Abstract

Motivated by the recent explosion of interest around blockchains, we examine whether they make a good fit for the Internet of Things (IoT) sector. Blockchains allow us to have a distributed peer-to-peer network where non-trusting members can interact with each other without a trusted intermediary, in a verifiable manner. We review how this mechanism works and also look into smart contracts-scripts that reside on the blockchain that allow for the automation of multi-step processes. We then move into the IoT domain, and describe how a blockchain-IoT combination: 1) facilitates the sharing of services and resources leading to the creation of a marketplace of services between devices and 2) allows us to automate in a cryptographically verifiable manner several existing, time-consuming workflows. We also point out certain issues that should be considered before the deployment of a blockchain network in an IoT setting: from transactional privacy to the expected value of the digitized assets traded on the network. Wherever applicable, we identify solutions and workarounds. Our conclusion is that the blockchain-IoT combination is powerful and can cause significant transformations across several industries, paving the way for new business models and novel, distributed applications.

Introduction

Blockchains have recently attracted the interest of stakeholders across a wide span of industries: from finance [1] and healthcare [2], [3], to utilities [4], real estate [5], [6], and the government sector [7]. The reason for this explosion of interest: With a blockchain in place, applications that could previously run only through a trusted intermediary, can now operate in a decentralized fashion, without the need for a central authority, and achieve the same functionality with the same amount of certainty. This was simply not possible before.