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Blockchain in IOT,
Opportunities & Challenges
Workshop on IOT
MSRIT
S Chetan Kumar (shivakumar.chetan@gmail.com)
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
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
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
blockchain and iot: Opportunities and Challanges
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
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
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
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.
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”
Application of blockchain
• Crypto currency
• Smart contracts
• Decentralized Notary
• Digital assets
• Supply Chain
• Digital Rights management
• Stock trading
• Identity management
• Document storage
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
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
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
Opportunity: New paradigm in manufacturing
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
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
How does this work
Smart
ContractsOrder Placed
Smart
Contracts
Smart
Contracts
Smart
Contracts
USER Move job to
Other unit
Design Center Final
Shipment
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)
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.
Opportunity: Security
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
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
blockchain and iot: Opportunities and Challanges
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
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
Thankyou
Shivakumar.chetan@gmail.com

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blockchain and iot: Opportunities and Challanges

  • 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.
  • 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