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The Internet of Things (IoT) has emerged as a transformative technology, connecting billions of devices and revolutionising industries across the globe. In parallel, smart contracts, powered by blockchain technology, have gained traction as an innovative means of automating and securing digital agreements. When these two disruptive technologies converge, the potential for synergy and transformative impact becomes evident. In this article, we explore how smart contracts could revolutionise the Internet of Things, enhancing security, efficiency, and trust in the interconnected world.

What is the Internet of Things (IoT) and what are the real-world benefits?

IoT refers to a network of physical objects, devices, vehicles, appliances, and other items embedded with sensors, software, and connectivity capabilities that enable them to collect and exchange data over the internet. These “things” can range from everyday objects like thermostats, refrigerators, and wearable devices to complex industrial machinery, smart cities infrastructure, and even autonomous vehicles.

Equipped with sensors and actuators, IoT devices help to gather data from their surroundings and potentially even interact with their environment. They can communicate with each other, exchange data with cloud-based systems, and potentially make autonomous decisions based on the information they receive. This interconnected network of devices creates a vast ecosystem where data flows and interactions occur, enabling a wide range of applications and services.

The primary goal of IoT is to enable the seamless integration between the physical and digital world, unlocking numerous opportunities for efficiency, automation, and innovation. By collecting and analysing data from various sources, IoT provides valuable insights, helping to make informed decisions and automate processes to enhance productivity, optimise resource utilisation, improve safety, and provide new services and experiences.

The proliferation of IoT has transformed numerous industries, including healthcare, agriculture, manufacturing, transportation, energy, and smart cities. In healthcare, for example, IoT devices can monitor patients’ vital signs, track medication adherence, and enable remote diagnostics, enhancing the quality of care and empowering patients to take a more proactive role in managing their health. In agriculture, IoT sensors can monitor soil moisture, weather conditions, and crop health, enabling farmers to optimise irrigation, reduce waste, and improve yields.

How can blockchain technology and smart contracts enhance IoT?

The seamless integration of IoT and blockchain technologies offer numerous potential benefits, particularly in scenarios where vast amounts of data collected from IoT devices need to be stored and accessed in the public domain. Meanwhile, smart contracts can eliminate the need for intermediaries, central authorities, and manual intervention, helping to streamline processes and increase operational efficiency. Here are three examples describing the potential impact blockchain technology and smart contracts could have on three incredibly important global sectors.

Example #1 — IoT-Based Supply Chain Tracking

In this scenario, let’s say a company manufactures organic coffee beans and wants to provide verifiable information about the product’s origin, ensuring transparency and trust for consumers.

• IoT Devices: The company installs IoT devices (e.g., RFID tags, GPS trackers) on each bag of coffee beans during the production process. These devices record data such as the location, temperature, humidity, and other relevant parameters at different stages of the supply chain.
• Data Storage on the Blockchain: The data collected by IoT devices is stored on a public blockchain. Each bag of coffee beans is associated with a unique identifier (e.g., a barcode) that acts as its digital twin on the blockchain, referred to as an NFT.
• Smart Contracts: Smart contracts are deployed on the blockchain to automate various aspects of the supply chain process. For instance, a smart contract could be programmed to trigger certain actions when specific conditions are met, such as recording the location and timestamp when a bag of coffee beans reaches a particular checkpoint, like a warehouse or a shipment hub.
• Transparency and Verification: Consumers and other stakeholders can access the blockchain to verify the entire journey of a bag of coffee beans, from its origin to the final destination. The immutable nature of the blockchain ensures that the data cannot be tampered with, providing transparent and auditable information about the product’s supply chain history.
• Supply Chain Efficiency: With the data being transparently recorded on the blockchain, all parties involved in the supply chain, including the manufacturer, distributors, retailers, and consumers, have access to real-time information. This transparency reduces the likelihood of disputes, delays, or fraudulent activities, leading to a more efficient and trustworthy supply chain.
• Quality Assurance: The data collected by IoT devices can help monitor environmental conditions during transportation and storage. If the temperature or humidity exceeds predefined thresholds, the smart contract could trigger an alert, allowing the company to take immediate action to preserve the product’s quality.
• Automated Payments and Incentives: Smart contracts can automate payment processes between different parties in the supply chain. For example, when a bag of coffee beans reaches its destination, the smart contract can automatically release the payment to the distributor, streamlining the payment process and reducing administrative overhead.

