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IOT Cryptocurrency | Blockchain IOT for Less Vulnerability and More Efficiency

Basics of Cryptocurrency
Last updated April 13, 2020

The fear that our entire world is built upon faulty information is more real than ever. And to tackle this issue, scientists have started to look for a more efficient economical environment by combining blockchain, IoT, and cryptocurrency into trustless systems.

Trust is an essential concept that stands at the base of all human interactions and transactions. However, it weakened to the point where a technology such as IoT has a hard time finding large scale implementations on its own.

The Identity of things and the cost of verification are some of the biggest concerns regarding this technology. But as we will see, Blockchain is coming as an enabling platform.

SIDENOTE. Trustless system – a system in which the participants do not need to know or trust each other or a third party for the system to function.

SIDENOTE. Identity of things (IDoT) – an identity management model that involves assigning unique identifiers (UID) with associated metadata to devices and objects (things), enabling them to connect and communicate effectively with other entities over the Internet.

What is IOT?

What is IOT

IoT, short for the Internet of Things, is a network of connected devices that gather and share data about how they’re used and the environment in which they’re operated. 

Through the connection of devices, IoT enables communications and interactions between:

  • Human to device;
  • Device to device;
  • Device to service.

With every physical device containing sensors, the data about their working states is able to travel to an IoT common platform.

The IoT common platform also provides a common language for every device to communicate with each other. So once the data is on the platform, it is integrated and structured to be further requested as valuable information.

As a matter of fact, today’s technology already offers carriers for IoT to be implemented all over the world. And Satellite, Wi-Fi, Radio Frequencies, Radio-Frequency Identification, Bluetooth, and Near Field Communication are just a few of them.

IOT Use Cases

More and more devices start being connected through smart sensors generating massive streams of data that enable new opportunities. Therefore, businesses from all sectors saw the potential IoT comes with and started finding applications for it.

Smart Watches and Fitness Trackers

Imagine that: It’s winter and it’s freezing outside. You parked your car three streets away. Walking through there sounds insane, so you tell your watch to bring the car in front of the office and warm up the house before you get home.

That may sound like the sci-fi future wearable devices are heading toward. But actually, the technology is already here.. 

Wearable devices such as smartwatches and fitness trackers are some of the most popular current applications of IoT. They are used mostly for particular functions such as checking the time and tracking exercise.

Usually, the wearable devices involved in IoT communicate with an app installed either on a personal computer or a mobile device. And besides fitness tasks, they are virtually able to complete complex tasks such as making calls, operating the internet, managing finances and payments, or manipulating home appliances.

However, wearables prove to be often impractical for certain tasks compared to desktop or mobile devices. And that’s mainly due to the small screen size. Additionally, the more functionalities they have, the shorter their battery time is.

Although the technology to command most of your possessions exists, It requires a network connection and compatible software. And that’s a big issue because different devices are built with incompatible technology by different companies that have no incentive to offer integrations with rival products.

Smart homes

The total number of connected devices on the planet is expected to rise into the tens of billion by 2025. This includes smart home safety, security systems, and smart home energy equipment like smart thermostats and smart lighting. The top benefit to smart homes is convenience, as more connected devices can handle more operations and perform tasks in your place. Furthermore, smart home IoT devices can help reduce costs and conserve energy. 

However, smart home devices are more expensive than their non-connected counterparts, and most of the time they don’t mix well if they are not from the same producer. 

Autonomous and Connected Vehicles

Another sci-fi scenario we’ve seen in movies is driverless cars. Having your car drive you to the airport and then going back home on its own is a dream that might soon come through thanks to 5G and IoT.

Through real-time Internet connectivity in vehicles, automotive companies can release software updates in real-time. Also, they can use data from the car to analyze their performance and obtain valuable data on how drivers use their cars and come up with improvements.

Sensors would allow vehicles to communicate between them and avoid bumping into each other. Also, the car provider could diagnose malfunctioning components or software bugs before the car breaks down or it causes an unfortunate event.

But before turning this scenario into a reality, there are some issues that need solving.

Some of the potential problems we have in today’s systems could be fatal for autonomous car users. In May 2016 Tesla’s car failed to distinguish a white tractor-trailer crossing the motorway against a bright sky. Before the technology is released, it needs to be fail-proof.

Another problem is the mapping. A driverless car would need complete enhanced maps to be able to navigate in the streets as a human driver could. And even with complete enhanced maps, a driverless car would still need to be able to deal with dynamic obstacles, such as cars and pedestrians.

