Blockchain and IoT overview: benefits and disadvantages

The Internet of Things (IoT) and blockchain are among the most revolutionary technologies of our time. They have the potential to change our daily lives in many fields. Their combination brings many benefits. The Internet of Things (IoT) manages vast amounts of data with a constant connection to the Internet. Blockchain technology can solve data security issues, providing a decentralized, secure, and transparent storage and transfer system. These two technologies are overturning how we interact with the digital world. Let's break down these IoT and blockchain use cases in our article.

Blockchain technology is revolutionizing IoT

IoT technology links various devices, sensors, and non-computer devices that communicate with computers or other devices via the Internet. IoT networks can be used on multiple devices, from thermostats, heart rate monitors, sprinklers, and home security systems. IoT devices can be found everywhere, from smart homes and even entire cities to use in healthcare or agriculture. They aim to facilitate daily work and living by remotely monitoring, controlling, and automating electronic devices such as using lights in the home, air conditioners, heaters, and even security systems to create smart homes or autonomous vehicles, for example. 

IoT can also track temperature, humidity, and electricity consumption enabling homeowners to optimize costs. Interconnecting and exchanging data allows these devices to carry out automated tasks, track and monitor various indicators, and communicate with other devices and people.

The Internet of Things is booming and has become ubiquitous in our daily lives. With this development comes the enormous challenge of securing the vast amount of data generated by these devices. Blockchain technology is a potential solution to security problems. 

Understanding blockchain

Blockchain is a decentralized digital ledger that enables secure and transparent transactions without a central authority. It consists of a network of nodes validating and storing transactions, ensuring data integrity and immutability. Blockchain technology is best known for its association with cryptocurrencies such as Bitcoin, but its potential applications go far beyond finance.

Blockchains use cryptography to ensure data security and privacy. Transactions are recorded in blocks, chained together to create a permanent and immutable record of all trades. By connecting IoT devices to the blockchain, it can provide, for example, end-to-end transparency and security in the supply chain. In real-time, companies can track goods' location, temperature, and humidity, ensuring products are delivered safely. The technology can also detect counterfeit products, preventing them from entering the supply chain.

In a blockchain network, transactions are validated and added to the ledger by nodes using complex algorithms. Each node has a copy of the ledger, making it difficult for any one node to tamper with the data. Blockchain technology's distributed, transparent nature makes it a powerful tool for secure and efficient record-keeping across various industries. 

IoT and blockchain

IoT devices can generate vast amounts of data that must be securely stored and managed. Blockchain technology offers the benefits of added security, flexibility, and the ability to generate new efficiencies. It streamlines processes and creates new business value across entire ecosystems by drawing on data provided by IoT devices and sensors.

Thanks to blockchain technology, IoT devices can exchange data securely and transparently, enabling them to operate autonomously without human intervention.

Blockchain and IoT can be used together in various ways, such as in freight transportation, component tracking, compliance, log operational maintenance data and trusted supply chains. What are the main advantages of the combination:

Data security

A decentralized blockchain architecture helps IoT devices securely store and transmit data without a central authority. It makes data manipulation or interception by hackers nearly impossible.

Smart contracts 

Smart contracts automate asset transfers and payments, making transactions faster and safer. Blockchain linkages are excellent for supply chains where their use ensures that all parties have access to the same data. That reduces the risk of fraud or error and builds a resilient supply chain. Smart contracts trigger automatically when predefined business conditions are met. With their help, IoT devices can conduct transactions and perform tasks autonomously without intermediaries. It ensures secure and efficient collaboration between devices and leads to a more streamlined and secure IoT ecosystem. 

Improving supply chain management 

The use of blockchain technology improves supply chain management, providing end-to-end transparency and security. By combining IoT devices with blockchain, companies can not only track the location, temperature, and humidity of goods in real-time but also check their sources and whether they come from unethical sites. The technology can also prevent counterfeit items from entering the supply chain, and also by linking products to the blockchain, the entire live cycle of a product can be tracked. 

Cryptocurrency mining

The IoT provides solutions for mining cryptocurrency. Since cryptocurrencies' value is based on solving complex equations, massive computing power is needed to mine them. The overhead cost of a processor large enough for efficient mining is high. IoT can make this processing power available to many devices because they are already connected. Mining potential continues to grow as more IoT devices are activated. Companies are already exploring ways to encourage users to use their computing power for mining. For example, Helium Miner offers users a percentage of the cryptocurrency they mine if they allow their mining applications to run in the background of their IoT devices.

Data monetization

Another benefit of blockchain technology is data monetization applied to IoT devices. Cryptocurrencies can become essential to the IoT, facilitating commerce in the machine-to-machine (M2M) ecosystem. However, at the moment, blockchain has some limitations, namely its scalability, which makes it not feasible to use it for large-scale M2M microtransaction processing. Some projects, such as Lightning Network Plasma and IOTA have already been working to resolve this issue. IOTA has developed Tangle, a distributed ledger protocol that does not require miners to verify transactions. Although it is still an experimental project with various technical challenges, its innovative concept has impacted technology. Solving the scalability limitations issue can pave the way for blockchain to be an ideal solution for IoT devices and the M2M economy. 

Summary - the combination of IoT and blockchain 

The world of technology has gained tremendous momentum in recent years. At the forefront of these changes are IoT and blockchain technology. Their combination is a real revolution that promises many improvements in everyday life and work. Devices can already exchange IoT data and secure it with blockchain technology. This streamlines and automates many repetitive tasks, enabling new business models and more secure transactions. As these technologies continue to evolve, we expect to see more innovative applications using the power of IoT and blockchain. This futuristic combination is a powerful solution that benefits both businesses and consumers. Companies and industries can improve the efficiency, transparency, and security of their operations by leveraging the strengths of each technology, which creates new opportunities for growth and innovation. 

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