IoT greets Blockchain

Teodor L. Vasile, Embedded System Engineer and IoT Service Lead of ERNI Germany.

By Teodore Vasile (ERNI Germany)

The Internet of Things (IoT) and blockchain are relatively new technologies, with the latter being the younger invention. Both are highly used all over the Internet as top tech buzzwords for attracting attention or intriguing the reader. This intrigue obviously exists, as you are curiously reading this article to find out more about this technological blending and how it impacts our society.


The term IoT had already been mentioned before we entered the third millennium (Lueth, 2014), but had to wait for the development of a mature communication technology in order to flourish and to become a household name for so many companies and sectors. Nowadays companies build their business cases around smart embedded devices and good Internet connectivity, which ultimately have the aim to improve our daily life. How? No matter what type of smart IoT application you use, most of you will agree that the information and convenience you get as a result has saved you time, money and a lot of worry (Donaldson, 2019).

On the other hand, blockchain technology was invented approximately thirteen years ago and represents the skeleton, or the so-called public transaction ledger, on top of which a whole new decentralised financial system is built. And it all started with bitcoin. This new technology enabled the creation of the first digital currency that solved the “double-spending” problem (Roßbach, 2016) without the need of a trusted authority or centralised server. Therefore, the newly created asset, called cryptocurrency, aims to replace or at least complement the existing monetary system consisting of the national treasury, the mint and the central and commercial banks. This goal has not been reached yet, sceptics refuse to trust this new approach either for good or bad reasons. Some people have doubts with respect to the security and the ethical use of the newly proposed financial instrument. Nonetheless, the technology is being adopted more and more in our society, with the younger generation being more fearless and being the “transactional engine” behind it (Strathern, 2021). Moreover, innovative companies are finding ways of integrating this decentralised network into their business and countries are adopting it as a complementary payment system or regulating the law such that it permits, for example, investment funds to invest part of their capital into this new and relatively volatile asset, called cryptocurrency. Besides the financial aspect of it, in recent years blockchain technology has been used more and more in IoT applications as a secure transaction platform and this seems to only be the starting point.

Living in the 21st century, where technological advancement feels like it’s accelerating and the periods between the industrial revolutions are getting shorter and shorter, it is no wonder that humans are looking for ways of combining these two relatively new technologies, the Internet of Things and blockchain. It’s in the human nature to strive for an increase in efficiency. Therefore, we ask ourselves whether it’s possible to combine these two technologies with a common ground, where this could echo like: “Is there a way of making things more efficient, simpler?” The common ground is in this case the Internet.


The purpose of this article is to introduce the reader to IoT and blockchain, and show the benefits of merging the two. The article shows the different blockchain approaches available, with the focus on the Proof of Coverage concept, invented by the company Helium, which is worldwide a well-established community perfectly suited for low-data IoT applications. The article presents IoT-blockchain-driven applications from different domains and concludes the writing with several open questions with regard to the future of this captivating technological merge.

Figure 1: IoT Greets Blockchain

Blockchain in the IoT landscape

The Internet of Things and Blockchain have the Internet as a common ground.

The former uses the Internet to send data from their sensors to the cloud for further processing, evaluation and decision making, whereas the latter uses the Internet for connecting at least two entities and facilitating a fully encrypted data transmission. The original intention for blockchain was to perform financial transactions like mining, transmitting or receiving digital currency.

There are several reasons why combining the two technologies makes sense. The biggest issues are related to IoT vulnerabilities like outdated firmware, weak authentication, insecure communication, lack of device management or risk of service interruption (Semeniak, 2019), especially when this is based on a centralised server. One possible solution for solving these issues associated with secured centralised information is to use a blockchain, as shown in the figure below. In this example, Smart Contracts and the blockchain network are used, where Smart Contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss (IBM, 2021). In the context of a medical product, for example, these actions could include registering a medical device, performing data analysis, aggregating patient values from medical IoT devices and providing a patient daily average for blood gas values. The blockchain is completed and then updated, when all involved parts of the transaction have agreed. That means the transaction cannot be changed, and only parties who have been granted permission can see the results. Therefore, a blockchain can enhance the security and privacy of IoT systems by:

  • Protecting transactions from being modified or removed
  • Recording an immutable history of events
  • Offering complete transaction traceability for users
Figure 2: IoT Systems using Blockchain Technology (Dinan Fakhri, 2018)

(Novo, 2018) is proposing a new architecture for arbitrating roles and permissions in IoT using blockchain.

How does a blockchain work?

The structure of a blockchain can be seen in the figure below, where one block consists of a unique hash and a timestamp. Before a block is added to the ledger, this needs to be created, broadcasted such that every network partner sees and shares a single “trusted reality” of the transactions, and then validated by all relevant participants involved. The transparency in the chain is reached by only adding, never removing, more blocks to the chain, so there is a permanent record of every transaction, which increases trust among the stakeholders.

