Blockchain is a relatively new technology that underpins transactional applications such as those associated with cyrpto currencies like Bitcoin. In essence, all transactions in a blockchain are added as blocks in a linear, chronological order by a node or computer connected to the blockchain, providing a complete and accurate recording. Transactions are enabled using a private and public key. The technology protects against the tampering and revision of data records, helping create trust, accountability and transparency as well as streamlining business processes.
The adoption of blockchain has primarily been in the financial sectors. The application in IoT has been hyped by a number of vendors because it is seen as a potential solution to the perennial concerns about IoT security, particularly in controlling botnet attacks because it can potentially prevent hijacked devices from being used in denial of service attacks or otherwise disrupting its environment.
Blockchain technology is built for decentralised control meaning there is no master computer controlling the entire chain. Rather, each node in the network have a copy of the chain. So is seen as less vulnerable and more scaleable than traditional security approaches. The distributed nature of the technology helps remove single points of failure. It also lends itself to the IoT potential for massive numbers of things being interconnected across different networks, without the need for centralised cloud servers. Potentially, blockchain could also enable the monetisation of data, where owners of IoT sensors could sell data for digital currency (e.g. see tileplay)
Potential industrial application
Blockchain is a way of creating digital assets, or tokenising a thing, that can then be transferred or traded. Virtually anything of value can be tokenised, e.g. eco-credits, work-hours, rights to buy products/services, commodities, electricity etc. For example the energy produced by rooftop solar or any other energy source, could generate income in the form of cryptocurrency that is registered on the blockchain. Having established a large blockchain, it would then be possible to form secondary markets for trading of these digital assets as you can assign owners of these assets.
It is also being seen as a way of ensuring trusted readings from sensors in areas such as drug safety, food quality and other certification processes, anywhere where the end-user or regulator needs to be assured of a immutable record of the conditions monitored. Blockchain is also "public", which means everyone participating in the chain can see the transactions stored in them, while the cryptographic algorithms underpinning it also provides greater data security against hackers.
One of the biggest areas of potential industrial application to streamline supply chain processes in many sectors. Global supply chains obviously have a very large number of transactions and have massively complicated, and arguably bloated, computational systems to handle and secure them. Blockchain would help provenance, by tracking objects throughout the supply chain while enabling line-of-credit contracts and incremental payments. Every physical thing in a supply chain could have a digital passport, that proves authenticity - things like existence, origin, condition, location. It also enables "smart contracts"
However, while there has been much excitement over blockchain, its application is still embryonic.
Blockchains are a distributed ledger technology, which is a peer-to-peer, insert only datastore that uses consensus to synchronise cyrptographically secured data. The Peer-to-peer (P2P) component partitions tasks or work loads between peers or nodes. Peers are equally privileged in the application. Insert only datastores can only create and read data, not update or delete data.
A key challenge in internet enabled systems is to build a consensus on what is to be trusted. The consensus problem involves determining ways of facilitating isolated computing processes to agree on something, when some of them may be faulty. Faults can be benign, such as when a node goes down and is just unresponsive. However, faults can also be hostile where actors are trying to fool the system and this needs to be protected against. There are a large number of mechanisms to deliver consensus including proof of stake, proof of work, federated consensus, round robin, proprietary distributed ledger, etc.
Application considerations and limitations
While blockchain offers the potential for application in IoT, it is by no means certain it will be taken up. Its application in financial sectors is relatively simple compared to the requirements of device authentication, security and control layers. In particular, if 51% of processing power in an blockchain network were subverted, and this is possible in many small IoT networks, an attacker could change the supposedly secure data records.
A key limitation is that blockchain is computationally intensive and many IoT devices lack the processing power to participate in a blockchain without compromising the required speed. Also, because every record is stored and never deleted, the ledger in any blockchain will grow continuously and this needs to be stored in every node.
While the public nature of blockchains is one of it's key advantages, it also generates a limitation in that data is not likely to be private. So commercially sensitive data should not be shared, although researchers are working on methods to get around this.
Researchers and commercial vendors around the world are working on feasible models to apply in the IoT space, e.g:
Researchers are working on simplified computational methods to make it feasible for IoT. However, commercial knowledge of blockchain is limited and combined with the lack of broadbased IoT engineering skills, widespread adoption seems to be someway off.
- Hyperledger - A Linux Foundation Project
- Red Belly Block Chain - This has been developed at the University of Sydney
- Modum - data integrity for supply chain operations powered by blockchain
Sources: Information on this page was primarily sourced from the following.
- A webinar titled Blockchain Technology by Nick Addison, Chief Technology Officer, Finhaus Labs
Edited by Tim Kannegieter