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 Nakamotopublished 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

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

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

ThankyouShivakumar.chetan@gmail.com