In summary, combining IoT, blockchain, and smart contracts in the supply chain management of organic coffee beans enables transparency, trust, and efficiency throughout the entire process. Consumers can access verifiable information about the product’s origin, quality, and handling, leading to increased trust in the brand. The automated and secure nature of smart contracts reduces the need for intermediaries and manual interventions, making the supply chain more streamlined and cost-effective. Overall, this example illustrates how blockchain and smart contracts enhance the IoT ecosystem, transforming supply chain management and positively impacting businesses and consumers alike.

Example #2 — IoT-Based Energy Management in a Smart City

In this scenario, we’ll explore how blockchain and smart contracts can help manage energy consumption in a smart city, optimising resources and enhancing sustainability.

• IoT Devices: In a smart city, various IoT devices are deployed throughout the infrastructure, including smart meters, sensors, and actuators. These devices collect real-time data on energy consumption, electricity generation (e.g., solar panels), weather conditions, traffic patterns, and other relevant information.
• Data Storage on the Blockchain: The data collected by IoT devices is stored on a private or public blockchain, depending on the level of required transparency and privacy. Each device or data source has its unique identifier and cryptographic signature to ensure data integrity and prevent tampering.
• Smart Contracts: Smart contracts are used to manage energy-related processes in the smart city. For instance, a smart contract could be created to automatically adjust street lighting levels based on the detected traffic patterns and weather conditions. Additionally, a smart contract could optimise the usage of renewable energy sources based on real-time electricity generation data and demand.
• Decentralised Energy Grid: The smart contracts on the blockchain enable the creation of a decentralised energy grid, where energy transactions can occur peer-to-peer between energy producers and consumers. Prosumers (those who produce and consume energy) can sell excess energy to others directly through the blockchain, without the need for intermediaries.
• Energy Efficiency: With real-time data collected from IoT devices and processed by smart contracts, the city’s energy management system can automatically optimise energy consumption. For example, smart contracts can adjust heating, cooling, and lighting systems in public buildings based on occupancy, weather conditions, and energy availability, reducing wastage and promoting energy efficiency.
• Demand Response: The IoT devices and smart contracts can enable a demand-response mechanism. When the energy grid faces peak demand periods, smart contracts can automatically adjust the energy consumption of certain non-essential systems to balance the load and prevent blackouts or energy shortages.
• Incentives for Sustainable Practices: Through the blockchain and smart contracts, the city can implement incentive programs to encourage sustainable energy practices. For instance, residents or businesses that actively participate in energy conservation or generate renewable energy may receive tokens or other rewards on the blockchain, fostering a culture of sustainability.

In summary, applying blockchain and smart contracts to IoT-based energy management in a smart city offers numerous benefits. It allows for a transparent, decentralised, and automated energy management system that optimises energy consumption, reduces waste, and promotes the use of renewable energy sources. The secure and immutable nature of the blockchain ensures data integrity, while smart contracts enable real-time decision-making and automation. By fostering a more sustainable and efficient energy ecosystem, this use case contributes to building smarter, greener, and more resilient cities for the future.

Example #3 — IoT-Based Healthcare Data Management

In this scenario, we’ll examine how blockchain and smart contracts can address the challenges of securely managing and sharing patient data among different healthcare providers, ensuring privacy, and promoting interoperability.

