The idea of incorporating Blockchain with Internet of Things (IoT) is nothing new. They both function as a medium of exchange for transferring data so naturally as the technologies gained exposure, it became apparent just how the two systems could benefit from one another. But to fully understand the potential of the two technologies working together, they must first be separated to discern their independent functions and value.
Blockchain is a secure, trust-free, distributed public ledger with the ability to facilitate a wide range of transaction processes including data, finance, medical records, and much more. Blockchain is widely known as the foundation for cryptocurrencies to operate and transact on, however, this represents just a fraction of solutions blockchain ledger technology can provide.
Internet of Things (IoT) is a type of network defined as the interconnectivity and communication between common electronic devices such as cars, wearables, laptops, and TVs. IoT systems allow the user to interact with common electronic devices through other electronic devices using either a public or private network connection. The idea of Internet of Things was a direct result of furthering the potential of the already existing internet infrastructure. Without proper encryption protocol, IoT faces many security issues with device attacks, software attacks, and network attacks on the internet. It can become quite expensive to develop a protocol that tackles all of these vulnerabilities facing the emerging technology as there currently is no end-to-end solution built for it. However, although the two technologies weren’t developed for each other, blockchain technology seems to offer a solution for many of the problems and weakness facing IoT network security. Blockchain ledger technology would simply act as the fabric or “framework”, tracing, storing, and governing the transaction of data between trusted devices on a network. Trusted devices share a unique recognition code that is identifiable only by other devices sharing that same identification code supplied by that blockchain's encryption. The exchange of data between one trusted device and another on a closed network is immediately verifiable and, once put on the blockchain, becomes immutable and traceable. This puts ownership of data back in the hands of the user and facilitates a more secure connection between devices and for the network itself. While both technologies pose great potential, independently and concurrently, they are still very young in their development and adoption phases. Both technologies still pose vulnerabilities and weaknesses in their protocol which will only be improved upon through years of research and development. Blockchain still faces scalability issues and IoT without blockchain faces many network security issues. The worldwide market for IoT devices and systems is expected to reach over $500 Billion by 2021 and over $1 Trillion by 2025.