Contact Us (833) 210-7333
Go back

Blockchain and IoT: From Concept to Convergence

Blockchain and IoT

Blockchain is a shared ledger technology that has sped up the evolution of the digital space and applies to much more than corporations providing financial services. The primary focus is on combining blockchain with another innovative technology, such as the IoT, which will make machine-to-machine transactions possible.

Companies implement IoT solutions in many areas to optimize production and digitize the industry. These include wearable devices, smart homes and smart cities, healthcare, automobiles, the environment, smart water, smart grids, etc. Additionally, the IoT and blockchain convergence offers various potential benefits and will allow smart devices to operate autonomously with no centralized management. The technology will also help track how devices exchange measured data and interact with each other.

More mature blockchain protocols, implementations, solutions, and initiatives are emerging every day that can complement the digital IoT infrastructure. The growing number of emerging partnerships already shows that blockchain fits well into the IoT sector. Zion Market Research calculated the global blockchain-IoT market will be a $3 billion industry, the IoT world will be 75 billion devices, and the global economic impact will be over $10 trillion, all by 2025.

Forrester The Internet Of Things Heat Map 2016

IoT and Blockchain: Potential Problems and Solutions

The ever-growing variety of intelligent connected IoT devices presents enterprises with entirely new security and privacy challenges. The viability of smart products may depend on the ability of organizations to implement systems that provide adequate integrity of sensor data while ensuring sufficient user privacy. Blockchain is a game-changer in information thanks to its unique capabilities and advantages.

Blockchain and IoT security

The loosely regulated IoT market offers many opportunities for hacking heterogeneous IoT devices. The IoT network can process data transactions on multiple devices owned and operated by different organizations, making it difficult to identify the source of any data leaks in case of a cybercriminal attack. Additionally, the Internet of Things generates a vast amount of data, and with the participation of many stakeholders, ownership of the data is not always clear. Biometrics and two-factor authentication do not fully solve this problem. However, blockchain technology is a promising means of protecting the IoT architecture from data falsification, blocking access to devices.

The Internet of Things allows you to disable compromised devices on the IoT network. It protects the shared ledger in the blockchain system from unauthorized access and provides the ability to record information and transfer it to the user community. Members of this community keep their copy of the ledger and must collectively confirm any new transactions before they are accepted into the ledger. The blockchain IoT devices provide a high level of encryption, which makes it nearly impossible to overwrite existing data records. Additionally, the transparency of the technology allows everyone with access to the network to track transactions that have already occurred. This helps to identify the source of any data leak and take the necessary measures. Another advantage of blockchain technology is that an immutable record of a digital identity is difficult to forge.


Another bottleneck of modern IoT networks is scalability. As the number of devices connected through the IoT network grows, the existing centralized systems of connection, authentication, and authorization are going to be overloaded, and the entire network may fail if the server becomes unavailable. It will require enormous investments in servers capable of handling large amounts of data.

Blockchain can provide fast transaction processing and the coordination of billions of connected devices. As the percentage of interconnected devices grows, shared ledger technology becomes indispensable for supporting the processing of large numbers of transactions.


Blockchain and its trust system can enable IoT companies to reduce their costs by eliminating the processing costs associated with IoT gateways. This applies to traditional protocols, equipment, or communication overhead. Smart contracts, which are stored on the blockchain, permit the execution of contractual agreements between interested parties based on certain criteria, such as the automatic authorization of payments without human intervention when the conditions for the provision of a service are met.

Blockchain and IoT use cases

The technologies behind sensors and smart chips are becoming more portable and applicable to interact with blockchain ledgers.

The convergence of blockchain and IoT has a wide potential to create a market for services between devices and empowers companies to create value from the collected data. Blockchain technology itself can be used for online micropayments, digital forensics, a supply of chain tracking, medical record exchanges, and insurance payments. By extending this technology to the IoT, you can create a verifiable and traceable IoT network.

Here are some examples of how the combination of IoT with Blockchain is transforming several industries:

Smart houses

Smart IoT devices play a critical role in our daily life. The IoT blockchain allows you to control your home security system from your smartphone. It stores sensitive user data on the blockchain for increased security, such as biometrics, or voice and face recognition. Once the data falls on the blockchain, it cannot be changed, and it grants access only to the allowed person.

Supply chain and logistics

The combination of blockchain and IoT can improve the reliability and traceability of the network. IoT sensors provide accurate information on delivery status using motion and temperature sensors, connected devices, and GPS. The information is then stored on the blockchain, which the stakeholders listed in the smart contracts can access in real-time.

Automotive industry

Digitization is mainstream these days. The automotive industry is using IoT-enabled sensors to develop fully automated vehicles. For instance, the integration simplifies finding a free parking space and automates payments using crypto-wallets.

