BIVO—A Decentralized Oracle Solution for Data Authenticity in Blockchain-Based IoT Networks

Abstract

Integrating blockchain technology into the Internet of Things (IoT) has revolutionized industries, enabling decentralized and reliable management of systems, while improving both efficiency and security. However, a key challenge for blockchain-based IoT solutions is ensuring the accuracy of data fed into the blockchain, known as the “blockchain oracle problem.” This work addresses this challenge by proposing the BIVO system (blockchain information verification oracles), a blockchain-based decentralized oracle for IoT networks. The system utilizes a reputation and voting mechanism suitable for both crowdsourced and semi-controlled environments. We also model the weighted voting mechanism as a stochastic game and conduct stress tests to analyze the system’s expected accuracy and cumulative payoffs under various conditions. Our findings indicate that the system achieves higher accuracy compared to nonweighted voting approaches. In semi-controlled environments, the system demonstrates resilience against up to 64% of adversarial nodes. However, under the worst conditions, malicious nodes need to control no more than 36% of the network to benefit from malicious behavior. Additionally, we implemented a prototype of the BIVO system and deployed it on both a local blockchain simulator and the public Ethereum testnet Sepolia to evaluate the cost and feasibility of blockchain integration.