Figure 3: The Structure of a Blockchain (Semeniak, 2019)

Decentralisation of data

A blockchain for business is valuable for entities transacting with one another. Like in our previous example (see figure above), the IoT devices communicate with the blockchain, which basically takes the place of the cloud in a traditional network, for reasons like data transmission or firmware updates. In contrast to a cloud, all nodes in a blockchain collectively manage the distributed ledger and are responsible for confirming new blocks. This approach has the advantage of increasing the autonomy of IoT devices and ensures the security and traceability of communications. The disadvantage lies in the recording and storing of all transactions in the blockchain, which leads to increased bandwidth and data. Also, blockchain transactions are restricted by the number of validators, therefore, it needs a solid community for a good performance.
Consequently, a blockchain-based approach in an IoT environment has several critical challenges:

  • Blockchains are computationally expensive
  • IoT devices are resource-constrained (computational, memory and storage resources)
  • Blockchain transactions require many different validators in order to be completely autonomous and unbiased

Key benefits of using blockchain for IoT

There are several benefits from using Blockchain in the IoT world. One important point is building trust between parties and devices and reducing the risk of collusion[1] and tampering[2]. Another benefit is the cost reduction of removing overhead associated with middlemen and intermediaries, especially true for telecommunication providers. For the financial sector, the blockchain also has the advantage of accelerating transactions, therefore reducing time from days to near instantaneous (Mone, 2017). Other major benefits of integrating a blockchain into an IoT network are depicted in figure 4. This article doesn’t treat each of these points separately, as this is not in the scope of the publication.

Figure 4: Major Benefits of Integrating a Blockchain into an IoT Network (Semeniak, 2019)

Blockchain algorithms

Blockchain technology uses different approaches and principles when it comes to how the cryptocurrency is mined and data is exchanged between entities. Like any technology evolves over time, so does blockchain and its different approaches, especially in this phase of the development where it isn’t fully adopted by our society, as it doesn’t fulfil all the minimum requirements like resources of IoT devices or low computational costs. In this article we focus on the first two most popular blockchain concepts as well as on the newer IoT-related blockchain network.

Proof of Work

Bitcoin is the first digital currency and its network functions using the principle of Proof of Work (PoW). The network is built by a distributed ledger known as the blockchain, and this ledger contains a record of all Bitcoin transactions, arranged sequentially in blocks, so that no user is allowed to spend any of their holdings twice (i.e. the “double spending” issue – see chapter above). In order to prevent tampering, the ledger is public, or “distributed”, thus an altered version would be rejected by other users. The way that users detect tampering in practice is through hashes, which are in fact long strings of numbers that serve as Proof of Work (PoW) (Frankenfield,, 2021).

“Proof of Work was initially created as a proposed solution to the growing problem of spam email”

PoW requires nodes on a network to provide evidence that they have expended computational power (i.e. work) in order to achieve consensus in a decentralised manner and to prevent bad actors from overtaking the network.

Generating just any hash for a set of bitcoin transactions would be trivial for a modern computer, so in order to turn the process into “work”, the bitcoin network sets a certain level of “difficulty”. This setting is adjusted so that a new block is “mined” and added to the blockchain by generating a valid hash.

In conclusion, because the Bitcoin network has high computational and bandwidth requirements, this makes it impractical for IoT networks.

Proof of Stake

The Proof of Stake (PoS) concept states that a person can mine and validate block transactions according to how many coins they hold and using digital signatures, respectively. This means that the more coins owned by a miner, the more mining power they have (Frankenfield,, 2021). This concept was created as an alternative to the Proof of Work concept, to tackle inherent issues in the latter. Currently, only Altcoins[3] use the Proof of Stake concept. When a transaction is initiated, the transaction data is fitted into a block with a maximum capacity of 1 megabyte, and then duplicated across multiple computers or nodes on the network. The nodes are the administrative body of the blockchain and verify the legitimacy of the transactions in each block.

“The first cryptocurrency to adopt the PoS method was Peercoin.”

To carry out the verification step, the nodes or miners would need to solve a computational puzzle, known as the proof of work problem. The first miner to decrypt each block transaction problem gets rewarded with a coin. Once a block of transactions has been verified, it is added to the blockchain, the public transparent ledger (see figure 3 – The Structure of a Blockchain).

The Proof of Stake seeks to address the power consumption issue of the PoW by attributing mining power to the proportion of coins held by a miner. This way, instead of utilising energy to answer PoW puzzles, a PoS miner is limited to mining a percentage of transactions that is reflective of their ownership stake. For instance, a miner who owns 3% of the coins available can theoretically mine only 3% of the blocks.

The Proof of Stake also isn’t quite suitable for IoT devices, mostly because it’s based on a monetary concept (stakes) that doesn’t exist in IoT networks.

