Internet of Things and blockchain

The Internet of Things (IoT) and blockchain technology are two transformative forces that, when combined, address some of the most pressing challenges in connected device ecosystems. IoT refers to the vast network of physical devices embedded with sensors, software, and connectivity that collect and exchange data. By 2025, the number of connected IoT devices worldwide surpassed 15 billion, spanning smart homes, industrial automation, healthcare monitoring, supply chain tracking, and autonomous vehicles. This massive scale introduces equally massive challenges around security, data integrity, and trust.

The core security problem with IoT is that billions of devices, many with limited computational resources, are generating and transmitting sensitive data across networks. Traditional centralized architectures create single points of failure: if the central server or cloud platform is compromised, the entire network is at risk. Many IoT devices ship with weak default credentials, receive infrequent firmware updates, and lack the processing power for sophisticated encryption. The Mirai botnet attack of 2016, which enslaved hundreds of thousands of IoT devices to launch devastating DDoS attacks, demonstrated the scale of these vulnerabilities.

Blockchain technology offers several properties that can address these IoT security challenges. The centralized model also raises questions about who ultimately controls the data generated by billions of devices -- and decentralized architectures offer a path where that control rests with the device owners rather than a handful of platform operators. As a distributed ledger, blockchain eliminates the single point of failure inherent in centralized architectures. Data recorded on a blockchain is immutable, meaning once a transaction or sensor reading is recorded, it cannot be altered retroactively without detection. Cryptographic verification ensures that data originates from authenticated devices, and the decentralized consensus mechanism makes the system resistant to tampering.

Smart contracts, self-executing programs stored on a blockchain, enable automated interactions between IoT devices based on predefined rules. For example, a smart contract could automatically trigger a payment when a supply chain sensor confirms that goods have arrived at the correct temperature. This removes the need for intermediaries and creates an auditable trail of every transaction and condition check.

Several blockchain platforms have been designed specifically for IoT use cases. IOTA introduced the Tangle, a directed acyclic graph (DAG) structure that eliminates mining fees and is designed for the high-throughput, low-value transactions typical of IoT networks. IOTA has continued evolving, with its Stardust and subsequent protocol upgrades adding smart contract capabilities and improved tokenization features. Ethereum's smart contract capabilities have been widely used for IoT prototyping, though gas fees and throughput limitations have pushed many implementations toward layer-2 solutions or alternative chains. Hyperledger Fabric provides a permissioned blockchain framework suitable for enterprise IoT deployments where participants are known and trusted.

In supply chain management, blockchain-enabled IoT is already delivering real value. Sensors track temperature, humidity, location, and handling conditions throughout a product's journey, with each data point recorded immutably on the blockchain. This creates a complete, tamper-proof provenance record that all participants in the supply chain can verify independently. Industries from pharmaceuticals to food safety have adopted this approach to meet regulatory requirements and build consumer trust.

Industrial IoT (IIoT) represents another promising convergence point. In manufacturing, predictive maintenance systems use sensor data to anticipate equipment failures. Recording this data on a blockchain ensures its integrity for compliance auditing and creates a reliable dataset for machine learning models. Energy grids are exploring blockchain-based peer-to-peer energy trading, where IoT-enabled solar panels and batteries can autonomously buy and sell electricity based on real-time supply and demand.

Despite the potential, significant challenges remain. Many IoT devices lack the computational power and storage capacity to participate directly in blockchain networks. Edge computing architectures, where a gateway device handles blockchain interactions on behalf of constrained sensors, are the practical solution but introduce their own complexity. Scalability remains a concern, as most blockchain networks cannot yet match the transaction throughput required by large-scale IoT deployments with millions of devices generating data continuously.

Energy consumption is another consideration. Proof-of-work blockchains are unsuitable for IoT applications due to their enormous energy requirements. Proof-of-stake, DAG-based systems like IOTA's Tangle, and permissioned blockchains offer more energy-efficient alternatives that are better suited to the resource-constrained IoT environment.

The convergence of IoT and blockchain is still maturing, but the trajectory is clear. As blockchain platforms improve in scalability and efficiency, and as IoT devices become more capable, the integration of these technologies will become increasingly practical. For organizations building IoT solutions today, understanding how blockchain can enhance security, data integrity, and automated trust is essential for designing systems that are resilient and future-proof.

Ethereum, IOTA