Could blockchain unlock the potential in IoT?

| September 11, 2017

There aren’t many areas where blockchain isn’t tipped for success. A lot of this is unsubstantiated hype, but one area that does shows a lot of current and genuine potential, is the Internet of Things. This is because blockchain could help solve the security issues currently hindering mass connectivity.

Blockchain is most famous for being the virtual ledger that records bitcoin payments, but outside of this specific cryptocurrency, its strength comes from its ability to keep data transactions accountable. “Blockchain computer technology has the potential to create an open and shared platform that billions of devices can use to interact,” explains Shaan Mulchandani, director of technology and security at engineering company, Aricent.

“One day an autonomous car might use the blockchain both to accept rental payments and to pay a pump for gas. Clearly such infrastructure needs to be secure as well as open, and blockchain can provide this too,” he says.

Read an interview with the author of ‘Blockchain For Dummies’ and download the first chapter as a PDF – Blockchain For Dummies: What you really need to know

Blockchain is not a catchall answer to every business issue though. “It is a solution to a distributed problem,” explains Joe Pindar, director of product strategy at Gemalto. If you want to connect two sites, this will not be not relevant, but if you want to connect many sites in a distributed way, this could be the answer. And this is why it may come into its own with the Internet of Things.


How is blockchain currently being used for IoT?

Like many areas around blockchain IBM is leading the way. This is because aside from being very large and therefore able to make a lot of up-front investment, IBM makes it easy to integrate blockchain technology with its Watson IoT platform to provide improved AI-enabled analysis.

‘Cognitive IoT’ is a big push for the company at the moment. This year it launched a new global headquarters for IoT in Munich and if it can position blockchain and IoT together in a practical way, aligned around industry verticals, it can get in on two very difficult areas at once.

“IBM is doing a very good job educating the market for us,” says Jody Cleworth, CEO of Marine Transport International (MTI), which began using blockchain in the cross-border shipping supply chain, before IBM announced a similar partnership with Maersk earlier in the year. He says he’s had a lot of interest from both governments and the public sector to understand exactly how he made this work in practice.

“If you’d asked me a year ago who would have gained the most from this [blockchain in the shipping industry] I would have said the shipping lines,” he says. Now his views have changed. “The biggest thing is connecting ships and the land,” he explains, because this is currently not done. “Technology shouldn’t be used to replace what we have – we should use it to connect the data siloes.”

We consult a panel of IoT security experts to provide some insight on what businesses need to know. Check out: The IoT “time bomb” report: 49 security experts share their views

Dr Kevin Curran, senior member of the IEEE (Institute of Electric and Electronic Engineers) and professor of cybersecurity at Ulster University says that there are already existing blockchain-based IoT frameworks, such as ChainAnchor, which includes layers of access to keep out unauthorised devices from the network.

“Another blockchain solution from Australian researchers uses a block miner to manage all local network transactions to control communication between home-based IoT devices and the outside world,” he adds. “It can authorise new IoT devices and cut off hacked devices. [While] Telestra is using blockchain to secure smart home IoT ecosystems by storing biometric authentication data to verify the identity of people.”


How do different ‘flavours’ of blockchain vary?

One of the more confusing aspects of blockchain for those who don’t follow the day-to-day news is all the different ‘flavours’ it comes in. At present there are two main alliances: Enterprise Ethereum and Hyperledger. The first is a public blockchain with a ‘walled’ section for enterprise. The second is hosted by the Linux Foundation, based on a steering committee of which IBM is a key member, and brought out its first white paper [PDF] this August.

The reality on the ground is not too black and white though, explains Brian Behlendorf, executive director of Hyperledger and primary developer of the Apache Web server. When Dubai announced it would build its smart city on the blockchain earlier this year, the message to its technology partners was they would have to be able to use both Ethereum and Hyperledger Fabric.

There are also numerous other new approaches and small players. Cleworth from MTI says when he started exploring blockchain he initially looked into the one associated with bitcoin, but transaction time and cost made it prohibitive, after that he tried Ethereum but it was also too expensive. Eventually he opted for Agility because it was the only one which facilitated territoriality – the ability to include jurisdiction and applicable law – which was important for the shipping business.

Pindar, from Gemalto, points to a new organisation – IOTA which we profiled in July – which offers an entirely new framework for IoT. This and others like it are really “blockchain 2.0” he says, but reminds readers that it is important not to get carried away. At present because everything is so new, we’re operating under a misconception that blockchains are exciting.

