Cross-Industry Blockchain Technology: Opportunities and Challenges in Industry 4.0

Blockchain for IoT Security and Privacy: Challenges, Application Areas and Implementation Issues

Chaitali Choudhary¹, *, Inder Singh¹, *, Mohammad Shafiq²

¹ School of Computer Science, University of Petroleum and Energy Studies, Bidholi, Dehradun 248007, Uttarakhand, India

² Department of Cyberspace Institute of Advanced Technology, GuangZhou University, Guangzhou, China

Abstract

Blockchain and IoT are the most exciting technologies in the current world, combining these two together may resolve a lot of issues. In the current scenario, we are using IoT devices in nearly everything. By the end of this era, we can presume that all of our day-to-day use devices will be smart. But with this various issue may rise like safety, security, and performance concerns of smart devices. To resolve these issues, blockchain technology has emerged as a very powerful tool. In this chapter, the basics of blockchain along with its architecture and algorithms involved are discussed. IoT challenges and related literature are also discussed along with blockchain as an efficient technology to resolve these issues. The chapter also includes the challenges in using blockchain in IoT devices.

Keywords: Blockchain, Cryptocurrency, Distributed ledgers, IoT, Proof-of- stake, Proof-of-work.

* Corresponding authors Chaitali Choudhary & Inder Singh: School of Computer Science, University of Petroleum and Energy Studies, Bidholi, Dehradun 248007, Uttarakhand, India; Tel: +919827180073;

E-mails: [email protected] & [email protected]

INTRODUCTION

The chapter includes the two emerging technologies, blockchain and Internet of Things (IoT). Blockchain is a distributed ledger technology that maintains immutable records leading to highly secure data, whereas IoT is the technology that became an essential part of our day-to-day life. IoT applications are used in smart homes, smart cities, industrial productions, smart grids, etc. Here, we discuss various IoT related issues and blockchain technology separately and then the ways in which blockchain can be used to resolve these key challenges of IoT are discussed. Out of the various challenges of IoT, the most crucial one is secu-

rity and confidentiality, which can be resolved using blockchain. Blockchain gives power to the changing digital infrastructure which can help to evolve IoT, ranging from analytics to security. IBM took an initiative of blockchain usage incognitive IoT [1]. They used it in complex trade lanes and logistics where smart contracts can be incorporated using blockchain technology register. According to IBM, three key benefits are firstly building trust using distributed ledger-based authentication system and reducing the risk of collision and tampering, secondly by cost reduction by removing intermediate or third parties, and thirdly accelerated transaction speed by reducing settlement time from days to instantaneous decisions.

Blockchain and its Key Concepts

Blockchain is important as it brings trust to a network, and that is the main reason behind its wide usage in various areas based on trust factors. Blockchain operates with the basic concept of peer-to-peer trust factor with zero intervention from third parties. Blockchain is a decentralized ledger of all transactions across a peer-to-peer network, which means it enables the transfer of digital assets without third party intervention. Blockchain is being used in a wide range of industrial applications as listed below:

One of the most famous is cryptocurrency, for each blockchain. Right now, there are various cryptocurrencies in existence. Out of which the most famous one is Bitcoin. Some other are Ether, USD Digital, Bitcoin Cash, Tether, Stellar, etc.

It is used in financial transaction security in the finance industry as transactions should be open and in the form of immutable ledgers.

Patient’s data is collected by various devices in healthcare. Such data is highly confidential and need not to be manipulated under any conditions.

One of the major issues with government supplies is that they do not reach the designated person or department. To maintain that, government nowadays uses blockchain in supply chain management to ensure the proper delivery of essential items.

Blockchain in supply chain management is also used in manufacturing and distribution to ensure an immutable ledger of items produced and distributed.

It is also useful in moving point of data computation from one place to another. While doing so, our data should be secured which can be easily done using blockchain.

Some other examples are E-voting, Key distribution, funding generation, securing public records etc.

The most known term in the blockchain is Bitcoin. Blockchain is confused with bitcoin, but actually bitcoin is just a cryptocurrency based on blockchain. Whether Bitcoin survives or not, concepts and algorithms of blockchain form an essential backdrop of various key security-based fields. There was a scenario in 2008-09 where major financial systems were facing issues, which led to share market crumbling. Then a person named Satoshi Nakamoto introduced digital currency. Digital currency is an asset which can be transferred securely over internet. This new currency introduced by Satoshi Nakamoto is called Bitcoin [2]. Cryptocurrency is in controversy due to the reason that it does not need any central authority like bank to transfer assets [3]. Thus, many people and countries still do not authenticate it. Bitcoin uses various algorithms for verification, validation and consensus protocol for each transaction.

