Match Made in Heaven for Manufacturing: IoT and Blockchain


The world is becoming more interconnected as technology becomes smarter thanks to AI and IoT. IoT, or Internet of Things, is a network of physical devices embedded with electronics and sensors connected to the Internet, exchanging data with other objects or networks. There are 21 billion IoT devices as of 2018, and that number will grow to 50 billion by 2022, resulting in a $15 trillion aggregate investment into IoT by 2025.


However, IoT has one potentially fatal flaw.


In their current form, IoT devices are extremely insecure. They are prime pickings for hackers. With a growing number of sensors in vehicles, factory machinery, supply chains, and infrastructure, cybersecurity can be a major problem. Hackers can gain access to power grids, automobiles, and airplanes through IoT devices—and take control of them with potentially disastrous consequences.


IoT is also difficult to implement due to privacy issues and high deployment failure rates. Furthermore, companies find it difficult to manage the explosion of data volumes and bandwidth brought upon by IoT. Although not yet possible, IoT also needs to automate data exchange processes without compromising security, or leaving any devices vulnerable to hacks.

Blockchain Technology: A Promising Solution for IoT

Blockchain is a distributed ledger technology that can enable processes between IoT devices without intermediaries. Standardizing data exchange using IoT devices decreases the time needed to process data within a mesh network of smart sensors—a particularly important proposition for manufacturers and supply chains. Blockchain brings two main features that can potentially solve current problems with IoT:


  1. Decentralization

In a decentralized blockchain, each node within a distributed network participates in validating every transaction using a consensus mechanism. As a result, decentralization eliminates all single points of failure. Doing so adds an extra layer of security that promises to close cybersecurity vulnerabilities currently exploited by hackers.


  1. Smart Contracts

Smart contracts are contracts that self-execute when certain predefined conditions have been fulfilled. These are embedded in each IoT device to determine what action takes place when a condition has been met. In the IoT world, the inclusion of smart contracts is a potential game changer because most of the manufacturing process could be automated, saving manufacturers enormous amounts of money with unparalleled efficiency.

Resulting Benefits Blockchain Brings to IoT

Both decentralization and smart contracts bring scalable distributed security and trust to IoT devices, applications, and platforms. With decentralization, smart contracts and an extra layer of security, blockchain benefits IoT in the following ways:


  • Lower bandwidth requirements leading to reduced costs
  • Faster application response times
  • Improvements in security by closing vulnerabilities
  • Elimination of single points of failure
  • Increased oversight and trust
  • Audit trails, accountability, new forms of contracts


These benefits result in a more transparent and efficient supply chain in the manufacturing industry. Traditionally, a central authority can approve or halt the movement of goods and materials from one location to another. Now, using blockchain would distribute this authority to IoT devices on a peer to peer mesh network. These devices could use consensus mechanisms to authenticate and execute transactions based on predetermined rules without a central server.


IoT and blockchain would inevitably converge at some point. Connecting IoT devices to a centralized cloud service is unsustainable—too many devices, too much data volume, more bottlenecks, and security vulnerabilities. Blockchain eliminates these issues with decentralization and duplication of data storage across many nodes throughout its network. This redundancy ensures that data will never be lost, and that transfer times and bandwidth use would be reduced. Server failure of one node would not affect any operations, which is vital for manufacturing.

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