Proof of Coverage

Besides the well-known PoW and PoS concepts introduced before, another novel work algorithm emerged called Proof of Coverage (PoC). This verifies on an ongoing basis that hotspots are located where they claim, honestly representing their location and the wireless network coverage they are creating from that location (Helium, 2021).

This new approach was introduced by the company Helium, which ultimately opened the doors for new IoT applications which use this type of blockchain network. The Helium Network is a physical wireless network that succeeds based on the amount of reliable coverage it can create for users deploying connected devices on it. Therefore, this IoT blockchain network relies on the following characteristics of radio frequency (RF):

  • RF has limited physical propagation and, therefore, distance
  • The strength of a received RF signal is inversely proportional to the square of the distance from the transmitter
  • RF travels at the speed of light with (effectively) no latency

The physics-driven network constantly interrogates hotspots using a mechanism known as “PoC Challenge”. The ultimate power of Proof of Coverage lies in the fact that the data generated by the ongoing proofs and stored in the Helium blockchain is the definitive verification of the wireless coverage provided by hotspots of the network.

“Do you want to operate a cell tower, if it only costs a couple hundred bucks? And do you want to do it long-term?” – Frank Mong, COO Helium (Mong, 2021)

Figure 5: Helium and the LoRa Alliance (lora-alliance, 2021)

The technology consists of a device (Hotspot) that connects to an existing Wi-Fi router and uses the LoRa communication technology to extend the Internet signal to much wider areas, approximately up to 5 km in urban areas and 15 km in rural areas (line of sight). Helium calls this LongFi (Wikipedia, 2021). The LoRa technology was specifically designed for large-scale IoT applications. Compared to a Wi-Fi signal which can spread the signal up to 50 m at 2.4 GHz and around 10 m at 5 GHz, the LongFi wireless network is a considerable improvement. The LongFi can cover greater distances, but can only send a small amount of data, from 0.3 kbps[4] to 50 kbps. This limitation in the data rate is absolutely satisfying for many IoT applications that have a monitoring functionality or that have to measure a single physical unit only. These applications can extend from environmental monitoring to security and smart devices (see the following chapters for reference applications). An example of such an application can be seen in figure 6, where different IoT sensors, like a mousetrap, an air quality monitoring sensor or a parking place management system are connecting to a single Helium Hotspot for sharing their information. Remember that these sensors can sit at a distance of up to 15 km from the hotspot and still be able to communicate reliably. This performance of area coverage wouldn’t be possible with a Wi-Fi-based router only.

Worth mentioning is the power consumption of such LoRa-based hotspots, which is in the order of 1 to 5 watts, similar to a light bulb. This makes it extremely power efficient for a blockchain network infrastructure when compared to the other more known concepts of Proof of Work or Proof of Stake.

Figure 6: IoT Applications in the Helium Network (Helium, 2021)

In the figure below we can see the blue hexagons which represent the coverage of a single Helium Hotspot. The numbering within the hexagon form shows how many Hotspots exist in a certain area block.

Figure 7: Example of the Helium Hotspot Coverage in an Urban Area

The importance of building a community

Like with any other new technology, if the idea is good but it doesn’t have practicality, then it won’t be accepted by the public. Without the public, a technology dies or remains forgotten under the desks of the patent office.

Helium understood this aspect very well, so they thought about a method for promoting their blockchain network such that more and more users would adopt it.

“Be part of the People’s Network”

Becoming part of this community means the user orders the Helium LoRa-based device and attaches it to its own Internet router. The installation of the hotspot is simple to follow, and thereafter the user is participating in the network and has the benefit of mining cryptocurrency whenever transactions are done through their Helium Hotspots. Helium partnered with different companies for manufacturing the hotspots, thus more than one company can benefit from this new technology.

During the transactions, the role for each hotspot can differ, so depending on this the remunerated rewards can slightly differ.

Figure 8: Participants in a Helium Transaction (Helium, 2021)

There are various roles where the Hotspots have to solve the PoC Challenge:

  1. Challenger – The Hotspot that constructs and issues the PoC Challenge. Hotspots issue challenges approximately per every 300 blocks. The challenges are used by Proof of Coverage to validate wireless coverage.
  2. Transmitter – Sometimes called “Challengee”. This hotspot is the target of the PoC Challenge and is responsible for transmitting (or “beaconing”) challenge packets to potentially be witnessed by geographically proximate hotspots.
  3. Witness – Hotspots that are geographically proximate to the Transmitter and report the existence of the challenge packet after it has been transmitted.
  4. Network Data Transfer – HNT[5] is distributed to hotspots that transferred data from devices on the network. The amount of HNT is allocated proportionally based on the amount of data a hotspot transferred.

Other IoT-Blockchain concepts

Helium is not the only IoT blockchain company. There are several other companies on the market, each of them with its own speciality and application domains (Daley, 2019).

