Blockchain in IoT: Definition, Benefits, and Challenges

Updated: 20 June 2025, 11:34 am IST

Innovation and technology drive the information technology industry. The Internet of Things and Blockchain are two key players in this field. Both being revolutionary and ground-breaking, incorporating them benefits us in many ways. 

In the fast-changing digital landscape, privacy and security are one of the key concerns. In this blog, we will discuss how blockchain in IoT mitigates these concerns and the challenges it faces. 

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What is IoT (Internet of Things)?

When scientist Kevin Ashton coined the term, 'Internet of Things' in 1999, people were fascinated by the then buzzword 'internet'. However, the term stuck and today we live in a society directed by it. 

The term IoT essentially refers to the connectivity of physical objects through software, sensors, and the internet. LG's release of a 'smart refrigerator' in the year 2000 forever changed the way we live, work and stay. Today, more devices are connected in the world than there are people here. 

Key factors of IoT

The main factors defining this technology are;

  1. Sensors: Inculcating sensors in physical devices to make them accessible anywhere is the main component of the Internet of Things.  
  2. Connectivity: Devices share sensor data through a network on the internet. 
  3. User Interface: Internet of Things-enabled devices provide intuitive user interfaces to help users interact with their devices. 

What is Blockchain?

Satoshi Nakamoto, a pseudonym, created history with the launch of blockchain and cryptocurrency (Bitcoin) in 2009. Although people mostly associated the technology with Bitcoin, soon other uses across industries were recognised. 

Before this, all ledgers and storage systems were centralised and prone to cyberattacks. With blockchain, a decentralised and transparent digital ledger came into the market that facilitated security and privacy. 

Key Factors of Blockchain

It embodies various factors that make it stand out from the rest. Let us discuss them below:

  1. Immutable: A blockchain is immutable, meaning, no one can change its components.
  2. Decentralised: It leverages peer-to-peer connections, making everyone in the network an equal contributor.
  3. Secure: One of the most crucial factors is security. It uses cryptography and encryption to ensure security and privacy. 

What is Blockchain in IoT?

Integrating IoT with blockchain is an essential step towards the future. Blockchain in IoT is a decentralised and secure network for recording communication between IoT devices. 

Blockchain and the Internet of Things together solve various problems faced by many industries. As we move towards a world facilitated by connectivity and 'smart' devices, our private data faces security issues. Blockchain allows us to securely store our data in a decentralised manner. 

Not only in our day-to-day, but business operations also benefit greatly from it. In the next section, we will learn about several use cases of blockchain in IoT. 

 

Also Read:- Ignite Blockchain: A Comprehensive Guide
 

How Blockchain in IoT Helps?

Blockchain in IoT proposes several benefits. Let us see how it makes our life easier and more convenient:

  • Decentralisation 

It is the driving force behind blockchain technologies. When we integrate IoT and blockchain, we benefit from a decentralised network handling all our data. Moreover, single points of failure won't affect our devices or data handling. This makes IoT devices much more convenient and efficient. 

  • Security

Our online world is plagued with hackers trying to access unauthorised data. As IoT devices record important and sensitive data, a centralised system increases the chance of hacking. However, switching to a decentralised network facilitates tamper-resistance. 

  • Data Integrity

Perhaps one of the most crucial aspects of any business is maintaining data integrity. Sectors such as supply chain and healthcare benefit greatly from blockchain-based IoT devices. Its immutable nature ensures that whatever data the sensors record is accurate and no one can tamper with it. 

  • Scalability 

Where traditional systems fail, blockchain seamlessly flourishes. As our world grows more and more connected, it helps manage the increasing number of connected devices. This increases the scalability of the merged technologies. 

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Challenges of Blockchain and IoT

A question may occur to you, 'If blockchain benefits IoT so much, why isn't it widespread'? This is because the convergence of these technologies faces several challenges. We will discuss them below.

  1. Power Consumption: Blockchain consumes huge amounts of energy to run. This is one of the main reasons for slow progress in this field. Researchers compare the power consumption of a Bitcoin Network with that of Austria and Columbia. IoT devices won't be able to handle such huge power surges. 
  2. Scalability: Although blockchain theoretically improves scalability, real-life data points are otherwise. The tremendous amount of energy that blockchain requires hinders the widespread adoption of the technology. Moreover, integrating the two technologies is expensive and therefore consumers and businesses cannot afford them. 
  3. Connectivity: The Internet of Things thrives on connectivity. However, when integrating with blockchain, it is expected to connect to high computational power. Current IoT devices cannot form or maintain such connections in a way that is beneficial to businesses or consumers. 
  4. Regulations: IoT is widespread in the world, however, that is not the case with blockchain. Multinational companies avoid investing in blockchain due to the lack of regulatory framework in many countries and regions. Certain functions can be against the law in many areas, therefore hindering the progress of the same. 

Addressing these issues and providing robust solutions will usher our technology into a new era. 

Conclusion 

Blockchain in IoT is therefore the next big thing. As both technologies mature over time, we can expect a surge in their adoption. Several industries have already started exploring its possibilities and few have even adopted them. An online blockchain course is the perfect choice for anyone looking to dive deeper into blockchain. 

Amity Online University is renowned for offering UGC-approved MCA in Blockchain. The best part? You can access the course from the comfort of your home. Enroll today to unlock exciting possibilities and who knows, maybe the next tech genius is you! 

Siddharth

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