What is a Blockchain? A Definition to Clarify the Role of the Blockchain in the Internet of Things

Abstract

The use of the term blockchain is documented for disparate projects, from\ncryptocurrencies to applications for the Internet of Things (IoT), and many\nmore. The concept of blockchain appears therefore blurred, as it is hard to\nbelieve that the same technology can empower applications that have extremely\ndifferent requirements and exhibit dissimilar performance and security. This\nposition paper elaborates on the theory of distributed systems to advance a\nclear definition of blockchain that allows us to clarify its role in the IoT.\nThis definition inextricably binds together three elements that, as a whole,\nprovide the blockchain with those unique features that distinguish it from\nother distributed ledger technologies: immutability, transparency and\nanonimity. We note however that immutability comes at the expense of remarkable\nresource consumption, transparency demands no confidentiality and anonymity\nprevents user identification and registration. This is in stark contrast to the\nrequirements of most IoT applications that are made up of resource constrained\ndevices, whose data need to be kept confidential and users to be clearly known.\nBuilding on the proposed definition, we derive new guidelines for selecting the\nproper distributed ledger technology depending on application requirements and\ntrust models, identifying common pitfalls leading to improper applications of\nthe blockchain. We finally indicate a feasible role of the blockchain for the\nIoT: myriads of local, IoT transactions can be aggregated off-chain and then be\nsuccessfully recorded on an external blockchain as a means of public\naccountability when required.\n