In-brief: Blockchain technology will have to clear a number of hurdles before it will be ready to serve as a core infrastructure for the Internet of Things, the author explains.
As technology and commercial firms look for ways to deploy and secure Internet of Things technologies at scale, blockchain has emerged as a clear favorite for managing issues like identity and transaction security. IBM, for example, is offering a commercial blockchain to developers who use its Watson IoT platform and Bluemix platform as a service.
There is reason that technologists interested in the Internet of Things are looking to technologies like Blockchain: traditional IT security technologies are poorly suited to applications on the Internet of Things, where the scale of deployments and the diversity of endpoints present real challenges.
Given those constraints, Blockchain technology has much to offer. Originally developed as a means to secure Bitcoin transactions, Blockchain’s distribute ledger can provide device identity, secure data transfer, and immutable data storage for all manner of online transactions and communications. Importantly: these features can be implemented without any centralized authority and a completely transparent system with cryptographic proofs capable of being audited.
[Interested in blockchain? Read this Security Ledger coverage. ]
Recent years have witnessed an explosion of interest and investment in Blockchain technologies, as applications in industries like banking, financial services and technology are continuously being developed. Evolutions on the original Bitcoin technology, like Ethereum, have made significant progress, adding Turing completeness to blockchains.
Today, blockchain and blockchain variants like Ethereum offer a trust-less, decentralized system that can facilitate execution of code (read Smart Contract) and perform further actions based on the logical conditions in that code.
In spite of these unique and valuable features, there are still impediments to the incorporation of blockchain technology as a foundation for Internet of Things ecosystems. This article will discuss a few of them.
The first and major impediment to the growth and adoption of blockchain technologies is the concentration and consolidation of mining power.
Bitcoin and Ethereum were intended to function as distributed and decentralized systems of coin mining and exchange. In practice, that hasn’t come to pass. Instead, the financial rewards offered by cryptocurrency systems created a huge incentive for expensive, concentrated coin mining operations featuring mining farms, rigs, and pools. Sporting blindingly fast and efficient mining rigs with immense hash rates, simple, general purpose computers have been pushed out of the mining business.
Practically, that means that on the Internet of Things most endpoints will not be suitable for mining. Low-end devices like Raspberry Pis and embedded systems with minimal CPU power have and will continue to take a back seat to high-end machines that are designed just for calculating hashes and mining. Centralized mining introduces a single point of failure into the blockchain network. This is not desired, especially in a system that was meant to be peer-to-peer, where a fault in a single node shouldn’t affect the whole system. In centralized mining, if a mining pool which contributes majority of the hashing power stops functioning, the security of the blockchain network decreases which might ultimately render the system useless. Moreover, a mining pool with majority of the hashing power can perform some attacks on the network like adding/deleting transactions from the blockchain and double spending.
The second factor is storage capacity. The blockchain protocols are designed in such a way that each node should maintain the same copy of the blockchain and the blockchain should contain every transaction from the beginning of time. This means that any new device, in order to become a node in the Bitcoin network, should download all the transactions right from the first block which was mined back in 2009.
The same principle holds for other blockchain applications as well.Bitcoin’s blockchain size is more than 100GB and Ethereum’s blockchain size is approximately 50GB. These are just financial transactions and these systems limit the no. of transactions per second. For example, the Bitcoin network supports 3 transactions per second and the blockchain size grows 1MB for every 10 minutes. In an IoT application, the system should support thousands of transactions per second and the blockchain size will be bloated in no time. Due to the replicated storage mechanism, every device should hold a copy of blockchain in order to be a part of the network and a simple IoT device might not provide the demanded storage capacity.
The third factor is the block time, which is defined as the time taken by a node to validate all the broadcasted transactions, arrange all the legitimate transactions into a block, and find the correct nonce value that provides the desired block hash.
Bitcoin’s block time is 10 minutes and Ethereum’s block time is 15 seconds. For a financial transaction, this block time might be desirable. But, for an IoT application with cyber physical capabilities, even a latency of a few seconds might not be feasible. In a smart vehicle or a piece of life-sustaining technology, actions need to be performed immediately. While not an urgent issue today, in the future, block time will need to be shortened drastically to clear the way for widespread adoption of blockchain technology.
As I write, researchers are exploring solutions to address these problems and others like them. To solve the storage capacity problem, for example, light client protocols are being designed which include pruning methods. In these implementations, the number of blocks to be stored on a node can be mentioned in the blockchain clients.
The limitations imposed by the mining requirements of Bitcoin are more difficult to solve. The computational capacity and block time problems derive from the Proof-of-Work algorithm that is used to secure blockchain data. That algorithm is not energy-efficient. In response, a Proof-of-Stake algorithm offers the most promising alternative to Proof-of-Work. It doesn’t require a node to perform millions of calculations and is more energy-efficient.
The storage and management of blockchain accounts or keys has also proven to be a weak link. Most of the bitcoin hacks to date have been the result of an attacker stealing the keys from a cold or hot wallet storage. These incidents are not related to the technology itself, but attention to bitcoin thefts tends to undermine confidence in the technology.
An effective solution for this would be to have another factor, such as a password or PIN that is used to initiate and sign transactions. This is already being implemented in Ethereum.
Blockchain is still a nascent and controversial technology. It goes without saying that blockchain’s applications within the Internet of Things is still a matter of conjecture and trial, and that it will take more time to determine whether and how blockchain might be implemented to secure IoT ecosystems.
Experts estimate that it might take 5 -10 years for the mainstream adoption of blockchain technologies like IOTA and Hyperledger that have the most direct applications to the Internet of Things. However, with all the popular banks and companies in the FinTech sector jumping aboard the blockchain train, setting up labs, developing proofs of concept and filing patents, that long runway may end up much shorter than anybody expected.