CHALLENGES OF BLOCKCHAIN WITH INTERNET OF THINGS (IOT)

There is no doubt that integrating blockchain would have many advantages. However, the blockchain technology is not a perfect model which has its own flaws and challenges. Some of these challenges can be summarized as follow:

1. Scalability: Scalability issues in the blockchain might lead to centralization, which is casting a shadow over the future of the cryptocurrency. The blockchain scales poorly as the number of nodes in the network increases. This issue is serious as IoT networks are expected to contain a large number of nodes.

2. Processing Power and Time: The processing power and time needed to achieve encryption for all the objects included in a blockchain system. IoT systems have different types of devices which have very different computing capabilities, and not all of them will be able to run the same encryption algorithms at the required speed.

3. Storage: One of the main benefits of blockchain is that it eliminates the need for a central server to store transactions and device IDs, but the ledger has to be stored on the nodes themselves. The distributed ledger will increase in size as time passes and with increasing number of nodes in the network. IoT devices have low computational resources and very low storage capacity.

4. Lack of skills: The blockchain technology is still new. Therefore, a few people have large knowledge and skills about the blockchain, especially in banking. In other applications, there is a widespread lack of understanding of how the blockchain works. The IoT devices exist everywhere, so adopting the blockchain with IoT will be very difficult without public awareness about the blockchain.

5. Legal and Compliance: The blockchain is a new technology that will have the ability to connect different people from different countries without having any legal or compliance code to follow, which is a serious issue for both manufacturers and service providers. This challenge will be the major barrier for adopting blockchain in many businesses and applications.

6. Naming and Discovery: The blockchain technology has not been designed for the IoT, meaning that nodes were not meant to find each other in the network. An example is the Bitcoin application in which the IP addresses of some “senders” are embedded within the Bitcoin client and used by nodes to build the network topology.

This approach will not work for the IoT as IoT devices will keep moving all the time which will change the topology continuously.