What is cooking between Distributed Ledger Technology Blockchain & Internet of Things (IoT)?

Blockchain and IoT

Converging the power of blockchain and IoT together to obtain optimum results!

In one of our previous infographics, we explored the use of smart contracts based on blockchain technology and IoT devices. The convergence of these two breakthrough technologies was specifically addressed for insurance/ subsidy schemes in the agriculture sector.

But, this eventually got me thinking!

What are the possibilities of merging IoT devices with blockchain technology? How can we use blockchain in IoT? Are there practical use cases for blockchain and IoT?

Well, let’s find out, shall we?

Internet of things (IoT)

According to a report by Gartner, IoT devices and projects are currently moving at a really fast pace. According to research by McKinsey, the IoT sector has the potential to generate $4 trillion to $11 trillion in the economy per year by 2025.

Another research from IDC predicts that around 30 billion IoT devices are going to be connected by 2020. It is almost double from the 12 billion IoT devices in 2017. With multiple projects across the IoT sector, the industry is growing at an extraordinary rate.

What is the Internet of Things (IoT)?

Putting simply, this definition by Ernst and Young best describes IoT as

” The Internet of Things is the connection of devices to the Internet using embedded software and sensors to communicate with one another”.

IoT brings entirely another realm to the physical and digital world, connecting them in a way which has never been done before. It opens up endless possibilities giving reality to the sci-fi fiction.

So, the Internet of Things (IoT) basically means a set of interconnected devices which interact with each other. These devices are connected to a centralized server (cloud) and most of the devices need internet in order to operate. This network of smart devices receives and collect data. The purpose of it is to build a system which collects data, operates without human intervention and works efficiently with the data collected.

IoT Devices

IoT devices

Whenever someone refers to IoT devices, most of the times we envision smartphones or smart wearables. But the industry has spread far away in all the different directions.

Like smartphones, IoT devices have now become a part of our everyday life. Devices such as TV, home appliances, air conditioners and even stretching as far as smart assistants. Sensors such as electrical sensors, air quality sensors, temperature sensors collect data so as to make informed decisions.

Not just our everyday lives, but the implications of IoT devices are far-ranging. IoT devices have even found its place in smart cars and farming as well. It is going to be on an industrial scale far difficult to imagine!

Each second, these billions of devices continue to interact with each other. They extract the relevant information and share it with other devices to generate a better human experience with as less human intervention as possible.

For example- In the supply chain industry, some products require a specific temperature to be maintained inside the container. Now, an IoT sensor is fitted inside this container. It monitors all the required details such as air pressure, temperature, light, etc. The collected information is automatically reported back. Hence, any change in temperature is automatically detected. This further ensures that the product inside the container was not exposed to any unforeseen circumstances.

From smart cars to smart containers- IoT sensors have completely transformed the digital world.

IoT Challenges

Granted that the IoT industry has come a long way. But, with major growth consequently, the challenges faced by the sector have also risen.

Most of the connected devices lack the security infrastructure needed. With more personal user information accessed by such devices, the digital raw data is prone to hacking and security threats

Billions of interconnected devices constantly exchange data back and forth. The huge chunk of data is stored on a centralized server on the cloud. The central storage makes the data extremely vulnerable and prone to hackers. Security of this data is one of the prime concerns faced by the IoT sector today.

With more and more information collected, the problem of security inside IoT devices only continues to grow.

Also, the humongous data needs to be managed and analyzed in a way which preserves its authenticity. Without proper analytics and deductions, even the most relevant data becomes useless. However, data access is a tricky point. The data needs to be legally accessed such that user privacy is also protected.

Distributed Ledger Technology Blockchain and IoT

After the Internet of Things (IoT), the distributed ledger technology- blockchain is the new talk-of-the-town buzzword. In fact, many industries and corporations are looking at merging blockchain and IoT to create scalable and secure solutions.

Some of the key characteristics of the distributed ledger technology can be quite valuable with IoT. Blockchain can act as a bandage to the loophole of the IoT industry.

Improved Security

One of the key features which blockchain technology is known for is securing the data. Blockchain combines cryptography into its protocol. The cryptographically secured blockchain platform offers security to the data.

Distributed Framework

The distributed ledger technology works on a distributed framework. The data collected on the ledger is stored on the hardware or nodes operating that particular blockchain. Instead of a centralized server, the data is distributed among the multiple nodes. Thus eliminating a single point of failure in the system. Hence, even if someone tries hacking the data, they would have to hack multiple different points.

Distributed Ledger Technology in IoT


The data stored on the distributed ledger remains immutable. This means that once the data collected is stored on the blockchain along with the timestamp it becomes impossible to remove or change any part of the information. Hence, combining this with IoT ensures the authenticity of the data which the devices collected.

Data Reliability

The data collected becomes worthless if it cannot make lives efficient for us. Blockchain provides a secure and reliable medium to analyze the data. Each bundle of data stored on the blockchain is approved through consensus and additionally, the authentication of the data makes it more reliable.

Inexpensive Operations

In the current system, IoT devices need to have centralized servers in order to communicate with each other. But the decentralized nature of blockchain allows these IoT devices to directly communicate data to each other. Thus the costs of installing and maintaining a centralized server for IoT network can be significantly reduced.

Blockchain Smart Contracts in IoT

Smart contracts written on blockchain combined with IoT can be a powerful tool for automation. The contracts have predefined conditions written in the form of code, which are automatically executed.

The implanted IoT sensor can act as a messenger to smart contracts. The sensor can detect outside information or conditions. This data is automatedly passed onto the smart contract program. When a certain condition or information is met, the contract automatedly takes the step (as written in its code).

For example, let’s take the example of agricultural insurance subsidy schemes. IoT sensors are already positioned to determine contingencies such as crop productivity, weather forecasts, etc. Whenever predefined conditions such as “Disburse funds to Mr. Adam as soon as the rainfall level exceeds 300 mm”– are in effect, smart contracts automatically disburse funds to Mr. Adam’s wallet.

The permutation and combination of smart contracts with IoT devices can provide us with use cases we haven’t even thought of yet!

Any Thoughts

The stage is relatively quite new for both- blockchain as well as IoT. But, one also cannot deny the powerful impact that these technologies are going to have on our future. Individually as well as merged with each other.

In the next article, we are further going to discuss the real use-case applications of blockchain technology in IoT. Also, the industries in which merging the two next-gen technologies will provide optimum benefits. We are also going to look at some of the current projects working in this space.

Do you have any specific use case, in which we can harness the power of both these technologies together? If so, mention in the comments below!

Leave a Reply

Your email address will not be published. Required fields are marked *