding a smart contract to such network, organizations would be able to form rules set and contractual agreements between themselves. Such programmable terms and conditions would be run autonomously and guarantee the execution of the contract.

Challenges of the integration between blockchain and IoT are many and need to be addressed, to provide a practical use case.  Blockchain scalability is a significant problem, especially when using it as a platform for IoT apps. Consensus algorithm like PoW that runs under the hood of many Blockchain platforms is the reason for that bottleneck, and it is scalability killer. Moving from resources intensive mining like PoW to virtual mining is a practical proposal. Ethereum, for example, is planning to move from PoW to "Casper" virtual mining, other permissioned platforms such as HyperLedger Fabric going to use a Practical Byzantine Fault Tolerance -PBFT algorithm with the promise of processing thousands of transactions per second. Capacity and size of data is another challenge which needs to be tackled; Blockchain is not designed fundamentally to handle a massive amount of data, that are produced by IoT application. A proposals to solve this problem are in progress, beginning with filtering of the data generated by IoT devices to normalizing it and compressing the filtered data would profoundly reduce its size, before transmitting it to the blockchain. Security is a vital problem when it comes to IoT world, the lack of standardization, limitation in processing power, high heterogeneity of IoT devices, and reliability of the data generated, are few to name.Furthermore, the firmware that runs inside those devices target for hacking and security breach if not continuously updated. GITAR is a generic extension for IoT architectures, that enables dynamic application and network level upgrades efficiently. A noted project that addresses many of those security issues is filament. Filament offers hardware and software solutions that will allow machines and devices to interact with and transact against a blockchain securely.

The Convergence of blockchain with IoT devices would transform the internet of thing to something like "The Economy of Things." IoT blockchain-powered devices would connect the physical world with virtual one.  Liquification of the physical asset - as termed by IBM is the process of transforming physical assets ( wash machine to a car to real estate ) and make it indexable, searchable and digitize.  Asset digitization would enable trading of those asses like any commodity in a new real-time digitized global marketplaces.