Pharmaceutical industry

The transparent and traceable nature of blockchain technology helps control the shipping and storage temperatures of drugs from the point of manufacture to the point of destination in the supply chain. Vaccines become unusable if not maintained at the correct temperature, and blockchain solves this problem.


Blockchain for supply chain management is transforming the agricultural industry by improving food safety and quality, as well as traceability of the entire agricultural supply chain.

Blockchain significantly reduces the risk of DDoS attacks that affect multiple devices at once; shutting down one device won't affect others. Such capabilities are critical to maintaining service functionality, especially for mission-critical systems like smart cities.

IoT Implementers


Blockchain IoT devices in action

Blockchain can be implemented to securely connect low-power IoT devices (such as microchips and external devices) to the Internet to increase the speed of Internet connections and significantly reduce the energy consumption required to run intelligent machines.

Blockchain solutions and end-to-end IoT products can be combined to update delivery processes in real-time.

Blockchain-based software will suit a range of intelligent, connected elements, including voice assistants, wearable devices, and smart TVs. Additionally, decentralized networks are the best solution for securing connected ATMs, cars, locks, and homes.

AI, IoT and Blockchain Convergence: Key to the Digital Transformation

To fully realize the prospects of the Internet of Things and all the wealth of data it accumulates, artificial intelligence is needed in addition to blockchain. Tied together, these three technologies are recognized as innovations that can improve current business processes, form new business models, and reshape entire industries. Blockchain, or rather, a distributed ledger, stores many assets, while the Internet of Things automates business processes, and AI identifies patterns and optimizes the results of this business activity. Connecting AI and IoT with blockchain-based platforms could eliminate the current limitations of IoT data. The final business models can be widely applied to any autonomous agent such as sensors, cameras, cars, trucks, and other IoT devices. These agents can send and receive money autonomously and use AI and data analytics to make decisions as independent economic agents. However, for a full implementation, you need to overcome the General Data Protection Regulation right to remove the data and solve the problem of integration with legacy systems.

Obstacles to Implementing Blockchain in IoT

The goal of an IoT platform using blockchain technology is to provide a hands-on application to the device owner that provides a complete immutable log and easy access to devices deployed in different domains. It displays the characteristics of common IoT systems, as well as enables real-time monitoring and device control. The business logic of an application is determined by a smart contract that contains terms and conditions. The concept has been proven to work in realistic IoT scenarios using real devices. However, there are some challenges to overcome when considering blockchain integration with the IoT.

The trust

Ironically, trust in secure technology is a barrier. As mentioned, the blockchain is still developing. Despite the launch of pilot programs to investigate various blockchain apps, there is still not enough data to study and use as evidence. Also, there must be a certain level of trust among enterprises that decide to develop joint ventures using blockchain.


There are many factors to consider when implementing and configuring a blockchain program. It is often not as easy as tracking the location of goods. The condition of goods, such as tracking the state of perishable goods, is also critical information. And this data should be collected, transmitted, and controlled somehow.


Standard IoT devices do not have enough computing power to support the heavy computational loads required to take part directly in the blockchain. Additionally, if the database of IoT-connected devices, according to blockchain and IoT ppt, exceeds 75 billion by 2025, blockchain networks will have to cope with a colossal amount of data.


Current blockchains are vulnerable if over 50% of the network's mining hashrate is controlled by one group of miners.


Although the distribution of nodes in the blockchain makes this difficult, the computing power of the home IoT blockchain is easier to hack.


Of course, blockchain and the Internet of Things are technologies with outstanding potential that have not yet become widespread because of technical nuances and security problems. Several companies are already working on blockchain and IoT applications that combine the two technologies and minimize risks. The IoT itself opens up countless opportunities for companies to operate intelligently. It equips every electronic device with sensors that send data to the cloud. In addition, blockchain with new standards of data transparency and peer-to-peer interaction will add a third layer of security to the Internet. Hence, combining these two complementary technologies can make systems efficient, and blockchain technology will be the key to solving the scalability, privacy, and reliability issues associated with the IoT paradigm.

Gartner suggests blockchain and IoT will take 5 to 10 years to reach full maturity. Companies need to consider blockchain and Internet of Things adoption to solve their business challenges by “starting small,” define their strategy and decide how to implement it. Business models, services, and products will benefit from the combination of these technologies, and market participants can achieve tremendous efficiency gains. Implementing blockchain in IoT will pave the way for a new era of digitalization.

Average rating / 5. Votes:

Written by

Dmitriy Sorokin

Dmitriy is developing the company’s financial expertise and helps clients to automate their business process with the help of Financial Services Cloud.

Need consultation?


    I agree to the Terms and Privacy Policy

    Comments (1)

    • user avatar

      The article is really interesting to read. It covers a lot about IoT and blockchain. The best part is the inclusion of infographics, they are really informative.


    Don’t miss out on new business resources.

    Get the latest business resources on the market delivered to your inbox. Unsubscribe anytime