Supply Chains of the Future

When it comes to the Supply Chain, IoT allows warehouses and fleet managers to keep track of their cargo and inventory more efficiently.

It offers real-time location-tracking so the stream of real-time data regarding the location of the product and the transportation environment can be tracked coherently and prevent shipping errors. Also, through environmental sensors, supply chain managers can track the shipment process. The temperature inside the vehicle, pressure, humidity, and other factors that could compromise the product’s integrity can all be checked in real-time. 

In supply chains that involve the same company, IoT solutions do magic. But when there are multiple, international companies, with different financial capabilities, the complexity factor brakes the spell. 

Let’s take this situation where a meat producer uses advanced IoT solutions that communicate with the supermarket it delivers to, but the transportation company did not invest in such fancy stuff. On the road, the truck’s refrigerator heats up because of some error and the meat rots inside the container. The driver notices the cooler is off and refrigerates everything before the destination. At the destination, the supermarket takes the container without noticing anything. According to the IoT solution, the meat left the producer frozen and arrived at the supermarket frozen but the food still remains spoiled. In the best case scenario, one of the supermarket’s employees notices the problem and alerts the management before the packages reach the shelves. In the worst case scenario, some consumers will get sick and the supermarket, and most likely the meat producer, will go through a crisis that will seriously affect their sales.

IOT Vulnerabilities

IOT Vulnerabilities

“We’re sweeping every wirelessly accessible camera on the planet. Cell phones, laptops. If it’s connected to a satellite, it’s eyes and ears for us” says agent Phil Coulson in Avengers.

Although it’s a quote from a movie, the fact still remains that your IoT devices can be hacked and the most common backdoor is through your internet router.

One of the best resources to understand serious IoT security threats is OWASP Top 10 IoT Vulnerabilities list

  1. Weak, Guessable, or Hardcoded Passwords – Use of easily brute forced, publicly available, or unchangeable credentials, including backdoors in firmware or client software that grants unauthorized access to deployed systems. 
  2. Insecure Network Services – Unneeded or insecure network services running on the device itself, especially those exposed to the internet, that compromise the confidentiality, integrity/authenticity, or availability of information or allow unauthorized remote control. 
  3. Insecure Ecosystem Interfaces – Insecure web, backend API, cloud, or mobile interfaces in the ecosystem outside of the device that allows compromise of the device or its related components. Common issues include a lack of authentication/authorization, lacking or weak encryption, and a lack of input and output filtering. 
  4. Lack of Secure Update Mechanism – Lack of ability to securely update the device. This includes lack of firmware validation on devices, lack of secure delivery (un-encrypted in transit), lack of anti-rollback mechanisms, and lack of notifications of security changes due to updates. 
  5. Use of Insecure or Outdated Components – Use of deprecated or insecure software components/libraries that could allow the device to be compromised. This includes insecure customization of operating system platforms, and the use of third-party software or hardware components from a compromised supply chain. 
  6. Insufficient Privacy Protection – User’s personal information stored on the device or in the ecosystem that is used insecurely, improperly, or without permission. 
  7. Insecure Data Transfer and Storage – Lack of encryption or access control of sensitive data anywhere within the ecosystem, including at rest, in transit, or during processing.
  8. Lack of Device Management – Lack of security support on devices deployed in production, including asset management, update management, secure decommissioning, systems monitoring, and response capabilities. 
  9. Insecure Default Settings – Devices or systems shipped with insecure default settings or which lack the ability to make the system more secure by restricting operators from modifying configurations. 
  10. Lack of Physical Hardening – Lack of physical hardening measures, allowing potential attackers to gain sensitive information that can help in a future remote attack or take local control of the device.”

Combining Blockchain and IOT

Combining Blockchain and IOT

IoT systems are dependent on centralized architectures where the device is sent from devices to the cloud. But as a centralized system can only scale so far, in a world of complex networks it would require much more processing and coordination happening in the network. 

With coordination taking place peer-to-peer, it would reduce the bottlenecks and centralized security vulnerabilities

The more efficient way for IoT environments would be to have decisions, processing of data, resource sharing happen locally between devices on demand.

The blockchain is promising for IoT by providing assurance the data is legitimate and the process through which the data is put into the database is well defined.

Blockchains have the ability to identify devices as unique entities in a precise and immutable way. By hashing or using non-fungible smart contracts the data stays resistant to any alterations. Also, through distributed ledger technologies the hacking or altering of any records would be significantly more challenging than with a centralized system.

