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Blockchain Technology for IoT EcosystemsBeatrice Rossi – AMTeam – SW Platforms, AST

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Introduction to the Blockchain Technology

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The Context

Brainchild of a person or group of people known by the pseudonym of Satoshi Nakamoto

Introduced in 2008 for the distributed exchange of cryptocurrenciesFinancial uses of the blockchain have dominated the discussion

At the centre of the attention of the tech community in several sectorsIt is expected that the blockchain should be a useful technology to model

future IoT ecosystems

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The Basics: Distributed Ledgers (DLT) 4

• The innovative core of the technology is built on the concept of a distributed ledger (DLT) maintained by a distributed network of nodes

• Permissioned: all the node identities are known and controlled by a single entity or federation

• Public: anyone can join the network and nodes are anonymous

CentralizedNetwork

Permissioned

Public

DistributedNetwork

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The Basics: Transactions & Blocks• The DLT makes it

possible for the network to track a history of transactions chained into blocks in a secure manner

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Transactions

Blocks

time

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The Basics: Transactions & Blocks• Transactions:

• Inputs: …, Tx IDs from where assets come from, Tx signature

• Outputs: …, amounts, destination addresses

• Secure chaining:Secret keys:

• used for signing transactions: ECDSA

Public keys:

• used for verifying transactions

• used as wallet address: SHA-256 applied twice

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verify(Pkey A, sign(msg,Skey A))=TRUE

PKey A

SKey A

verify

sign

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The Basics: Hash Chain• The blockchain is implemented

as a hash chain (linked list in which pointers to the previous block have been replaced with the hash of the previous block)

• Each HashBlock implicitly verifies the integrity of the entire chain before it, and tampering with previous data is detectable

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HashPrevBlock MerkleRootBlock

Header

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The Basics: Consensus• Consensus: distributed

protocol according to which nodes agree on which block should be added to the blockchain

• New blocks are defined by special nodes called miners

• Miners compete to provide a Proof of Work for the block

• Winning miner is rewarded (transaction fees are imposed)

• The new block is added, the longest chain is considered and broadcasted

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Miners Challenge

Pro

pose

d b

lock

s

Proof of Work

Hash(Block,nonce)<T

Winning Block

Broadcast

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The Basics: Smart Contracts• The blockchain can

act as a platform for code execution

• Transactions can include references to smart contracts

• Algorithms that can automatically verify and execute the terms of a contract

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Transactionsending value from the SC

Eventsending information

from the SC

Transactionsending value

to the SC

Eventsending information

to the SC

Smart Contract

VALUE - STATE

DLT

Example: Car sharing platform where cars contain a chip with a blockchain node. Customers can make payments through the blockchain. Through a smart contract the payment should enable the automatic execution of commands (remote locking/unlocking doors and engine startup/shut off)

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Blockchain for IoT

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Why IoT Needs a Distributed Ledger? 11

Is this a solution looking for a problem?

Blockchain IoT

?

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Why IoT Needs a Distributed Ledger? 12

Blockchain IoT

Machine Economy• IoT devices are made with

the intent to create value (collecting/trading data, sharing resources)

• m2m interactions and payments should get machine economy going

• data should “belong” to devices

Blockchain technology should be used secure register data from IoT devices, possibly enabling m2m micropayment

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Why IoT Needs a Distributed Ledger? 13

Blockchain IoT

Security of Things• the great majority of IoT

devices are easy to hack (Distributed Denial of Service (DDoS) attack)

• connected devices should disclose personal info/sensitive data, or reveal some preferences of their owners

Blockchain technology should be used for device identification by registering the

hash of devices IDs

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Why IoT Needs a Distributed Ledger? 14

Blockchain IoT

Automatic execution:• IoT devices automatically

download and execute programs (software, firmware updates)

• execution must be ensured also when OS/applications are infected with a virus

Manufacturer of IoT devices should deploy a smart contract that allows the devices to

store the hash of the latest firmware update. They can query the contract, request and execute new firmware

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Blockchain’s Limitations

• Scalability: several unconfirmed transactions. Uncertainty of not getting your transaction through

• Transaction fees: “Who is going to pay for it?” especially in Machine Economy, where micropayment must be enabled

• High hardware and resource requirements

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IOTA• Public distributed ledger where all nodes are miners

• Tangle: transactions are bundled in a Directed Acyclic Graph (DAG)

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No blocks, no chain…

https://iota.org/

Transactions

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IOTA: Transactions and Consensus• For every transaction done by a user, IOTA requires the user to verify

two other random transactions:• the user signs the transaction inputs with his secret key: Winterniz (WOTS)• selects two random tips (unconfirmed transactions) using Markov Chain Monte Carlo • verifies their signatures, runs PoW (Curl) & broadcasts result

• A transaction implicitly verifies all the previous transactions it refers to

• This reduce the need for mining, and also remove transaction fees

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Other Solutions 18

Hyperledger (Sawtooth)

Linux foundation

ADEPTIBM

Samsung

Filament

...

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ConclusionsThe combination of IoT and Blockchain should be pretty powerful:

• Dissemination: blockchain should enable IoT devices to share data and value with each other without the need for a centralized entity

• Empowerment: nodes are in control of information and transactions they register on the blockchain

• Availability: no single point of failure. If one node is damaged or removed, the data persists in the other nodes

• Guarantees for data integrity and device identity: the validity of device identity is verified and transactions are signed and verified cryptographically

The continued integration of blockchains in IoT will cause significant transformations across several industries, bringing about new models

and having us reconsidering how systems and processes are implemented

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Thanks!