ISE Blog

Distributed Ledger Technology, Blockchain, and IoT (Part 3)

As has been mentioned in past blog posts, there are security concerns with IoT systems.  When discussing distributed ledger technology (DLT) we investigated how a blockchain approach could address the security concerns, but introduces system demands in terms of memory and computing power that do not appear practical for many of the simple IoT devices on the market today. Enter the permissioned blockchain; a network where only specific nodes are required to maintain the transaction ledger and determine which transactions are allowed.  This addresses the problem with strict centralized control discussed in the first blog post in this series and the issue of memory demands discussed with a completely decentralized model in the second blog post

In a permissioned blockchain the network of devices communicate with each other, exchange data, and have ‘smart’ device execute actions based on programmed algorithms.  However, the transaction ledger that is maintained in blockchain to improve security is maintained by a subset of devices on the network.  This helps to maintain system security while allowing us to automate many of our everyday activities.  To provide a more complete understanding a simple example likely serves best.

Permissioned Blockchains - The Sweet Spot for IoT in the Future

Recall our previous blog post, the hacked fish tank.  Assume one lives in a connected house where the ‘smart’ fish tank is on a network with your refrigerator, dish washer, washing machine, dryer, hot water heater, thermostat, and whatever other luxuries the mind can imagine.  Rather than having an easily susceptible IoT fish tank on the network, you instead have a platform that has a ledger maintained by the fridge, a phone or tablet (cause let’s be honest if you have this home you want to do unnecessary things like make a shopping list on the couch while using your tablet to inspect what’s in your fridge), and perhaps a main hub which hosts the network. Now when a hacker attempts to break into the network via the fish tank by performing malicious actions, the permissioned blockchain system could thwart such actions.  This level of security is not unhackable, but it is a strong step in the right direction.   

Smart Home

The research in this arena is fascinating, with one of the more advanced projects being  performed by Hyundai with their Hyundai Digital Asset Currency (HDAC) platform.  The HDAC platform aims to bring permissioned blockchain to IoT networks.  A complete white paper on it can be found here.  In fact, since our second blogpost on IoT and blockchain, Hdac MainNet has launched, bringing the platform to a wider market. 

The strength of the platform has been discussed widely within the IoT/Blockchain space, and as such, has been a target for early hackers as the network is generating tokens (currency).  In some cases participants involved have been hacked and some would leap to the conclusion that this shows security in the space is a myth.  While no system will ever be truly unhackable, the goal is to improve security among IoT systems. Leveraging permissioned blockchain and platforms such as HDAC, we can begin to move the needle in that direction.  When an adequate level of security – which is likely determined when consumers feel the risk is worth the reward – is obtained, the strength and convenience of IoT systems will gain a greater traction and create a rapidly growing market full of opportunities for entrepreneur individuals and companies.


Do you have questions about DLT or blockchain? Let us know what you would like to learn about in the comment section below or contact us!

Hudson Ludvigson, Senior Software Engineer

Hudson Ludvigson, Senior Software Engineer

Hudson Ludvigson is a Senior Software Engineer and the Practice Lead in Vehicle Telematics at Innovative Software Engineering. He has been with ISE since March 2006. He enjoys the diversity of the software engineering field and how it impacts and improves peoples' everyday life, particularly in the domains of agriculture, business, finance, and medicine. In his downtime he can be found enjoying college football and outdoor recreational sports, or spending time with his family.