Exploring Top Benefits of Blockchain IoT

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Published on
September 16, 2022

Blockchain IoT

IoT devices are physical objects with embedded technology that enables them to send and receive data over the Internet without any human interaction. IoT devices span from everyday consumer products like smartwatches, WiFi-enabled appliances, and wireless headphones, to the intelligent infrastructure powering smart cities, autonomous vehicles, and smart factories.

By leveraging blockchain technology, enterprises can take advantage of smart contracts, math-based and tamper-proof contractual agreements that provide a single source of truth to all parties and automate transactions based on predefined business logic. Smart contracts are deterministic, which means that they will automatically execute according to set parameters defined by computer code. Thus, no party can breach their contractual obligations—issues like late payments, pricing differences, and refusals to pay can all be eliminated with smart contracts.

By combining the real-world inputs of IoT devices with the robust execution framework of blockchains, enterprises have an opportunity to build increasingly data-driven processes backed by cryptographic guarantees, as well as unlock new products and markets around on-chain datasets.

The Benefits of Blockchain Technology for IoT

By connecting existing IoT devices to blockchains, enterprises can instantly improve device security, automate business workflows, and achieve end-to-end transparency around previously fragmented and opaque systems.


While their connection to the Internet is what gives IoT devices their rich set of functions, features, and designs, it also makes them vulnerable to attacks. A hacker could manipulate traffic sensors in a smart city, hijack an autonomous vehicle, or exploit critical machinery in a smart factory. IoT devices that have access to personal data can also leak this sensitive information to third parties. With decentralized oracles, IoT devices can securely feed their data to blockchains, where it gets recorded on-chain and can then trigger hyper-reliable outputs. For a hacker to manipulate the recorded data on a blockchain, they would have to compromise the blockchain itself, providing a tamper-proof layer of security for IoT device data.


Enterprises can leverage the granular sensor readings of IoT devices in combination with smart contracts to automate and optimize existing business processes. In industrial settings, for example, developers can integrate smart contracts with IoT sensors to conduct predictive maintenance. IoT devices in a manufacturing plant can periodically transmit diagnostic machine data to blockchains, and smart contracts can be programmed to shut down individual machines if they stray from the recommended health settings. In the future, autonomous machine-to-machine transactions can occur where only human input is required to program the initial smart contract variables.


By connecting IoT devices to smart contracts, enterprises managing transactions across complex supply chain networks can leverage a blockchain’s single source of truth to achieve end-to-end transparency around the movement of products. Historically, information within existing business networks is often siloed and fragmented across disparate systems, leading to excessive back-office costs, contract errors, and processing delays. Integrating RFID tags, commonly used to identify and track inventory goods, with blockchain-based smart contracts provides a tamper-proof and auditable record of the global distribution of materials, from the source point to end customers.

Securely Connecting Blockchains and IoT With Decentralized Oracles

To ensure security and reliability, blockchains are purposely disconnected from external inputs like real-world data. For blockchains to securely interact with off-chain resources, they need the help of an oracle, which is middleware that connects smart contracts to external systems, including enterprise resource planning (ERP) systems. Oracles are essential to connect IoT devices to blockchain environments for enterprises to take advantage of the many benefits of smart contracts.

Final Thoughts

Blockchain-connected IoT devices are poised to transform an array of industries, but to securely and easily integrate IoT devices with the rapidly growing blockchain ecosystem, a highly decentralized and flexible oracle solution is required.

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