What Blockchain Can Do for IoT


Blockchain and IoT are a marriage made in heaven. Blockchain can enable and augment a variety of application scenarios and usecases for the IoT. No longer are such possibilities too futuristic – as we will discuss in this post.

IoT Meets Blockchain…

Blockchain and Internet Of Things (IoT) are easily the two biggest buzzwords in technology at the moment. The IoT encompasses the world of sensors,moving objects like vehicles and really any device that has embedded electronics  to communicate with the outside world – typically over an IP protocol.

Combine that with Blockchain – a distributed ledger architecture (DLT) pattern. Combining the two can facilitate the entire lifecycle of IoT devices and applications and prove to be the glue for business processes to act on these events. Consider the following scenario – a private blockchain for a driverless connected car that will enable secure and realtime interactions from the car starting with car startup, driver authentication, smart contracts to exchange insurance and maintenance service information and realtime location info to track safety.

Blockchain-Based Distributed Ledger Technology (DLT) Fills in Five Critical Gaps in IoT

  1. In such typical scenarios as the above, a Blockchain-based distributed ledger provides the trust, record of ownership, transparency, and the overall (decentralized) communication backbone for IoT.
  2. It needs to be noted that over the years specific IoT communities will develop their own private blockchains that can store transactions in a highly secure manner for their specific applications. IoT architectures that relied on centralized servers to collect and store data will be able to write to local ledgers that will synch with other localized ledgers to maintain a single yet secure copy of the truth.
  3. All IoT transactions on the Blockchain will be timestamped thus ensuring that they are available essentially – for posterity.
  4. Next up, the true innovation of Blockchain – digital agreements or Smart Contracts. Smart contracts can then be applied on the data in the blockchain to enforce business conditions on the IoT interactions.
  5. Finally, one of the big knocks against IoT has been the relative lack of security standards. Blockchain due to its background on high end cryptography actually helps with IoT security. A future post will discuss such a reference architecture.

With that background, let us consider low hanging usecases across key IoT applications in verticals.

  1. Industrial manufacturing: The manufacturing industry is moving to an entirely virtual world across its lifecycle, ranging from product development, customer demand monitoring to production to inventory management. As devices and systems become more interactive and intelligent, the blockchain can serve as a plant level, regional level and global supply chain level ledger. This will dramatically cut costs and drive more efficient just in time (JIT) processes enabling better usage of plant capacity and improved operational efficiencies.
  2. Connected and driverless vehicles: The Connected Vehicle enables the car or truck to behave as a giant Smart App. With the passing of every year, vehicles have more automatic features builtin – ranging from navigation, roadside assistance etc. Blockchain will enable these devices to be tracked on the digital mesh thus enabling easy inter vehicle communication as well as automatic tracking of fleet insurance policies, vehicle registration renewals etc
  3. Transportation: IoT + Blockchain = Connected Transportation. A range of scenarios can be imagined around a connected mesh of vehicles that exchange everything from traffic information to avoiding gridlocks and bottlenecks. Extending this to global trade, this mesh can incorporate shipping, air freight as well as ground transportation to track shipments.
  4. Public infrastructure and smart cities: Smart devices are already being used to track the health of bridges, roads, power grids etc. Blockchains can be used to interconnect these to share efficiencies and to conduct maintenance, forecast usage trends for power usage, pollution etc. Another key area of usage would be to help remote areas such as forests to monitor natural incidents and to prevent catastrophic occurrences like large scale forest fires or farm infestations by blight etc.
  5. Financial services and insurance: Banks could use Blockchain backbone to track IoT enabled devices like ATM machines, remote tellers to conduct maintenance. Insurance companies which have already started deploying drones to verify property claims in remote areas can use the Blockchain to validate and verify claims.
  6. Home and commercial real estate management: Using sensors deployed on both homes and commercial buildings helps with automated home and office monitoring. The usecases will diverge across both areas but many can be built on having a foundational distributed ledger capability.
  7. Smart contracts: Blockchain based cryptocurrencies like Bitcoin enable two business capabilities at a high level – a) transfer of cryptocurrency and b) business rules that specify when the payout has to happen – typically once conditions that have been met – which satisfy fulfillment of contractual terms.
    These rules are termed “Smart Contracts.’ Smart contracts are applicable across all of these business areas and can be used to keep track of business rules and take actions based on thresholds that have been met or have been breached. E.g A driverless vehicle that has failed an inspection can be grounded, non payment of home owners insurance can trigger an alert to the homeowners housing society etc.
  8. Retail: Retailers are already using IoT devices and endpoints to help across the business lifecycle – ranging from the shop floor, to tracking product delivery to store, to understand their customer traffic patterns, wearables etc. The vision of the Connected Store with IoT enabled shelves, an ability for customers to perform more actions using smartphone apps to reducing checkout times with self checkout etc are all taking place. The Blockchain can augment all of these usecases by providing the critical link between retailer and consumer in a way that it automates away the middle man- be it a credit card issuer, or a  central server. For instance consumers can store their product preferences, sizes in a Blockchain and the retailer can access these in a seamless and secure manner.

Finally, it needs to be mentioned that there still exist critical gaps in Blockchain technology – whether one considers the public Blockchain on which Bitcoin is built or technologies like Etherium – in terms of interoperability, security standards, throughput and mature developer tooling. These will need to be worked on over the next few quarters before we see production grade IoT deployments on Blockchains.