IoT and blockchain: a match made in heaven?

But first things first: how can we define IoT and blockchain?

We're connected to the internet, but so are several devices (the "things"). Thanks to built-in wifi options and sensors, these devices can collect and share data.

Good to know: you can still download our free Internet of Things guidebook. Bart Keybergh and Greet Brosens discuss the possibilities of IoT, and they dare to take a critical view.

And what about blockchain?

You can compare blockchain to a large spreadsheet. Everyone can access that database, and add new data. Cryptographical software plays an important role. It guarantees that, when adding new data, certain rules are met. It also makes sure that nobody can change existing data. That way, online transactions can happen more secure and more efficient.


Why should you combine IoT and blockchain?

The image of IoT isn't merely positive. When you link the transparent nature of blockchain to IoT, it can help to build trust. Participants are able to enter into transactions as trusted parties.

Those transactions take place via encrypted smart contracts, which even reinforces the trust. Smart contracts automatically guarantee the compliance of the conditions. It's also impossible to overwrite data.

Another advantage of using smart contracts is that accessibility issues can be cleared up quickly. The entire chain of transactions is aligned. When things go wrong, every party can easily detect in which part of the chain it happened.

Did you know that blockchain also adds extra security to IoT? Again, this builds trust, even between parties that haven't met before. Thanks to this extra layer of security, it's harder for hackers to get their hands on personal data, often shared via IoT applications.

Moreover, when you combine IoT and blockchain, intermediate partners disappear. It allows you to exchange data on a peer-to-peer basis cheaper and faster.


What challenges do you face when combining IoT and blockchain?


Technology-wise, security is one of the main challenges. It's true that blockchain is seen as a way to secure the Internet of Things, but that's not going to happen by magic.

Security systems based on blockchain have to be implemented (correctly) in the devices. Not that hard for large manufacturers, but a true challenge for small businesses.


Asset management is necessary. All the numerous devices are scattered geographically. Moreover, you have to be able to guarantee users that they can always meet their smart contracts.

Identity management

Who is who, and who is the owner of what? On the one hand, the smart contract has to know for sure that your identity is correct. How hard that is, depends on the specific location and situation.

On the other hand, it's important to know who owns a device. But, for example, who is the owner when you're renting a device?


Contracts in itself always present challenges, and that won't be any different in the context of IoT and blockchain. They have to be drawn up with due care, by someone who knows what he's doing, and the different parties have to accept the contract.


Brief and concise: combining blockchain and IoT definitely creates opportunities that can result in cutting-edge, practical applications. In other words: we're in the early stages of rebuilding our digital infrastructure.

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