Blockchain is a shared, incontrovertible ledger that enhances the process of recording transactions and tracking assets, both tangible and intangible, in a business milieu. Such a definition reveals one thing — blockchain can relate to and solve a lot of real-world problems while also presenting a better business model and economic structure. Indisputably, blockchain is among the most disruptive and revolutionary technology of our time.
Blockchain features in various sectors, for example, blockchain and artificial intelligence (AI), blockchain in promoting scientific progress, blockchain and publicly traded companies, blockchain and the climate crisis, in fixing elections, and combating fake news. This article focuses on another crucial area: the compatibility of blockchain with the Internet of Things (IoT).
What is the Internet of Things?
Internet of Things connects people, products and places. The connection is made possible by using sophisticated sensors, chips, and actuators embedded into physical items, each transmitting data to the IoT network. The IoT analytics capabilities then use this data to convert insights to actions that significantly impact businesses.
Blockchain and IoT Crossing-Paths
The IoT transforms enterprises’ operations through the use of sensors and other edge devices and infrastructures. While IoT has many benefits for businesses, it presents a major challenge whereby enterprises shoulder the biggest burden of protecting information at all levels of the IoT ecosystem. Following the multifold growth of connected devices every year, data security has become an increasingly complex yet fundamental activity. As dire as the issue of data security is, blockchain helps a great deal in combating security breaches in IoT systems.
Blockchain combines with IoT to execute machine-to-machine transactions. It uses a set of transactions, usually recorded in a database and verified by multiple sources (entered in a ledger distributed across every node).
Blockchain technology allows businesses to manage data on edge devices in an IoT system, reducing the costs associated with device maintenance and data transfer. Data management risk is significantly reduced because there is no decentralized data repository while the ledger is invulnerable to cyberattacks.
Therefore, blockchain foists high-level security by authorizing and authenticating encrypted device-generated data with the support of a decentralized, distributed ledger.
Blockchain and IoT across Industries: Cryptocurrency
The convergence of blockchain and the Internet of Things has been implemented across industries such as financial services, agriculture, banking, automotive, smart contracts, logistics, smart homes, and supply chains, among many more.
The good news is that cryptocurrency has become a significant use case of blockchain and IoT technologies.
Blockchain and IoT make peer-to-peer messaging possible, which has proven worthy in cryptocurrencies. The convergence of the two guarantees peer-to-peer payment services without involving third-party brokers.
Essentially, blockchain is decentralized, hence suitable for IoT applications, including cryptocurrencies.
How Exactly Does It Work?
What happens in the convergence of blockchain and IoT in cryptocurrencies is that when the user performs a transaction, the transaction’s data is encrypted using a cryptographic algorithm. The data is then verified to assess the validity of the transaction.
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