A report by Fortune Business Insights indicates that the global market of IoT is forecasted to reach $ 1.11 trillion by 2026 at 24.7% compound annual growth rate (CAGR). IoT is getting a boom in the software industry and a lot of applications are introducing day by day that is helpful in our everyday life.
Internet of Things (IoT) is providing competitive advantage for businesses in current and new markets as a wide variety of advanced technologies are enabling the accomplishment of desired tasks. IoT has changed things and revolutionizing the tech industry by introducing advanced systems. Protecting data and privacy is equally important and is a big concern for companies that can be achieved using Blockchain technology. It is a great achievement for securing IoT devices.
Managing information at all levels is complex because data will flow across many boundaries but Blockchain technology advancement has played its role in managing this problem effectively. Various technological components truly make the IoT ecosystem and it is good to consider the internet of things as a system of systems.
The architecting of these systems provide business value to organizations that include applications, protocols, and analytics capabilities that make up a fully functioning IoT system. The complexity for ensuring security in the IoT industry has become possible using Blockchain technological advancement.
The Blockchain Approach:
Blockchain technology that underpins bitcoin has emerged as an object of intense interest in the tech industry and beyond. Blockchain technology offers a secure way of recording the transactions or any digital interaction with the help of their transparent, secure, and highly efficient system.
It carries the possibility of disrupting the industry by enabling new business models to achieve new heights of success. The technology is advancing rapidly and creating positive impacts by making businesses more secure and functional.
Blockchain is capable of maintaining the continuous growing set of data records. The nodes included in it have a copy of the chain that is ever-growing. Data records are added to the chain. A Blockchain consists of two types of elements. One is transaction and other is blocks record. Transactions are created by the participants and blocks record these transactions and make sure that they are in the correct sequence without any tampered data. Blocks also keep a record of the transactions.
Advantages of Blockchain:
The great benefit of Blockchain is that it is public and everyone participating can see the blocks and the transactions stored in them. However, actual content is protected by your private key.
In the Blockchain, there is no single authority that can approve the transactions or set specific rules to have transactions accepted showing a huge amount of trust in this technology as all the participants in the network have to reach a consensus to accept transactions. The database can only be extended and previous records cannot be changed or a very high cost need to be paid for it.
The functioning of Blockchain:
A Blockchain is a cloud-based database shared by every participant in a given system. In this example, it is a currency trade containing the complete transaction of the cryptocurrency or other record-keeping in other applications. Consider it as a cloud-based peer to peer ledger.
It is illustrated in the above diagram and its explanation is available too:
1. Jayden wants to send money to Smith
2. A block is created showing the transaction.
3. The block is shown to every party in the network.
4. Participants of the network approve the transaction and validate it
5. The block is then added to the chain which provides a permanent and transparent record of the transaction.
6. Smith receives the money from Jayden
When anyone wants to add a transaction to the chain then all the participants in the network will validate it. It is done by applying an algorithm to the transaction to verify its validity. Then it is up to a majority of participants to agree that the transaction is valid.
A set of approved transactions are then bundled in a block, which is sent to all the nodes in the network. They in response validate the new block. Every successive block contains a hash, which is a unique fingerprint of the previous block.
Types of Blockchain:
There are two main types of Blockchain:
1. A public Blockchain
2. A private Blockchain
In a public Blockchain, data is accessible to everyone. Some public Blockchain limit the access however, bitcoin allows the approach of writing to anyone.
In a private Blockchain, all the participants are trusted and known. This is helpful in a scenario when the Blockchain is used between the companies of the same entity.
The Blockchain and Internet of Things:
Blockchain technology has become an essential component in the IoT industry for scalability, privacy and reliability concerns in the world of IoT. Blockchain technology can be used in tracking the transactions processes and enable coordination between devices.
Blockchain technology eliminates every single point of failure creating a more reliable ecosystem for devices. The cryptographic algorithms used in the Blockchain make consumer data more private.
The ledger is ledger proof and unable to get malicious attacks as there is no single thread of communication that can be intercepted. Blockchain has proved its worth in the world of financial services through cryptocurrencies such as Bitcoin, ensuring guaranteed payment services without the need of third-party brokers.
The capabilities of the Blockchain make it an ideal component to become a fundamental part of IoT solutions. It is a fact that IoT technologies have become an early adopter of Blockchain.
Read Also: Impacts of Blockchain Technology
In an IoT network, the Blockchain can keep an immutable record of the history of smart devices. This feature enables the smooth functioning of smart devices. Blockchain opens the doors to a series of IoT scenarios that were remarkably difficult or even impossible to implement.
By leveraging the Blockchain, IoT solutions can enable secure and trustable messaging between devices in an IoT network. In this model, the Blockchain will treat message exchanges between devices similar to a financial transactions in a bitcoin network.
In this scenario, we can communicate regarding crop conditions detection with the irrigation system. Similarly, use of Blockchain technology will enable autonomous smart devices to exchange data or even execute financial transactions without the involvement of a centralized broker.
We can visualize smart devices in a manufacturing plant that can autonomously place orders for repairing without human intervention. Similarly, smart vehicles in a truck fleet will be able to provide a complete report of the parts needing replacement after reaching a workshop.
One of the most wonderful features of the Blockchain is the ability to maintain a trusted ledger of all transactions occurring in a network. Blockchain capabilities are significant to enable regulatory requirements of industrial IoT applications without the need of involving a centralized model.