Blockchain in IoT and Smart Networks

Blockchain in IoT and Smart Networks

The Internet of Things (IoT) connects people, places and products and thus offers numerous opportunities for value creation and registration. This is achieved by embedding intelligent sensors in physical objects and transmitting data to the IoT network.

The analytical capabilities of the Internet of Things, in turn, use this data to transform analytical data into actions that can affect business processes and lead to new ways of working. However, the IoT network itself still faces a number of technical problems that have not yet been resolved.

One of the problems is the lack of security and scalability.

Internet of Things devices often have security flaws that make them an easy target for distributed denial of service (DDoS) attacks. So far, these problems have, among other things, hindered the large-scale deployment of the Internet of Things.

Another problem of modern IoT networks is scalability. As the number of devices connected via the IoT network grows, the existing centralized systems of authentication, authorization and connection of various nodes in the network become a bottleneck.

The corresponding growth may require huge investments in server technologies that will be able to cope with such information exchange. If it was unavailable, the entire network would be out of order. Since IoT devices will become an integral part of everyday life in the next few years, it is extremely important that companies invest in solving the mentioned security and scalability problems.

Solution: blockchain technologies

Blockchain or distributed registry (DLT) technology should use its potential and solve IoT security issues and scalability issues. After all, the “distributed registry” in the block chain system is protected from unauthorized access, and strengthens trust between the parties. No blockchain company can control the huge amount of data collected by Internet of Things devices. The block chain as an IoT data storage environment will add another layer of security, it will have to successfully protect against hackers so that they do not gain access to the network.

The blockchain technology provides very strong encryption, which makes it almost impossible to manipulate existing records. On the other hand, blockchain technology provides the necessary degree of transparency to obtain the right to control that takes place in traditional transactions.

Technology is also available for fast transaction processing and coordination between billions of connected devices. As the number of connected devices grows, distributed ledger technology provides a viable solution for processing large amounts of data to support transactions.

Possible applications

When renting vehicles, IoT sensors can send important events to the block chain, such as location information and their return, to help with management and more informative billing practices. The advantages of blockchain can be well illustrated by the example of insurance compensation after a traffic accident.

This means making claims, verifying the identity of the insured, receiving information about the incident from all parties, confirming the claim and, ultimately, settling the claim, and even paying within a reasonable time. The use of a block chain can not only easily introduce this process, but also significantly increase and significantly reduce the costs and, consequently, the duration of the settlement.

Perishable goods are usually exposed to different temperatures and light exposure when passing through transport and storage networks. Combined with IoT and blockchain, perishable goods will be checked at any time, purchased from manufacturers to merchants and automated.

IoT sensors on oil or water sources can allow operators to control the performance of logistics companies, for example, to transport oil, water or other materials to various destinations, such as environmental landfills.

IoT sensors on drilled wells help oil companies plan the loading of trucks and track the amount of unassembled and delivered material to avoid fraud and distortion of facts.

The advantage for oil companies: cost reduction, increased efficiency of the collection and delivery process, as well as on the basis of compliance reports to regulatory authorities.

Implementation problems

One of the biggest problems associated with the integration of blockchain and IoT is the limitations associated, for example, with the limited battery life of some IoT devices.

Some IoT devices are constantly connected to a power source and Wi-Fi, so they cannot cause interruptions in operation. However, currently many IoT devices are not configured this way. The crucial factor is that no computational and bandwidth-demanding blockchain transaction system can run on a very, very small device.

For this reason, such devices are likely to mean some kind of server infrastructure, or use the help received from a gateway device or a related device.

Blockchain solutions for Intelligent Networks

To use renewable, decentralized and networked energy sources, we need efficient and secure network solutions. These include smart grid and blockchain technologies. The smart grid optimizes the distribution and consumption of energy through a range of smart devices, meters and renewable energy sources.

In intelligent networks, blockchain provides decentralized transaction management and an energy delivery system based on smart contracts.

Most power systems around the world will soon exhaust their capabilities, because traditional electric networks are not designed to cope with rapid climate change and the demand for high energy efficiency, and they do not use the latest technologies.

Problems with the existing network

On the other hand, electricity is still generated in networks with central power plants, and distributed to various regions via transmission lines. Power plants raise the voltage for transmission through the corresponding transmission stations, turn off for the distribution of utilities at substations and lower again in transformers to offer low voltage services to consumers.

Despite the high level of reliability, there are still some problems, especially with regard to the inefficiency of peak load management, long distances, buffers for excess power and the cost of power outages. This leads to reduced efficiency, increased emissions and increased costs.

Approaches to the solution using Smart Grid

As an electric grid, the smart grid is designed to intelligently coordinate the actions of all connected users, such as producers, consumers and storage facilities, and at the same time ensures efficiency in a sustainable, ecological, economical and reliable energy supply. In particular, this means: reducing the impact of the energy system on the environment, saving energy and increasing efficiency, as well as the use of renewable energy sources.

However, an intelligent network is not a separate technology, but a combination of several selected innovations and technologies. With the rational use of these technologies, several potential economic and environmental benefits can be obtained:

  • Increased reliability
  • Higher occupancy
  • Better integration of electric vehicles and renewable energy
  • Reduction of operating costs for utilities
  • Increased efficiency
  • Reduction of greenhouse gas (GHG) and other emissions

Key technologies with a smart network

Key technologies and applications of smart grids include smart meters, meter reading systems, vector units of measurement and blockchain. With the intelligent measuring system of the smart meter, it is not only possible to count electricity digitally, but it is also possible to send and receive signals. Thus, the production of electricity by decentralized systems, as well as the consumption of pantographs, can be monitored continuously and in detail.

Private consumers, of course, can also be producers, for example, by supplying excess local solar energy to the grid.

In addition, the buyer of electricity with increased demand can automatically and directly buy electricity from the manufacturer through the blockchain. If the manufacturer is from the same region as the buyer, there are no workarounds through aggregators or exchanges either. Thus, blockchain smart contracts provide lower electricity costs and, above all, a self-organizing electricity landscape consisting of decentralized systems and electricity suppliers.

To control the quality of electricity, so-called phasor measurement units (PMUs) measure electric waves. Thus, the intelligent network is able to supply voltage and current from widely distributed locations in the power system.

More transparency and efficiency

This shows that smart grid technologies can be used to adapt to the dynamics of renewable energy sources and decentralized generation much faster and better. In addition, utilities and consumers can more easily access these new resources and take advantage of the benefits.

While the traditional grid was designed to transfer electricity from central power sources to fixed, predictable loads. This makes it very difficult for the network to manage inputs from many distributed energy resources.

And since resources such as solar and wind energy, as a rule, can be used in different ways, the network requires comprehensive monitoring and control, as well as integration into the automation of substations to compensate for fluctuations in energy flows and guarantee reserve capacity to complement intermittent generation. Smart grid functions facilitate the management of bidirectional electricity flows, as well as monitoring, control and support of these distributed resources.

In particular, when coordinating various workloads, blockchain can provide the necessary transparency. All transactions are stored on all nodes at the same time, it is quickly understood where and when energy is needed. For example, suppliers can interact automatically or send requests to stabilize the distribution network.