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

1. Blockchain in IOT,
Opportunities & Challenges
Workshop on IOT
MSRIT
S Chetan Kumar (shivakumar.chetan@gmail.com)

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. 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. 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 "bitcoin.org" registered
• October 31 Bitcoin design paper published
• November 09 ​Bitcoin project registered at SourceForge.net
• 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

6. 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

7. 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

8. 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

9. 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.

10. 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”

11. Application of blockchain
• Crypto currency
• Smart contracts
• Decentralized Notary
• Digital assets
• Supply Chain
• Digital Rights management
• Stock trading
• Identity management
• Document storage

12. 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

13. 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

14. 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

15. Opportunity: New paradigm in manufacturing

16. 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

17. 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

18. How does this work
Smart
ContractsOrder Placed
Smart
Contracts
Smart
Contracts
Smart
Contracts
USER Move job to
Other unit
Design Center Final
Shipment

19. 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)

20. 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.

21. Opportunity: Security

22. 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

23. 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

25. 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

26. 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

27. Thankyou
Shivakumar.chetan@gmail.com