Benefits and Challenges of Blockchain in IoT

Blockchain is a new advancement in the case of a highly secure transaction. This advancement is based on distributed ledger technology. If you want very secure, tamper-proof transactions without a central authority then this is it.

If we talk about the Internet of Things or IoT, this technique refers to the network of various devices & other physical objects. They are connected through the Internet & communicate with each other.

The combination of blockchain & IoT can provide numerous benefits, such as enhanced security, transparency, and accountability. Also have many challenges. In this article, we will discuss more about benefits and challenges of Blockchain in IoT. So, let’s start!

Benefits of Blockchain in IoT

Below are few benefits of Blockchain in IoT −

  • Enhanced Security − The integration of blockchain & IoT can provide enhanced security for devices and systems. Blockchain technology provides a decentralized & tamper-proof ledger. This technology prevents unauthorized access to devices & data. It can also prevent many attacks. By using blockchain, IoT devices can be authenticated & authorized, preventing unauthorized access and ensuring that only trusted devices are allowed to communicate with each other.

  • Transparency − Blockchain technology can provide transparency by allowing all parties in the IoT network to access and verify the data on the ledger. With this transparency, you can identify fraud. Blockchain technology makes sure you can access the most up-to-date information as every party involves in this need to get all the correct information. Blockchain can trace the movement of items during the transfer in a supply chain. With this getting real-time information on the shipment is easy.

  • Decentralization − Blockchain technology allows for decentralization, which can provide increased resilience to the IoT network. There is no single point of failure in a decentralized network thus even if some devices malfunction or are compromised, the network can still function. With this you can lower the chance of data loss & help to prevent downtime.

  • Data Integrity − With Blockchain technology you can get data integrity. You can get this by creating a permanent record of all ledger transactions. It makes sure the data cannot be erased or changed, which can help to stop data manipulation or tampering. It can be crucial in an IoT network for delicate applications like healthcare or financial transactions, where data quality and integrity are essential.

  • Automated Transactions − Blockchain technology can enable automated transactions in an IoT network. Smart contracts enable transactions to be carried out automatically when specific criteria are satisfied, such as when a task is finished or an event takes place. Processes may be streamlined & the need for manual intervention may be diminished, saving time and lowering the possibility of mistakes.

Blockchain in IoT Challenges

Here are few challenges of blockchain in IoT −

  • Scalability − Scalability is one of the primary obstacles to the integration of IoT & blockchain. When it comes to low transaction volume occurring in an IoT network, blockchain technology may not support it. Blockchain technology is only built to manage some specific transactions per second. This is the thing that delayed the transaction process & increased network congestion.

  • Interoperability − This is another challenge of integrating blockchain with IoT. IoT devices use various communication protocols, ensuring that all devices can communicate with each other properly. Likewise, Blockchain technology also have different blockchain protocols and standards.

  • Cost − The cost of the complete integration process between blockchain technology & IoT network is significantly high. Blockchain technology requires significant computing power & storage capacity, which can be expensive to deploy and maintain. In addition, because it can necessitate substantial alterations to the underlying architecture, integrating blockchain with current IoT infrastructure can be expensive.

  • Energy Consumption − One of the significant challenges of blockchain in IoT is its high energy consumption. It needs substantial energy usage during the mining process of a block as it needs an enormous amount of processing power. As IoT devices typically have limited computing power, integrating blockchain technology may require significant energy resources & may not be practical for low-power devices.

  • Regulatory Frameworks − Another challenge of integrating blockchain with IoT is the lack of regulatory frameworks. As technology is relatively new and constantly evolving, there is a lack of standardized regulations and guidelines. When it comes to concerns like data privacy and security, in particular, it may lead to uncertainty and legal difficulties. As a result, regulatory organizations must provide precise rules and specifications for the fusion of blockchain and IoT.


Numerous advantages, including improved security, accountability, and transparency, could result from the combination of blockchain with IoT. Scalability, compatibility, and cost are just a few issues that this integration raises. Collaboration between IoT and blockchain community stakeholders is necessary to overcome these obstacles. New solutions that will allow the full potential of blockchain in IoT to be realized are expected to emerge as technology develops.

Updated on: 15-May-2023


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