Businesses around the world are in the midst of two technological innovations that must be brought together to realize their full potential: The first, the “Internet of Things,” (or IoT) revolution is changing our relationship to product distribution and business analytics as more and more products take on “smart” characteristics and enter into new networks of connectivity. IoT enables the monitoring and management of physical things to improve and support situational awareness and business process execution. The second, is blockchain, which provides businesses with immutable data management within their networks. Both of these developments promise to increase efficiency, cut redundancies, and provide company-wide connectivity like never before, all surrounding a new core commodity: Data.
Historically, IoT devices and communication protocols have varied widely by production system in terms of both reliability and security. This poses a problem to the security of an otherwise secure blockchain network. Known as the ‘Garbage-in, Garbage-Out problem’ IoT devices threaten to delegitimize the security and immutability provided by blockchain networks: While blockchain’s security benefits are well known , the original data entry must be made in good faith to protect the integrity of the data that is stored and shared amongst parties. In other words, the security of a blockchain is only as solid as its input data.
There are two concerns when it comes to IoT security. First, if bad actors wish, they can hijack IoT readers and scanners. This can be done via product spoofing in the form of ID replacement, encryption key replacement, and the retransmission of older intercepted data as well as through malicious and authorized attacks on devices (i.e. the modification of the time stamped data). From smartphones to smart homes, every IoT device has the potential to be hacked. Hackers who gain access to IoT will be able alter data, access other devices on the network, and potentially infect much larger networks with viruses and malware.
In context, Cybersecurity is the greatest threat to IoT implementation. In 2019, cyberattacks on IoT devices surged 300% , totaling over 2.9 billion hacking events. These attacks can be attributed to the fact that over 98 percent of IoT traffic is unencrypted, making over half of all IoT devices vulnerable to medium- to high-severity attacks. These security breaches represent a significant financial cost and legal threat to companies operating within data protection and security regulations (GDPR). Though most security breaches make it to the headlines in the form of embarrassing leaks to private data, hackers are already using IoT breaches to access and exploit company-wide data systems for malicious ends.