• IoT Medical Devices: In a healthcare setting, IoT medical devices are utilised to monitor patients’ vital signs, collect health data, and track medical conditions. These devices can include wearable health trackers, smart implants, and remote monitoring devices.
• Data Storage on the Blockchain: The health data collected by IoT devices is stored on a private blockchain network with controlled access. Each patient’s medical data is encrypted and linked to their unique digital identity on the blockchain.
• Smart Contracts for Data Access and Consent: Smart contracts are utilised to manage data access and patient consent. Patients can specify which healthcare providers or researchers can access their medical data through predefined smart contracts. The smart contracts enforce data access permissions and ensure that data is only accessible to authorised parties with patient consent.
• Interoperability: The use of a blockchain-based system enables interoperability between different healthcare providers and institutions. As patient data is stored in a standardised and secure format on the blockchain, authorised healthcare providers can access and share relevant data seamlessly, even if they use different electronic health record (EHR) systems.
• Patient-Centric Data Control: Blockchain and smart contracts empower patients to have greater control over their health data. Patients can easily grant or revoke access to their medical information, ensuring that sensitive data remains secure and shared only with those they trust.
• Auditability and Data Integrity: The immutable nature of the blockchain ensures that all data transactions and changes to patient records are recorded transparently. This audit trail fosters data integrity, reducing the risk of unauthorised modifications or data breaches.
• Research and Analytics: Researchers can securely access aggregated and anonymised health data for medical research and population health analytics. Smart contracts can govern data-sharing agreements between healthcare institutions and researchers, ensuring compliance with privacy regulations and ethical considerations.
• Telemedicine and Remote Monitoring: IoT devices can facilitate telemedicine and remote patient monitoring, where patients’ health data is transmitted securely to healthcare providers through the blockchain. Smart contracts can automate remote monitoring protocols and alert healthcare professionals in case of emergencies or abnormal conditions.

In summary, implementing blockchain and smart contracts in an IoT-based healthcare data management system offers significant advantages. It ensures patient data security, privacy, and control while promoting interoperability and data sharing among healthcare providers. The decentralised and immutable nature of the blockchain enhances data integrity and transparency, making it a valuable tool for improving healthcare delivery, medical research, and patient outcomes. By fostering a patient-centric approach to data management, this use case enhances the overall efficiency and effectiveness of the healthcare system.

How does blockchain data storage compare to traditional cloud storage?

Commonly referred to as the “Big Data of Things” the IoT space is anticipated to generate a staggering 73.1 zettabytes (ZB) of data — for context, a single zettabyte (ZB) is equal to one trillion gigabytes (GB). Big data is a valuable resource for businesses, researchers, and organisations alike, providing insights, trends, and patterns that can drive decision-making, innovation, and efficiency improvements.

Rising significantly in popularity during the 2010’s, cloud storage solutions from the likes of Google and Amazon have made a significant impact on IoT data storage, providing scalable, real-time access and analytics capabilities. However, the downside of cloud storage lies in its centralised nature, where data is stored and managed by third-party providers, making it susceptible to potential security breaches, data loss, and privacy concerns. Furthermore, cloud computing lacks the programmability of blockchain technology, offering automated rule-based interactions and conditional data access. These are the key benefits of using blockchain technology over traditional cloud-based storage:

• Decentralisation and Security: Blockchain’s decentralised nature ensures that data is distributed across a network of nodes, reducing the risk of single points of failure and making it more resistant to hacking or data breaches. This enhances the security and integrity of IoT data, safeguarding it from unauthorised access and tampering.
• Immutability: Data stored on a blockchain is immutable, meaning it cannot be altered or deleted once it is recorded. This feature ensures data integrity and creates a transparent and auditable trail of all data changes, providing reliable and trustworthy data history.
• Trust and Transparency: Blockchain operates on a consensus mechanism, where multiple nodes agree on the validity of transactions and data. This consensus fosters trust among participants, as all parties can verify data without relying on a central authority, ensuring transparent and accountable data sharing.
• Data Ownership and Control: In a blockchain network, data ownership and control lie with the users who hold cryptographic keys to access and manage their data. This user-centric approach enhances data privacy, giving individuals more control over their personal information, reducing dependence on third-party providers.
• Elimination of Centralised Authority: Unlike cloud storage solutions that rely on centralised servers and administrators, blockchain eliminates the need for a single central authority, reducing the risk of data abuse or manipulation by a single entity.
• Smart Contracts and Automation: Smart contracts can facilitate automated and trustless interactions based on predefined conditions. This allows for seamless and secure data sharing, automated transactions, and the execution of predefined rules without the need for intermediaries.
• Resilience and Disaster Recovery: The distributed nature of blockchain data storage ensures that even if some nodes fail or leave the network, the data remains available and operational, enhancing resilience and disaster recovery capabilities.
• Data Interoperability: Blockchain can facilitate data interoperability, enabling seamless data exchange between different IoT devices, platforms, and applications, fostering collaboration and integration across diverse systems.

How is IoT data stored on the blockchain?

