Blockchain and the future of IoT – Part 3

To read Part 1 of the series, click here.

To read Part 2 of the series, click here.

Blockchain in the IoT world

A blockchain implementation in the IoT world is probably not best served by a public blockchain based on Proof of Work. The inefficient consumption, not to say waste, of energy to generate Proof of Work is pretty much orthogonal with the premise of IoT devices, which have to consume less energy and are in some cases battery powered. POW comes at a severe cost and it does not add much value to the use case of a distributed ledger used within a consortium of partners. Hence the implementation based on Proof of Stake provides a better starting point for any attempt to chainify an IoT ecosystem where a consortium of partners is adopting a new business application. The security would then be based on a limited number of centralized nodes or cloud servers and by design it does not rely on independence of central trust as do the public cryptocurrencies. Most blockchain use cases I came across start from the assumption that there is a set of parties or a consortium of partners that have a common interest in a specific ledger, and while it might serve the larger public in terms of better quality and faster service, the consumer is not directly concerned with or interested in the ledger itself, only the parties who provide the service and rely on the ledger for remuneration will be.

A world of hashing

IBM, in partnership with Samsung, unveiled a concept ADEPT or Autonomous Decentralized Peer-to-Peer Telemetry that uses technology such as blockchains to create distributed networks of autonomous devices in a decentralized IoT ecosystem. As they introduce in their whitepaper, any protocol used by autonomous systems within the IoT ecosystem should be secured, authenticated and distributed, and the foundational communication functions which each node in the ecosystem should be able to perform in a distributed fashion are messaging, file sharing and coordination. As such, IBM and Samsung used three protocols for their concept: Bittorrent for file sharing, Ethereum for smart contracts, and Telehash for peer-to-peer messaging.

[You might also like: Internet of Things or Internet of Threats?]

The first foundational function is obvious. IoT devices will typically interact with their environment through actuators or collect information of their environment from sensors. Whenever a change in the environment is sensed, a messaging system should provide a means to relay that information to other autonomous systems such as devices, servers or services. Such messaging must be distributed, secure and authenticated corresponding to the sensitivity of the information transported. Current IoT messaging systems, such as MQTT for example, use a central broker design and while they can be secured and authenticated, they will never provide the scale for millions or billions of devices without complex hierarchical designs. In the highly distributed, highly unreliable (I)IoT environments with low bandwidths, fluctuating latencies and regular disconnections, new peer to peer messaging systems are required which provide communication using encrypted messaging and transport, guaranteed delivery and store and forwarding of messages with ‘hop-on’ to other devices. Technology such as Distributed Hash Tables (DHT), used by the Bittorrent network, enables peers to search and find other peers in the network using a hash table of (key, value) pairs. Every peer generates and stores its own unique hashname in the DHT and uses the DHT to find peers to send and receive encrypted messages with in the network. Telehash is an open source messaging protocol based on a DHT implementation. Telehash provides distributed, secure messaging and routing through the Kademlia DHT implementation.

Distributed File sharing between nodes in an IoT ecosystem could provide for the exchange of larger chunks of non-real-time information such as configurations, global policies, and firmware/software updates.  Bittorrent is well known as a robust and performant peer-to-peer file sharing protocol and its trackerless torrents are based on the same DHT implementation of the Kademlia protocol as Telehash.

When there is a need for transactions in the IoT ecosystem, then blockchain is the technology which provides the decentralized ledger where autonomous nodes in the network can verify the validity of each transaction without relying on a central authority. Every node in the system keeps a complete history of all the transactions performed in the whole ecosystem. Because of its distributed nature the ledger is tamper-proof, robust and not prone to man-in-the-middle attacks. Using blockchain, IoT devices become true autonomous smart devices which perform payments, agreements with other autonomous systems in the same ecosystem such as providing resources in return for certain services, provide history and support entitlements throughout the whole ecosystem without requiring a central entitlement server or service. Imagine smart devices part of a larger IoT ecosystem being able to place orders for repairing other parts of the ecosystem, using the blockchain for proof of support entitlement or paying directly with a global pools of tokens for replacement parts or interventions: a self-sustaining, self-supported, self-maintaining smart ecosystem that does not require any human intervention to operate and maintain. Blockchain as a technology is able to provide any functionality that requires a trusted ledger of transactions, which can also include events for compliance and regulatory management of Industrial IoT applications.

The ADEPT PoC successfully demonstrated four use cases using functional Samsung products:

  • A W9000 Samsung washer autonomously reordering detergent (B2C)
  • A W9000 Samsung washer autonomously reordering service parts (B2C)
  • A W9000 Samsung washer autonomously negotiating power usage (B2C)
  • Samsung Large Format Displays (LFDs) autonomously displaying advertising content (B2B)

“By empowering devices to engage autonomously in markets – both financial and nonfinancial – and react to changes in markets, the IoT will create an ‘Economy of Things’. Virtually every device and system can potentially become a point of transaction and economic value creation for owners and users. These capabilities will be crucial to everything from enabling sharing economies to energy efficiency and distributed storage.”

