The IoT – Blockchain Scene

The Internet of Things (IoT) and blockchain are two technologies which have dominated discussions, research and developments in the technological sector over the past decade. Both technologies have also found their way into our everyday life through practical use cases which any non-tech savvy person can make use of. With both technologies moving from infancy stage to maturity phase, the global IoT-blockchain market is expected to grow with a CAGR of 40% between 2020 and 2025.

The IoT connects everything around us in a way which facilitates life, creates value and efficiency in business processes. IoT systems are used in small scale everyday devices such as cell phones and smart-home appliances, to large scale industrial devices, such as jet engines and drilling machines in coal mines. Through the use of sensors, chips, and actuators embedded in the physical objects, data is generated, transmitted and processed over the internet to connect and interact with other objects. It is projected that by 2030, around 125 billion devices will be connected over the IoT.

On the other hand, blockchain is a distributed ledger technology where any data can be stored in a decentralised, immutable and transparent manner. These three data-storage characteristics make blockchain a trustless yet trustworthy technology with the power to disrupt any industry. Blockchain technology also provides for the concept of smart contracts. These are agreements between users, deployed on the blockchain and executed on the basis of criteria being fulfilled. This automatic execution does away with the need for centralised human intervention.

Merging Blockchain and IoT

Whilst the IoT is experiencing an exponential growth, this technology still faces challenges which are yet to be overcome. Traditional IoT data storage systems face two major hurdles: security and scalability. Collectively, these hurdles expose IoT systems as a soft target for cyberattacks, such as Distributed Denial of Service (DDoS) attacks, and hinder its large-scale deployment. Other pitfalls are speed, costs and reliability.

The security vulnerabilities of traditional IoT systems are mainly due to the centralised nature of the technology. Numerous devices are connected together through one single network making it easy for cyber-criminals to infiltrate and manipulate all devices through one entry point.

The centralised nature of IoT networks also hinders its scalability. As the number of connected devices increases, the centralised system which is used to authenticate, authorise and connect all devices within the network becomes bottlenecked. Unless huge investments are made for more robust servers, the entire IoT network can collapse.  

This is where the second breakthrough technology comes in. By combining the IoT and blockchain, the IoT benefits from the decentralised, immutable and transparent nature of blockchain to alleviate the above concerns. This can be done through the following:

  • The immutability of the blockchain means that its is tamper-proof. Once uploaded, any data that is on the blockchain cannot be altered or deleted. This security is a result of the robust level of encryption used in blockchain technology which adds solid barriers for hackers. A tamper-proof network gives the IoT users comfort in the integrity and reliability of the network.
  • The decentralised nature of blockchain means that no single organisation controls the data generated.
  • The transparency of a blockchain network means that anyone authorised to access the network can track past transactions. This aids in the identification of any data leakages which would necessitate immediate action.
  • Being a distributed technology, blockchain would enable the fast processing of data transactions. In a blockchain-based IoT system, the work and data storage that would have otherwise been carried out by a central system, will be allocated among thousands of distributed nodes. This provides a viable solution to support the processing of a large number of transactions. This eliminates the concern of a single point of failure whilst increasing efficiency.
  • As a consequence of the above, IoT companies can easily reduce costs by eliminating unnecessary processing overheads which traditional IoT systems require. This also means a more cost-efficient solution for end-users.

The Future of the IoT-Blockchain Scene

Whilst this technological dynamic is still in its early days, big tech companies are already looking into ways in which this combination can spring their business to years ahead of others. IBM, for instance, has successfully applied an IoT-blockchain solution to complex trade lanes and logistics. Naturally, this convergence also attracts a third technological disruptor: Artificial Intelligence. This whole combination will undoubtedly give rise to a most interesting myriad of applications.

Like any other development, the IoT-blockchain scene will also face its challenges including legal and compliance issues. The automated nature of these technologies raises questions of responsibility and remedial actions. However, whilst regulation usually lags behind such developments, we are witnessing a number of jurisdictions aiming to address technological advances. This is an important step forward to secure the successful and compliant scalability of this technology.

In Malta, the Innovative Technology Arrangements and Services Act (ITAS Act), provides for the voluntary certification of innovative technology arrangements, including those used to design or deliver DLT. A certificate is issued by the Malta Digital Innovation Authority (MDIA) giving the technology a stamp of compliance which would undoubtedly give users the comfort they need to engage.

At E&S, our team is able to advise and assist clients on obtaining a certification under the ITAS Act and any ancillary services.


"According to our experience, E&S Consultancy team is made up of well-trained and skilled professionals who are always there to satisfy your business needs with reference to Maltase law. Their work is well organized and carried out in a precise and timely manner. I look forward to continuing my cooperation with E&S Consultancy."

Giorgio Crotta & Marco Compagnino - FIDINAM & Partners



    ITAs Certificate



    Company Formation