Blockchain For The Internet of Things (IoT): Why It And How It Works

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The fact that the Internet of Things technology is the future of robotics and the digital industry as a whole is far from news. And here, how blockchain will help it develop is the most relevant, hot and promising topic of the current time. So, how will blockchain help build intelligent information exchange systems?

How the Internet of Things Works

In a nutshell, the “Internet of Things” (IoT) is such a concept of the internal network for household devices and items. A kind of chat or messenger for coffee makers, washing machines, vacuum cleaners, refrigerators, and even cars, thanks to which they can exchange data on the external environment.

Hundreds of smart people around the world are struggling to create a language that will teach everyday objects to communicate with each other. And, it seems that the blockchain development by top web development companies is of little use here. But this is only at first glance.



In particular, IBM is developing this concept. Combining the two concepts is supposed to help:

• Track and record all changes in the network
• Create special magazines with the entire history of changes
• Define a smart contract system for data transfer

Blockchain, in this case, would help to unite several devices into a single infrastructure. They would thus be able to exchange parts of the property – for example, data or currency. At the same time, the blockchain itself can be used to track the time of transactions at any time.

What do the experts think?

IBM conducted a special survey among IT industry professionals to find out how promising they find blockchain technology concerning the concept of the “Internet of things”.

However, this is the main property of any blockchain, wherever it is used. In the “Internet of things” you can also adjust the level of control over the device: weaken or strengthen. Using the blockchain in this way, you can reduce the risks of hacker attacks on the data exchange system.

Dell, represented by its specialist Jason Compton, believes that blockchain could become an alternative to traditional security systems. Decentralized control will allow you to expand the scheme and make it more easily scalable – that is, you will not have to build a multi-level expensive infrastructure with secure servers that the devices would have to access to exchange data. You can connect them to a peer-to-peer network directly and in any quantity you like.

Blockchain is not only for security

Using distributed registry technologies for IoT devices can not only solve security issues but also add new features and reduce operating costs. Blockchain is a technology that works with transactions and provides interaction in the network. It is great for monitoring processes in IoT.



For example, based on the blockchain, you can support the identification and discovery of devices, facilitate micro transactions between them, and provide proof of payment.

Ways to use the blockchain for the “Internet of things”

There are at least four areas in which the blockchain can be integrated into IoT:

• Creation of a trusting environment
• Cost-saving
• Acceleration of transactions
• Security Improvement

By the way, they are already working on these technologies to use them in the development of “smart equipment” or its individual components.

Examples of solutions of blockchain development for IoT

A typical example is the support by the Hyundai industrial corporation of a startup using blockchain technology. The project was called HDAC (Hyundai Digital Asset Currency) and at the end of November 2017 raised about $40 million for development.

The essence of technology that Hyundai is developing is to adapt the blockchain for its own IoT devices. The consensus protocol will unite all devices and act on the principle of smart contracts for the exchange of transactions.

Another company, Filament, is developing an industrial chip for IoT that will automatically encode sensor data and then adapt it for the blockchain. Thus, the exchange of information from the external environment between various equipment in a peer-to-peer decentralized network will be achieved.



The third characteristic example is the IOTA project, which uses the innovative blockchain – Tangle, designed specifically for IoT devices. At the same time, MIOTA tokens are traded on the cryptocurrency market and have impressive capitalization, representing value for investors.

It is worth recognizing that the development of the blockchain for the Internet of things is still far from implementation. In particular, several security-related issues have not yet been resolved, and some legal issues have not been addressed. However, the potential from the interaction of IoT and blockchain is truly enormous.

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