Decrypting the system by getting authentication of a single member is particularly impossible. Even when one party is compromised, the system remains intact and continues working normally.

The Blockchain IoT combination reduces the cost of identification significantly. A decentralized approach to IoT networks could solve many current issues. By adopting a standard peer-to-peer communication model to process numerous transactions, the cost of installing and maintaining large centralized data centers will be reduced significantly.

The computational power needed across the devices would also be drastically reduced by handling decisions, data processing, and sharing locally. 

The high level of decentralization would also prevent the failure of every node in the network from shutting down the whole system.

IOT Cryptocurrency for efficient environments

IOT Cryptocurrency for efficient environments

Blockchain IoT solutions would enable trustless secure messaging between devices. In an IoT blockchain, the messages would be treated the same as financial transactions in the Bitcoin network. 

To further improve the system, devices could automatically demand resources from one another in a micropayment system. But for it to work, it needs very low fees and very high transaction speed. Therefore, having a third party to approve every request is out of the question.

A device with excess resources, such as an excess in storage capacity or electricity, would be able to sell it to another device that needs it, creating a balancing system based on an IoT cryptocurrency

Overall, a device functioning on the network will automatically plug in the network offering its capacities and receiving tokens in exchange. 

However, this kind of network needs a permissionless innovation layer where anyone can start participating and contributing. But this will create all sorts of security privacy and financial issues that only blockchain is well suited to face.

One of the most prominent projects within the blockchain IoT mix is Iota. 

What is Iota

Distributed technologies like the blockchain are the missing link to settle the scalability, privacy, and reliability concerns in the IoT. However, the blockchain in its current state still has to evolve to meet up expectations.

Yet, projects like Iota come with new propositions to the distributed ledger technologies.

Iota aims to be the distributed network protocol that enables a machine economy in which every device can be leased when idle. 

The main innovation behind Iota is the “Tangle“- a new distributed design that is scalable, agile, and makes it possible to transfer value without any fees. Iota takes advantage of a network of users and nodes that are asked to perform small proof of work operations to validate the previous two transactions. 

Iota enables a whole new realm where anything with a chip in it could be leased in real-time.

In addition, Iota started collaborating with Bosch in order to develop the XDK Cross Domain Development, as well as with Jaguar Land Rover.

Other Projects

Other IOT Cryptocurrency Projects

Iota isn’t the only IoT cryptocurrency project out there. Some other prominent projects are MXC, IOTEX, and IOTChain.

MXC

MXC, short for the Machine Learning Exchange Coin, aims to combine the potential of blockchain IoT with the capabilities of LPWAN. MXC’s goal is to minimize data collisions between devices that mostly operate on the same frequencies by using the MX Protocol. The MX Protocol enables a network of LPWAN gateways to prioritizes communication between participants and incentivizes the secure collection and distribution of data gathered from IoT sensors.

SIDENOTE. LPWAN – The Low Power Wide Area Network is a class of wireless technologies that enables low power consumption and long-range wireless connectivity ideal for low bandwidth and low latency IoT applications

IOTEX

IoTex is a privacy-IoT blockchain that aims to power the Internet of trusted things. It is a decentralized network where all physical and virtual things can freely exchange information and value on a global scale. 

IoTex has identified several challenges that prevent the mass adoption of IoT. Scalability, lack of privacy, high operating costs, and lack of functional value are just a few of them. 

They want to solve these issues by providing a unique randomized delegated proof of stake consensus mechanism and a side chain architecture. The core idea is the separation of duties. It essentially means that different side chains will be created for each different function which would still be able to interact with each other. 

IOTChain

IOTChain aims to make the Internet of Things secure. Their goal is to create a decentralized network that stores information from IoT environments. It eliminates the weakness and exposure of centralized data servers and also gives the user ownership of his personal information.

Key Takeaways

  • Internet of Things represents a network of connected devices that gather and share data about how they’re used and the environment in which they’re operated.
  • IoT finds futuristic applications in many industries but still needs improvements. Some of its capabilities materialize in wearables, smart homes, automotive, and supply chain.
  • Although promising, IoT faces resistance in mass adoption because of concerns related to privacy and security.
  • Blockchain IoT comes with better Identification and security assurance capabilities and reduces the risk of an IoT environment failure caused by centralization.
  • IoT cryptocurrencies enable a system of micropayment in which connected devices can exchange excess resources on demand.
  • Besides Iota, some other prominent Blockchain IoT projects are MXC, IOTEX, and IOTChain.
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