The ADEPT whitepaper cited that certain issues, including scalability and the nature of cryptocurrency development today, are potential challenges should the concept ever be applied on a grander scale. They address the issue of network scalability within the context of a distributed IoT, and according to the authors, there are no clear paths forward to scale the system as-is to incorporate billions of devices, but work in this area is promising. As they cite in the paper: “Multiple efforts like sidechains, treechains, and mini-blockchains are ongoing to address this problem. While each approach has its merits and demerits we are yet to see consensus on a common approach across the board. A blockchain to cater to hundreds of billions of devices needs to be scalable.” Also notable is the distinction of three broad categories of devices. Depending on their computing and storage capabilities, devices can be light peers which retain a light wallet with their blockchain addresses and balances, and perform minimal file sharing. To obtain its blockchain transactions, a light peer will turn to a trusted peer. The authors start from the assumption that in the next few years the cost of general-purpose computing will decline and more manufacturers will turn to devices with increased computing power and storage to create the ‘standard peers’ of the concept. A standard peer retains a part of the blockchain, based on its capabilities. The third category of devices, the ‘peer exchanges’ are high-end devices with vast computing and storage capabilities. These (cloud server) peers are owned and operated by the organizations and host the marketplace components such as analytics, payment exchanges, trade, legal compliance solutions, …. and are capable of interoperating and interacting with other business solutions. The peer exchanges are also the (only) repositories retaining a complete copy of the blockchain.

[You might also like: From BrickerBot to Phlashing, Predictions for Next-Level IoT Attacks.]

High-profile, high-reward targets for hackers

While public cryptocurrencies provide inherent resistance against traditional DDoS attacks, interfaces have to be formed between blockchain systems and third party services, between the systems and its users. Those interfaces will most conveniently be solved by providing web APIs and/or web applications, reaching back to the centrally brokered cloud solutions. Even if the technology behind the service is highly distributed and resistant to DDoS attacks, the entry-points and bridges between the ecosystems will represent high-profile, high-reward targets for hackers. Consider the recent DDoS attacks on the Bitfinex and BTC-e Bitcoin exchanges. The DDoS attacks were targeting and impacting the web service of the exchanges, not the blockchain nodes. There are also recent examples of hackers compromising these service points by stealing cryptocurrencies through redirecting web domains. such as here. Again, not exploiting vulnerabilities of the blockchain but the entry-point or service-point which provides end-users convenient access to the backend blockchain.

Vulnerabilities ahead

Until now we considered the blockchain to be perfect and not vulnerable to attacks, and while the algorithm might not be flawed, the implementation or the application (such as a smart contract) on top of the blockchain could be. Ethereum provides a programming language embedded in the blockchain to enable smart contracts and applications on top of the blockchain. On June 17th, 2016 a hacker used a weakness in the DAO code (a smart contract written on top of Ethereum blockchain) to drain 3.6 million ETH ($53m), essentially a third of the fund, into his account, within just a few hours.

In July 2015, Bitcoin activated the BIP66 soft fork. Pieter Wuille then disclosed that BIP66 fixed a consensus bug in OpenSSL that could cause a chainfork. Since many sidechains, including Namecoin, were based on Bitcoin and hadn’t yet activated BIP66 at the time of disclosure, this resulted in a serious 0day opportunity on the sidechains.

Hajime – the first distributed, multi-platform IoT software in production

Remember the IoT botnet malware? The botnet is estimated at a whopping 300,000 compromised IoT devices that communicate through a distributed peer-to-peer trackerless Bittorrent network, leveraging DHTs and using rotating info_hashes with RC4 public/private key for authenticating and encrypting communications. Hajime has support for a large range of IoT platforms based on arm5, arm6, arm7, mipseb and mipsel architectures. It provides automatic silent updates and modularity through extension modules. It even solved the distribution problem as it proliferates through common IoT vulnerabilities and exploits and aims at securing the devices from further compromise by IoT botnets – except for BrickerBot which aims its crosshairs at any infected IoT devices in an attempt to brick them.

The only feature Hajime is missing today is a blockchain implementation, which could bring new business applications to the botnet through a proper payment system for victimized devices and owners that could get ransomed by it… Joking… I hope….

As the future for scalable IoT is moving into autonomous, decentralized systems, providing new applications through Blockchain and growing into an Economy of Things, we all need to keep our mindset on security first. If we want to make the Economy of Things a profitable reality, our first priority should go to improving the overall state of security of all things connected, new and existing.


Download “When the Bots Come Marching In, a Closer Look at Evolving Threats from Botnets, Web Scraping & IoT Zombies” to learn more.

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Pascal Geenens

As the Director, Threat Intelligence for Radware, Pascal helps execute the company's thought leadership on today’s security threat landscape. Pascal brings over two decades of experience in many aspects of Information Technology and holds a degree in Civil Engineering from the Free University of Brussels. As part of the Radware Security Research team Pascal develops and maintains the IoT honeypots and actively researches IoT malware. Pascal discovered and reported on BrickerBot, did extensive research on Hajime and follows closely new developments of threats in the IoT space and the applications of AI in cyber security and hacking. Prior to Radware, Pascal was a consulting engineer for Juniper working with the largest EMEA cloud and service providers on their SDN/NFV and data center automation strategies. As an independent consultant, Pascal got skilled in several programming languages and designed industrial sensor networks, automated and developed PLC systems, and lead security infrastructure and software auditing projects. At the start of his career, he was a support engineer for IBM's Parallel System Support Program on AIX and a regular teacher and presenter at global IBM conferences on the topics of AIX kernel development and Perl scripting.

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