Six Challenges Facing Blockchain & IoT Convergence

Although the technology born of Bitcoin has received tremendous attention, investment, and development activity in the last few years, there are a range of challenges facing broader enterprise adoption. What follows are a very brief summary of those most related to its adoption in IoT contexts.

Scale: The paramount technical challenge facing DLT-IoT convergence is the ability to scale to meet service and security requirements across a dynamic network of devices. These requirements aren’t just precautions; they are foundational to running IoT in mission-critical, high risk and high [data] volume (sometimes low bandwidth) environments, such as healthcare, energy, transportation, and beyond. This is rapidly pushing IoT data processing, management, and analytics to the ‘edge’ (where compute occurs locally, instead of relying on cloud connectivity).

A decentralized consensus mechanism may offer myriad benefits—information neutrality, authenticity, fault tolerance, security, etc.— but [today] that comes at the price of scalability, especially in an IoT context:

  • It is simply untenable for vast networks of nodes to process every transaction
  • Many (majority?) of ‘blockchain-as-a-service’ architectures are cloud-based
  • Limited bandwidth to support real-time transaction processing
  • Transaction and microtransaction fees can thwart project economics
  • Traditional data storage structures are untenable using DLT
  • Energy waste remains a massive barrier with environmental costs
  • The costs and risks of potential downtime are too high

The silver lining of these constraints is that they are heavily influencing the architectural development and designs of blockchain today. What data are on vs. off-chain; what type of consensus defines distributed verification; even a shift away from chains of blocks to other (still decentralized) record-keeping architectures. (e.g. IOTA, Zilliqa, Lightening are all novel DLT approaches) DLT is not a solution for IoT’s scalability issues, but scalability will define when, how, and in what scenarios IoT and DLT converge.

Continue reading this post where it was originally published, on IoT Agenda, where we discuss the additional challenges of Security, Interoperability, Multi-party Collaboration, Regulation, and Reputation.

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