Blockchain for Secure IoT Ecosystems
The technology, which was proposed back in 2008, described a peer-to-peer distributed electronic cash system. This led to the creation of the Bitcoin digital currency that is getting a particularly bad press right now, but that is history and it’s not relevant for B2B IoT applications.
A blockchain is a way of storing sensitive information as complex computer code. It’s kept in computers connected over a wide-area network and is used extensively in cryptocurrency. Blockchains are specially designed to help keep data secure and prevent leaks, infiltration, and hacking. They comprise ’nodes’ that store information. These nodes combine to form chunks of data called ‘blocks,’ and this entire system makes up the blockchain infrastructure.
Blockchain does not differentiate between an IoT data transaction and a digital currency transaction. Therefore IoT ecosystems can employ a network technology that is tamper proof, redundant and self-healing : it builds trust, reduces costs and accelerates transactions. This is how it works:
Blockchain employs distributed ledger technology that uses a network of computers, referred to as nodes, to record, share and synchronise transactions in their respective ledgers. Each transaction is digitally signed to ensure its authenticity. As soon as a transaction has been verified and certified by the participants it cannot be changed. This means that consensus is distributed around the network. If there is consensus a new transaction block is added to the chain and the historical record. If not, it is rejected.
Blockchain nodes are active electronic devices. They are distributed across the network, which they support by maintaining a copy of a blockchain. IoT solutions that employ the technology are intrinsically secure because a cyber attacker would need to break into a majority of the nodes to gain controllable access. That is impossible because as soon as one node is attacked it is shut down and the remainder go on working. When the attack stops the node is synchronised with the rest of the chain. The more nodes that are added to the network the more secure it becomes because of the redundancy, i.e. there are more copies of the blockchain platform.
Blockchain’s significance in IoT
The number of one-on-one interactions in a large business ecosystem can make the transactions costly, inefficient, opaque and vulnerable to mistakes and fraud. When 20 parties participate the number of transactions can grow to 20*20 = 400. Blockchain addresses this issue head on. The technology allows ecosystem partners to have one common view on data to be exchanged on a shared distributed ledger and this virtually eliminates the need for one-on-one transactions. Processes that used to be complex are simplified and the resulting rise in transparency and trust is leading to brand-new, secure ways to conduct and organise business.News | Blog