How Blockchain Technology Can Solve IoT’s Security Problem

How Blockchain Technology Can Solve IoT’s Security Problem In the past couple of years, IoT ha ...

Published by TechAhead Team, Apr 24, 2019

How Blockchain Technology Can Solve IoT’s Security Problem

In the past couple of years, IoT has transformed the world with its ability to touch almost every aspect of life. It has encouraged businesses to move towards developing IoT solutions as they present opportunities to gain competitive advantage by collecting data from multiple points, some human-controlled and others, automated. However, IoT also poses challenges concerning security and privacy of data, since it is gathered over the cloud from devices, thereby increasing its vulnerability to hacking.

IoT Challenges

Most people associate Blockchain with the cryptocurrency, bitcoin, but the technology can eliminate threats to data privacy and security in diverse segments. It’s essential to be aware of the various types of challenges faced by IoT solutions to understand how it can help businesses to transact in a more secure environment.

Unauthorized access of devices:

Since multiple IoT enabled devices use a network, hackers can penetrate the entire network through even a single device that hasn’t updated its security system. The risk could arise from something as simple as allowing an employee to log in to the network using a personal device with weak authentication or through unencrypted data transfers. Considering the array of smart devices used at the workplace, from mobile phones to TVs, scanners and printers, the risk potentially multiplies as any of these devices can be hacked.
IoT Challenges

Software Attacks:

IoT devices are always connected to the Internet, and if they lack security, they are prone to malware and virus attacks that could lead to loss of control of devices and networks.

Network Breaches:

The numerous devices, protocols and standards make network implementation an ongoing process, which leaves gaps that attackers can identify and use to hack into the network and take control of it or in some instances deny services to users.

Encryption Attacks:

Since IoT involves machine to machine communication with no human interaction when data is being transferred from one device to another, weak encryption or a stray credential key gives hackers access to the data.

Blockchain Use Cases

Blockchain presents solutions for eliminating the threats posed by IoT as it can bridge the security gaps that exist in the current ecosystem. The various purposes it can serve include safe data storage, digital identity, and fraud prevention since the technology ensures that once data is recorded and stored it cannot be altered or tampered.
The most widely employed Blockchain use cases include:

Traceability and Security of financial transactions:

The distributed ledger in blockchain captures a digital data record into a block. Once this is done, neither can the data be moved to another block nor can anyone add an intermediate block in the chain. For financial transactions, since confirmations are needed from the sender, receiver and the miner, a transaction can be completed only once all the confirmations are received. Blockchain facilitates the recording and saving of each user login and confirmation. Additionally, each insider threat or attempt to access a record is tracked and noted, thereby eliminating the possibility of compromised or stolen data on the ledger.

Safe Data Storage:

One of the primary issues with IoT is the need to keep data safe. Blockchain creates a decentralized ledger as well as an unalterable data record, which helps to protect and control communication or any other activity that takes place within the system. Data protection doesn’t apply to just cryptocurrency. In other areas, such as healthcare, it can protect patient information, improve records management and minimize the unauthorized distribution of prescription drugs, among other things.

Minimizing Human Errors:

Wherever there is a human element involved in the recording and storage of data, there is also a likelihood of errors while inputting data or compiling documents, besides the risk of data loss, unauthorized modifications and data thefts. The advantage of blockchain is that it eliminates the need for logins and passwords. Instead, a device is issued an encrypted identity such as an SSL certificate, which can be verified on the distributed ledger. Human errors are minimized since all activities, including potential threats are tracked and instantly notified on the network.

Securing IoT Devices and Networks:

Since blockchain can monitor and record communication between all the devices that are connected to the network, it provides businesses with access to data on the activity logs, suspicious logins or attempted access of records, which helps to tackle security challenges.

Transparency of Supply Chains:

The supply chain management industry faces complex challenges, most of which are related to counterfeit goods or illegal transactions, since transported goods pass through close to hundred delivery points or parties, including manufacturers, distributors and retailers before they reach the last destination. By providing a digital ID for each product, blockchain presents complete visibility at every stage of the supply chain, thereby eliminating the possibility of frauds or counterfeiting as data is unalterable and cannot be deleted.

How does Blockchain form the base of trust?

Blockchain technology has several features that help to build a base of trust, ensuring privacy and security of data shared over the network. These include:

Smart Contracts:

One of the key elements of blockchain technology, Smart Contracts are based on a set of protocols that need to be followed by the parties or individuals entering into a transaction. The elimination of third parties increases the reliability of contracts and makes transactions irreversible.

Centralized Private Blockchain:

In this type of blockchain, the purpose of the Proof of Work algorithm is to validate the eligibility of each block or data record. In a centralized private blockchain, there is an additional layer that validates the rights of the user to make changes in the ledger. Since the number of miners is less than in a public blockchain, they are not as secure since the control rests with fewer miners. However, they require fewer resources and lower computational power.
How does Blockchain form the base of trust?

Decentralized Public Blockchain:

The advantage of this type of blockchain is that it is more secure and transparent than Centralized Private Blockchains. No single person or organization can control the transactions on the network, but this makes it more challenging to regulate and requires a higher level of resources as well as computational powers.

Proof of Work:

The proof of work algorithm is designed to authenticate each transaction or block to ensure its eligibility to be a part of the blockchain. Once it becomes a part of the blockchain, the transaction cannot be reversed, modified or deleted from the chain, thereby eliminating the risk of tampering or loss of records.
Miners and Transaction Fee: The role of a miner is to validate each transaction by solving a complex mathematical problem. A transaction is validated and confirmed only after the block is solved. Miners compete with each another to solve the Proof of Work algorithm-based problem and receive a transaction fee as a reward for solving a block. The more miners who work on the problem, the more secure is the block.


By providing solutions to bridge the gap in the current issues of IoT such as privacy, scalability and reliability, blockchain development can create a more dependable ecosystem on which devices can connect to the Cloud or Internet. With cryptographic algorithms, validation of transactions and continuous monitoring and recording of threats, Blockchain can take care of all the challenges that currently plague IoT solutions and provide a more secure environment for businesses to operate without worrying about threats to data security and privacy.