IoT data collection can typically be integrated with a blockchain in one of two ways:

1. Data can be directly embedded in smart contracts
2. Data can be stored off-chain and the blockchain stores references (e.g., hashes) to the data

Prior to adding any data to the blockchain, it undergoes validation to ensure its accuracy, authenticity, and adherence to predefined rules or consensus mechanisms. The validated IoT data is then stored on the blockchain as transactions. Each transaction represents a batch of data and is added to a block, forming a chain of blocks, hence the name “blockchain”. Once data is stored on the blockchain, it becomes immutable and transparent. It cannot be altered or deleted, and its entire history is recorded, making it auditable and tamper-resistant.

Smart contracts are created to manage data access and data sharing permissions. These contracts define rules for accessing specific data sets, ensuring that only authorised parties can retrieve relevant data. External parties, such as other devices, applications, or organisations, can interact with the smart contract to request access to specific IoT data. The smart contract validates the request and executes predefined conditions to verify the legitimacy of the data access request. If the request is valid, the smart contract grants access to the requested data, either by providing the data directly from the blockchain or by referring to off-chain data sources. In cases where data privacy is crucial, the smart contract may use encryption mechanisms to secure the data during transmission and access.

Where cloud storage is typically charged on a subscription basis, determined by the amount of data stored, blockchain storage is done on a pay-as-you-go basis. Each time data is recorded on the blockchain, transaction fees are applicable. Further fees may be applicable when that data is later accessed through a smart contract. It is therefore important to select a blockchain network that is optimised for the intended application. Choosing a network that is interoperable with other networks is also vital, as the blockchain industry is very much in its infancy and official global standards have not yet been established. Choosing a network such as Electroneum, with extremely low transaction fees (several orders of magnitude cheaper than Ethereum) along with its compatibility with the Ethereum Virtual Machine (EVM) could be a good choice for your requirements. More on this in the next section.

The importance of standards in blockchain for IoT expansion

Technology standards enable different devices and technologies to communicate seamlessly with one another, eliminating fragmentation and proprietary lock-ins. Standards help to establish best practices for safety and security, whilst also allowing for easy substitution and scalability. This, in practice, helps to facilitate greater market access and global trade, whilst driving collaboration, research, and development for innovation and industry advancement.

Across the IoT sector today, wireless communication standards such as Wi-Fi and Bluetooth have played a crucial role in facilitating its significant growth, which in 2021 had exceeded 11 billion devices, and by 2023 is projected to reach almost 30 billion. Where Wi-Fi provides high-speed wireless connectivity, enabling IoT devices to connect to the internet and communicate with other devices, cloud platforms, and applications, Bluetooth offers short-range wireless communication, making it ideal for connecting IoT devices in close proximity, such as wearable devices, smart home devices, and personal sensors. Together, these standards have provided the foundation for scalable, interconnected IoT ecosystems.

As blockchain technology and smart contracts continue to evolve and find widespread adoption, similar standards will be needed. So far, the Ethereum Virtual Machine (EVM) has played a pivotal role in setting some key global standards for smart contracts. It introduced the Solidity programming language, which aims to foster a common coding standard, whilst EVM’s gas mechanism and fee standards ensure fairness and efficiency in contract execution. It has also fostered the development of tools, libraries, and frameworks for smart contract development, while the EIP process provides developers with a unified way of proposing improvements to the technology.

With the release of Project Aurelius later this year, Electroneum is aligning its well-established blockchain network with the standards set out by EVM, allowing external developers to build on top of the network for the very first time and establishing interoperability with other EVM-compatible blockchains, such as Ethereum, Ripple, Binance Smart Chain, Polygon, Avalanche, Cardano, amongst others. More importantly, however, Electroneum is introducing significantly lower EVM interaction fees that are a number of orders of magnitude cheaper than Ethereum’s, providing a more affordable way to build and deploy smart contracts within IoT environments.

How can an IoT manufacturer move to blockchain data storage?

The convergence of blockchain technology and smart contracts with the IoT presents a transformative potential for various industries, and as these technologies continue to evolve and gain broader adoption, their impact on today’s trillion-dollar IoT market can be transformational, unlocking new opportunities for efficiency, security, and innovation. If you work in IoT and would like to discuss any thoughts or ideas, be sure to reach out to us at: opportunities@electroneum.com

By：ETN-Network Link：https://medium.com/@ETN-Network/how-could-blockchain-technology-and-smart-contracts-impact-the-1-trillion-iot-market-8a78a6980219