October 18

Why Blockchain and IoT Make a Powerful Pair

The Internet of Things (IoT) is giving businesses competitive edges that didn't exist earlier this century. Businesses that find IoT data leaks a reason to avoid investing in a digital infrastructure with IoT sensors, should consider blockchain as a superior cybersecurity layer.

Here's a look at how combining blockchain and IoT can empower your business to make dramatic system improvements.

How Blockchain Protects IoT

A central reason why blockchain and IoT go together well is that both are developments that promote sustainability through data collection. They've evolved together in the same era in which businesses have sought innovative solutions to serious internet issues such as data protection. Using blockchain as a security layer with IoT sensors can streamline a business in multiple ways. It can simplify production processes, increase company transparency and create better customer experiences.

Once you create a blockchain of interconnected blocks of data on a computer network, it can be accessed only by members with a special encryption key. Regardless of who accesses the data at that point, they cannot change any of it. Ultimately, this dynamic makes blockchain more secure than a centrally-controlled database. A hacker can gain a wealth of information by breaching a database but will run into endless walls and speed bumps when trying to access blockchain content.

Blockchain Needs to Be Standardized

Although blockchain is not yet the standard form of cybersecurity for IoT devices, it's poised to advance in that direction. One of the main concerns about using IoT is that when it distributes data through wireless transmission, the data can be intercepted by cybercriminals.

Blockchain technology provides a digital time stamp of when stored data is accessed, leaving a "digital paper trail" that tracks wallet addresses. While cybercriminals have tried to use crypto to hide their identities, blockchain is not an anonymous system, particularly when someone tries to trade crypto for cash through an exchange-registered digital wallet address.

Ways that Blockchain Adds Trust to AI and IoT

Think of a computer without any data protection as similar to a home full of open doors and windows, in which any strangers without being identified can walk in and out as they please. By contrast, a computing device with security layers like firewalls, antivirus software, encryption and 24/7 monitoring software is like a home with deadbolt locks and a burglar alarm system.

Now think of a big box store divided into hundreds of rooms with brick or concrete walls and steel doors surrounded by steel gates and video cameras. That's what blockchain is like by comparison. Another analogy is that while a database is like keeping secret documents in a filing cabinet in a locked room, a blockchain is like storing that same sensitive information spread out among many locked rooms.

Many cybersecurity experts consider blockchain to be a superior form of data protection, as it's based on data encryption. A blockchain, as the name suggests, is a series of interconnected digital blocks that store information. A hacker would have to crack complex encryption code for multiple blocks in order to compromise the data. Unlike other forms of communication, blockchain messages are nearly impossible to intercept.

How blockchain encrypts and stores data makes it a secure solution for IoT devices. It keeps a record of its activity on a public ledger that cannot be altered, so that community members can verify events that occur on the network.

Concerns About Trust in Decision-making Algorithms

The three main components of artificial intelligence are data, models and analytics. While many businesses trust centralized database systems, all it takes for a hacker to compromise massive amounts of data is to gain access to the database. In a decentralized system such as blockchain, most hackers don't know where to start, making it safe to store massive AI data.

The reason why blockchain works well with artificial intelligence applications is that AI involves decision-making processes based on "if/then" principles. The reason for a machine learning program arriving at a decision can be expressed in detailed data stored in multiple blocks. The fact that blockchain allows for securely storing a wealth of AI data on a network adds to its trust level.

AI Regulations in the EU

Despite the fact the business world is becoming increasingly automated, AI decisions must still be verified by humans to ensure accuracy. It's particularly important for businesses in the European Union to understand how their algorithms work due to new laws affecting AI. The EU General Data Protection Regulation (GDPR), which was implemented in 2018, requires owners of AI technology to explain upon request how their algorithms make decisions or face legal penalties. In this regard, blockchain simplifies audits with comprehensive reports, further elevating its trust level.

Trust in Crypto Transactions

Blockchain technology has proven to be a reliable cybersecurity solution for online transactions, particularly using cryptocurrencies such as Bitcoin. Automated transaction details can be stored in IoT devices that are accessed by different suppliers throughout a supply chain. Since there is no bank serving as a mediator, smart contracts cut costs on transactions. The combination of blockchain's encryption, communication process, lower costs and accurate tracking build a high level of trust among its participants.

A digital wallet developer that facilitates using blockchain is GridPlus, which manufactures a wallet-sized hardware device called Lattice1. Its user-friendly display portal makes it easy to read, reject or approve a smart contract with a third party. The device can be used to access any supported software wallet to make transactions with cryptocurrencies. It can also be used to store up to 64 GB of data. Its Wi-Fi antenna provides internet connectivity while its ZigBee antenna allows the device to connect with other IoT devices.

Turning to Zero Trust Principles

The security strategy known as "zero trust" in network computing is based on the "verify, then trust" notion. Websites, apps and IoT devices can use this strategy to shut out unwanted users from accessing data. The verification process for granting access to a digital network typically involves a username and password. Stronger security is achieved by adding multi-factor authentication.

In a zero trust environment, no access is given to anyone until their identity is authenticated. This strict policy can also be viewed as a "never trust, always verify" concept. Not all IoT devices that share data have built-in zero trust mechanisms, but they should, especially if the data is valuable or confidential.

Keep in mind that any electronic device connected to your network can potentially be vulnerable to a cyberattack, even with the most state-of-the-art data protection. So, it only makes sense to use a zero-trust strategy for all your network devices, including routers and IoT sensors.

Trusted Brands

Companies currently exploring AI development include tech giants Apple, Google, Amazon and Facebook owner Meta. These firms have gained enormous trust with the public over the years as far as designing technology for AI, IoT and the cloud.

IoT-based Blockchain Use Cases

Some of the most important applications for blockchain in the business world include smart contracts and recordkeeping. Here are some of the ways in which blockchain pioneers are currently using the technology:

Transactional Applications

As indicated earlier, blockchain is ideal for applications designed to make financial transactions. Smart contracts can execute either cash or crypto transactions upon completion of the terms. Blockchain is built on zero trust principles, as only authorized members of its community are allowed access via an encryption key.

Back-up Energy

Industry 4.0 firms have deployed digital infrastructure that allows for using smart contracts. A power generation company, for example, might use smart contracts to purchase alternative energy to account for mainline system glitches or shortages. Utility companies that partner with alternative energy companies to tap backup resources should consider smart contracts.


Blockchain is also ideal for the logistics industry since it deploys a high volume of IoT devices to track shipping and handling. These devices track specific products shipped to specific parties, which requires a zero trust strategy. Since blockchain maintains data integrity, it's a system that can be trusted and secure by supply chain members.

Healthcare Wearables

The healthcare industry must take a zero trust approach to digital technology or face heavy fines due to HIPAA regulations involving patient privacy. As medical professionals extract streamed patient data from wearable connected devices, these IoT devices must adhere to zero trust principles. Again, blockchain can maximize privacy for wearables.


In order for businesses to widely adopt blockchain and IoT, trust in the technology is a major factor. Once businesses become more comfortable with the security and precise tracking that blockchain provides with IoT integration, they will become less hesitant to implement it, as the world goes more digital. Smart contracts are helping lead the way toward trust in blockchain technology.


AI, blockchain, crypto, cybersecurity, IoT, zero trust

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