Working of Blockchain

Centralized vs. decentralized system: Consider a scenario where any person wants to buy something using credit card. This process has many stages including verification of the transaction by credit card authority, payment gateways, banks involved etc. This is an example of centralized system where everyone is connected with other with some legal process Now consider a scenario where a person directly wants to deal with another person irrespective of their location. Here these two people are going to be peers among which we need to establish a transaction in a decentralized way, which means transaction between two persons who are not at the same location and not a part of a centralized system and do not know each other. This is basic concept of decentralized system. The major issue with such systems is trust. We can build trust by framing a process to validate, verify and confirm transaction which should be a tamper proof. The overall process of doing so will include recording the transaction in distributed ledger system, making it tamper proof, creating a chain and finally implementing a consensus protocol for agreement on the verified transaction to be added in the ledger . This individual transaction is called blocks and to make it secure, a chain of blocks is created, that’s why this concept is named as blockchain. Whenever one person transfers a certain amount to others, they keep a ledger of that transaction, but to provide trust, the other person called peers comes into the picture. All these people involved also keep a copy of the ledger. This is the basic concept of an immutable distributed ledger defined in a blockchain process. Similarly, verification methods are also involved and implemented using peers. Summarizing, blockchain uses a decentralized peer-to-peer system using collective trust model for validating and verifying a distributed transaction.

Blockchain Structure and its Operations

The basic structure of blockchain has transaction as the core element, which is called unspent transaction outputs abbreviated as UTXOs. it is an abstraction of electronic money and have different values in different currencies. Whenever any user wants to initiate a transaction, they start by creating UTXOs or by creating a ledger using coins in the form of UTXOs. These are locked up cryptocurrencies until the transaction is complete. These are nothing but like a coin in cryptocurrencies. Each transaction needs to be validated and then broadcasted. Such validated and broadcasted transactions form a chain via digital data link. The work of validation is done by special peer nodes called miners. Miners are computationally fast computers executing a specific blockchain protocol known as proof of work protocol. Fig. (1) shows a basic operation of blockchain.

Fig. (1))

Basic operation of blockchain.

It is the responsibility of peers and their computational nodes to perform each operation. There are two types of participants in blockchain: one who initiates the transaction and other who validates these transactions, known as miners. If someone wants to transfer, then they initiate a transaction, whose ledger is maintained by both the parties. Then to validate, verify and broadcast, miners come into the picture. These transactions are added to the transaction pool, which are viewed by each and every miner. If all the miners validate the block and transmit it, then there will be multiple chains whereas the blockchain is a single consistent linked chain of flux which is challenging. All miners compete to solve the puzzle for validating these transaction blocks, to win the challenge their nodes computational capacity should be high. Once a miner wins, then that node sends the block for consensus validation. This is done by broadcasting the information to all other miners. Major set of miners, minimum 51% should agree to this new block addition. Once verified, then this transaction can be added in form of block in the original blockchain. After successful addition of this block transaction, it is completed and recorded. This algorithm for solving a puzzle and finally able to add a block is called proof-of-work protocol. This protocol needs a lot of computation power. This is one of the biggest disadvantages of blockchain proof-of-work protocol. Thus, various other protocols like proof-of-stake are used nowadays, but none of them are still as successful as this protocol. Now the question is what’s for miners here? Miners earn bitcoins for managing the blockchain. The protocol proof-of-stake uses this bitcoin earned again for solving the puzzle to add a block. So, in this case rather than using their node’s computational power, they use their earnings. This looks good but here came the problem of double spending. If a person has large number of bitcoins, these can be used to manipulate the original blockchain.

Algorithms and Techniques

There are two techniques for efficient validation and verification. Hashing and asymmetric key encryption.

1. The main issue with blockchain is that, it is a decentralized ledger system. So, we won’t be able to verify it by conventional methods. There must be a mechanism to establish trust in between peers. For that, public key cryptography can be used. Public key cryptography uses the concept of symmetric key, which means the key for encryption and decryption is the same. A symmetric key has some major issues like deriving the keys from the data sent and distributing keys secretly. This key distribution is a very crucial task, in symmetric encryption, it should be passed to each participant. Blockchain is a distributed framework which makes this key distribution more difficult. Public key cryptography addresses this concern by using two different keys in spite of using only one key. There must be two keys: one must be public and another one should be private. Here extracting data from a message is possible as the data encrypted using public- private key pair can be extracted or decrypted using only public key. For example, if a person wants to send a message, then the person should be sending data encrypted using its private key and then by the receiver’s public key. Receiver decrypts the data using its private key and then using sender’s public key. This ensures that only the sender can send the data and the receiver can receive the data. A popular algorithm for public-private key pair strategy is Rivest Shamir Adleman (RSA) algorithm. Another algorithm is Elliptic curve cryptography which is stronger that RSA as it uses greater number of bits, thus increasing the security as well as complexity. ECC is used in various blockchain technologies like bitcoin and Ethereum for block generation, as an addition in blockchain.

2. Hashing: It plays a critical role in blockchain’s integrity and confidentiality of data. A hash function converts input data into a unique fixed length value. The algorithm chosen for the hash function should be a one-way function and it should be collision free, or exhibit extremely low probability of collision. The first requirement is to make certain that no one can derive the original items hashed from the hash value. The second requirement is to make sure that the hash value uniquely represents the original items hashed. There should be extremely low probability that