260

Blockchain Technology

16.1  INTRODUCTION TO DISTRIBUTED LEDGER

TECHNOLOGY AND INTERNET OF THINGS

This section gives a brief introduction to two distributed ledger technologies (DLTs),

blockchain technology and IOTA Tangle. A DLT is a digital system that keeps track

of transactions and assets and simultaneously replicates the record at multiple loca­

tions. Traditional blockchain technology and IOTA adopt the principle of DLT with

architectural disparity. A brief overview of the Internet of Things (IoT) is also given

here. It is all about the distinguishing features of the two DLTs mentioned here and

their relation to IoT applications.

16.1.1  Introduction to Blockchain Technology

Blockchain technology is a DLT with highly secured features. It is immutable, trans­

parent and decentralized, with cryptographic hashing. This significant characteristic

of blockchain technology enlists it as a solution to the cost-intensive, insecure and

inefficient nature of modern business platforms (Bashir, 2018). It consists of digi­

tal information organized as “blocks” and recorded in public databases known as

“chains”. Blockchain technology forms the bedrock of the Bitcoin network. Haber

and Stornetta developed blockchain technology in 1991 to create a time-stamped and

tamperproof document (Haber and Stornetta, 1991). However, the technology gained

popularity in 2009 through Satoshi Nakamoto as the backbone of Bitcoin technology.

Aside from the financial application, blockchain technology has been found useful in

many sectors, including healthcare, industry, supply chain and many more. Deloitte’s

2020 study on 1400 companies across 14 regions showed that 82% of the companies

would be hiring blockchain professionals in the next year (Pawczuk et al., 2020).

Blockchain technology consists of three parts. First, the transaction information

includes the date, time and type. The second component is the information about

the initiator of the transaction (digital signature). Then the unique code identity of

every block is referred to as a cryptography hash. In other words, a block consists of

a transaction, a digital signature and a hash function. As soon a transaction is initial­

ized, it goes through a vetting and verification process on a network of authenticated

computer nodes known as miners. Miners are computer networks that validate and

approve a new block by solving a puzzle using a cryptography hash algorithm. The

verified transaction is approved, and a hash function is generated before recording it

on the chain. It is replicated on the decentralized network for public view.

16.4 Innovative Features of IOTA for the Internet of Things...............................272

16.4.1 IOTA Projects....................................................................................273

16.5 How Does the Architecture of Blockchain and IOTA Affect

the Internet of Things?...................................................................................273

16.5.1 Consensus Protocol............................................................................273

16.5.2 Data Structure.................................................................................... 274

16.6 Summary, Conclusion and Recommendation................................................ 274

References............................................................................................................... 275