“They shouldn’t be any more exciting than a relational database,” he says. “With Hyperledger and Ethereum Enterprise it is like the Betamax vs. VHS. It is just different ways you solve the problem. IoT developers shouldn’t care which flavour.”

Behlendorf adds: “In the database world people are comfortable with the idea of different players.”

Like many other existing technology alliances the ones around blockchain are likely to end up solving the specific problems of their membership. “Maybe Hyperledger is focusing more towards finance,” suggests Pindar, while Ethereum is better for the smart contracts which facilitate payments.


What are the challenges to market adoption?

There is clearly a pressing need for something to secure the Internet of Things and this is only compounded by regulations, like GDPR, which increase demand for compliance and authorised sharing of third party data. However, there are still a number of organisational – and potentially fundamental – stumbling blocks to mass adoption.

Dr Curran highlights the fact that most IoT devices have a limited memory size, limited battery life along with restricted processors. “Traditional ‘heavy’ cryptography is difficult to deploy on a typical sensor, hence why many IoT devices are insecure and are more vulnerable to the ‘51% attack’ where hackers control 51% of the processing power in the blockchain.

“This also raises a more important point that IoT devices may simply be too underpowered to actually be part of the Blockchain, as it does require participating nodes to perform relatively complex computations in a ‘proof of work’, which is necessary for integrity of data,” he says.

Stephen Holmes, CTO FINTech Banking Lab at Virtusa believes a halfway solution might be possible. “There are some blockchain technologies that can be ported to the IoT that would enhance the security of IoT devices. You don’t need to have blockchain on an IoT device, you simply need some of the cryptographic protocols to provide this security.”

Blockchain could also be seen as a second phase to IoT security. Robert Jones, VP of product and sales at IoT security company Netsnapper explains that currently networks are either typically new with “connectivity being prioritised over security” or older and more traditional – like public utility networks – where security is gradually becoming exposed by modern connectivity.

“In both cases there is an urgent need to provide configurable encryption and access management today to plug security gaps. After that is done, Blockchain will become more relevant in the mid to long term to scale,” he says.

Luke Turvey, a security consultant for ethical hacking firm Pen Test Partners – who is used to breaking systems – feels for blockchain to be used effectively for the Internet of Things, an organisation might need two separate networks. The first would be the regular corporate one and the second would be for IoT and would run through the blockchain.

“This would be much more secure but is probably five years away,” he says. It wouldn’t cost much once it was up and running but would require some up-front investment.


What might the vendor blockchain IoT market look like?

“IBM is uniquely positioned to excel in the Blockchain-enabled IoT market, not only due to its diverse investments within blockchain, IoT, cloud, and cognitive – but how they gel together,” says Mulchandani of Aricent. “As the largest cloud services provider, a significant portion of this is realised through private cloud implementations.

“As consumer, and especially industrial IoT players will seek to use blockchains in realising new products, platforms, and ecosystems – a strong private cloud implementation brings IBM to the forefront, particularly as large competitors mostly target scaling their public cloud operations.”

As one of the key members of the Hyperledger project, IBM is also able to bring together global developers to build a network of blockchain networks.

Yet IBM also has a growing competitor base both from giants like itself and from the newer, innovative startups. “Competitors arise from the consulting and professional services world,” suggest Mulchandani. “Sizeable competitors are rapidly making IP gains (e.g. Accenture’s Editable Blockchains), and making tremendous investments. This not only extends to some of the largest players in the form of Accenture and Deloitte, but also high-value consulting firms such as BCG and McKinsey, and a rising Indian contingent of technology/services firms such as Infosys, Wipro, and TCS.”

Another competitive area is on cloud and blockchain platforms. Earlier this year Coindesk published an article “IBM vs Microsoft: Two Tech Giants, Two Blockchain Visions” which looked at how these behemoths are approaching their different blockchain as a service offerings in unique ways. Microsoft is still looking to gain market traction but it was early in the Blockchain as a Service space and is making announcements and partnerships all the time.

Mulchandani believes it will only be a short while before Amazon Web Services enters the fray. This could “command a vast audience given AWS’ architect/developer community and AWS IoT’s adoption,” he says.

In the end, the Internet of Things has been a hot area for some time now and yet security always seems to hold it back. And although blockchain is hyped to transform everything in the whole world it has only proved commercially viable for a limited number of real businesses uses to date. Maybe a marriage of the two really is needed to unlock both their potential?


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