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blockchain and iot: Opportunities and Challanges


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A brief thought about opportunities and challenges of applicability of blockchain in IOT application

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blockchain and iot: Opportunities and Challanges

  1. 1. Blockchain in IOT, Opportunities & Challenges Workshop on IOT MSRIT S Chetan Kumar (
  2. 2. What is • Briefly: Bitcon is a distribution database of records OR public ledger • Each transactions in the ledger is verified by consensus of majority of participants in the system DISTRIBUTED CONCENSUS • Once entered, the entry in the ledger can never be erased
  3. 3. An Example: • It is a crypto currency, the ownership of this currency and transactions are governed by block chain • Each transaction is protected through a digital signature • Each transaction is broadcast to every node in the Bitcoin network and is then recorded in a public ledger after verification • Verifying node needs to ensure two things before recording any transaction: • Spender owns the cryptocurrency—digital signature verification on the transaction. • Spender has sufficient cryptocurrency in his/her account: c
  4. 4. History of BitCoin • In year 2008, anonymous author with the name of Satoshi Nakamoto published a paper entitled “Bitcoin: A Peer-To-Peer Electronic Cash System” • 2008 • August 18 Domain name "" registered • October 31 Bitcoin design paper published • November 09 ​Bitcoin project registered at • 2009 • January 3 Genesis block established at 18:15:05 GMT • January 9 Bitcoin v0.1 released and announced on the cryptography mailing list • January 12 First Bitcoin transaction, in block 170 from Satoshi to Hal Finney
  5. 5. The Transaction • Each owner transfer the coin to next by signing the previous transactions • The payee can verify the chain of ownership • How do stop double spending ? • The owner can send two transaction to two different receiver • Who would be new owner
  6. 6. A distributed time server • The double spending can be stopped, if there a time stamp • The new owner is one who received the money first • Can be easily implemented if there is a universal time stamp server • Which is not possible !! We need a distributed time server
  7. 7. Chaining the blocks • To implement distributed time server, agree on a certain task, completing the task is “Proof of Work” • A task can be to find a random number, when added gives a specific Hash value • Nodes that preform the work are called ‘miners’ • Miners gets rewarded for the task completed
  8. 8. Adding it together • New transactions are broadcast to all nodes. • Each node collects new transactions into a block. • Each node works on finding a difficult proof-of-work for its block. • When a node finds a proof-of-work, it broadcasts the block to all nodes. • Nodes accept the block only if all transactions in it are valid and not already spent. • Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.
  9. 9. Summary • Distributed: No centralized controller, completely peer to peer and distributed record • The ledger is broadcasted to all, can be verified using public key cryptography • Immutable record: Once a block is added, it can not be changed, if changed, need to re-do the entire block, to satisfy the “Proof of work”
  10. 10. Application of blockchain • Crypto currency • Smart contracts • Decentralized Notary • Digital assets • Supply Chain • Digital Rights management • Stock trading • Identity management • Document storage
  11. 11. What is IOT ? • Connecting “Things” that can operate independently • Things (sensors) are connected to other things (actuators) • Has computing power to perform certain coordinated tasks • Creates a smart world: smart homes, smart street, smart city
  12. 12. What is happening today • IOT in mainstream consumer applications • Smart homes, google home, amazon eco, smart watches etc. • IOT in mainstream Industrial applications • Solar power production monitoring • Industrial safety monitoring systems • IOT in mainstream personal/medical applications • Fitbits, diabetic monitoring, BP/heart rate monitoring • IOT in mainstream community applications • Pollution monitoring, environment/locality monitoring
  13. 13. IOT and Block Chain • IOT is distributed system, but • Today most of these works with support from centralized infrastructure • The sensors & actuators can talk to each other, but can not execute coordinated tasks, without trust • A de-centralized system like Block Chain can help • A smart contracts can be established and executed across peer group of devices, with trust ! • Can form a low cost and low maintenance trusted eco system
  14. 14. Opportunity: New paradigm in manufacturing
  15. 15. Just in Time manufacturing • Just in time manufacturing • All manufacturing done using 3D printer • No inventory!! • Consider: You see a car and want to purchase • Take photo and upload to just time manufacturing portal
  16. 16. Just in Time manufacturing • The request received at fullfillment center, job created • Automated 3D modelling and design by designing software • The job transferred to 3D printer and laser cutting machine • Required tasks performed • The job and material transferred to other unit/organization using an drone OR driverless vehicle • The more designs and tasks performed in other unit, and transferred again • Final product shipped back to user, in a drone/diverless vehicle
  17. 17. How does this work Smart ContractsOrder Placed Smart Contracts Smart Contracts Smart Contracts USER Move job to Other unit Design Center Final Shipment
  18. 18. How ? • Require distributed trust system • Each unit (a group of devices) must operate autonomously • Each unit must perform the task, complete the contracts • Must link the whole system via a common goal (for eg. Manufacturing a car)
  19. 19. Smart Contracts • Smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that make a contractual clause unnecessary.
  20. 20. Opportunity: Security
  21. 21. A Distributed Security System • To onboard devices in a secure way • Centralized system do now work well.. IOT is distributed !! • A secure system to exchange peer-to-peer data • A secure system to accept and act on commands
  22. 22. Block chain for security • Identify management Block chain based PKI • Eliminates need for centralized system for key management • Integrity management • A keyless signature structure using block chain • Reduce attacks, using block chain based network services
  23. 23. Challenges • New technology • While well adopted, still not many understand the core technical details • Not well exposed in other areas, barring crypto currency • Processing power • Require quite a bit of processing power • Can IOT devices afford ? Can Audino run this ? • But remember moorse law, computing power will increase and cost gets lower
  24. 24. Challenges • Storage • Seeks significant storage • Can IOT devices support this ? • There may be miners like devices for IOT, how do we incentivize them ? • Scalability • IOT is all about scale, million, billions of devices (50billion by 2020 ?) • Can the algorithm scale well at these numbers • Currently there is around 16M bitcoins and will max out at 21M
  25. 25. Thankyou