Other IoT-related blockchain networks are:

  • IOTA (Tangle Network) – distributed ledger for the “Internet of Everything”
  • Chronicled (MediLedger Network) – for the pharmaceutical and food supply industries
  • Arctouched (ArcTouch’s DApps) – for voice assistants, wearables and smart TVs
  • Filament (Blocklet Blockchain Suite) – for a boosted cybersecurity protocol
  • NetObjex (NetObjex Blockchain-IoT Tech) – for improving patron experience
  • Hypr (Hypr Network) – for biometric logins for connected ATMs, cars, locks and homes
  • Xage Security (Xage Blockchain) – for agriculture, energy, transportation and utilities
  • Grid+ (Ethereum Blockchain) – for energy retailers
  • Hyundai Digital Access Currency (HDAC Blockchain) – for consulting, blockchain-based hardware, smart homes
  • Quorum – blockchain security for IoT
  • it – uses Ethereum framework or uses PoA[6](Valente, 2019) consensus mechanism – Universal Sharing Network (USN) for sharing, selling or renting IoT devices, enhancing the process of tracking and supplying renewable energy
  • VeChain (VeChainThor Blockchain) – for logistics, agriculture, retail and document management
Figure 9: Other IoT-related Blockchain Networks

Applications using Blockchain

There are numerous applications based on IoT products that use blockchain technology. In the following we will have a look at some applications that use the Helium Network.

Applications for the environment

With such disastrous calamities nowadays like forest fires or violent floods, it becomes extremely important to know the quality of air and water in the environment we live in.


The company called Airly has the mission to reduce air pollution globally, and to do so they’re measuring the air quality all over the world in real time using sensors and a mobile app. This information about the air pollution is then available for everyone, as this is a major problem that kills an estimated seven million people worldwide every year.

Figure 10: Airly Brings Precision Analytics to Air Quality Monitoring (Lawrence, 2021)


“No more water waste or leakage”

Water is our most precious resource, which unfortunately we take for granted. Therefore, water management is becoming extremely important in our society. This is the motivation behind the NOWI system, a water management system for monitoring water waste and leakage.

Their water sensors, like the one in the figure below, can be mounted at every apartment complex, thus monitoring the water flow and eventual waste or leakage. The sensor’s battery runs for years and you don’t need to worry about it until it alerts you.

Figure 11: NOWI High-Precision Water Meter (NOWI Sensors, 2021)

Applications for better security


Invoxia is a standalone GPS tracker that can be used for for cars, motorcycles, bags or other valuable objects and is compatible with the LongFi Helium network. The battery lasts for up to six months and the tracker has a much higher performance in terms of coverage and usability than most tag trackers available on the market – those mostly use Bluetooth technology.

“Compared to Wi-Fi or Bluetooth, what sets LongFi apart is the ability to transfer data bi-directionally over much longer ranges (more than 200x Wi-Fi) and maximise battery life for compatible devices. However, LongFi is not designed for devices with high-bandwidth needs such as smartphones or computers.” (Gemmell, 2019)

Figure 12: Invoxia LongFi GPS Tracker (Invoxia, 2021)

Applications for Smart City

Nobel Systems

The devices from Nobel Systems consist of small cup-like LoRaWAN sensors, which are placed on each parking place. They connect to the Helium Network and inform about the state of the parking place directly to an app.

Such a system obviously reduces the time for parking and takes care of the well-being of people and the environment.

Now, it’s difficult to imagine that all parking places will benefit from such an intelligent system, taking into consideration the cost of the cups, but it can still be useful for important parking places in the city centres or around stadiums. Moreover, this type of application can act as a catalysis for other similar IoT-based solutions.

Figure 13: Nobel Systems Ecosystem Based on the Helium Network
Figure 14: Nobel Systems Real-Life Example of a Parking Place Monitoring (Nobel Systems, 2021)

Funny application

Mouse Trap – Victor VLink Pest Network

A funny application that uses the Helium Network is a mousetrap from Victor VLink Pest Network. The user has the option to provision its trap fleet on its own or let it be managed by a third company. The advantage of this trap is that it doesn’t need cellular to function and inform about eventual catches. The device protects you from rodent activity 24/7/365 and has a 3+ year battery life.

“Why have a data plan for an application like this?”

This is just a brilliant idea that makes use of the Helium blockchain.

Figure 15: VLING V450 – Electronic Mouse Trap (Parley Labs, 2021)

Outlook and next-gen technologies

The future is bright and it remains to be seen how this technological merge will evolve in the next couple of years and most importantly how our society will benefit from it.

Will the merge of the two technologies contribute to something called Industry 4.1? Will a blockchain network like Helium go down in the history books for revolutionising the Internet and how smart devices make use of it?

These are interesting questions that one could ask himself either by trying to envision the future or just out of curiosity. One fact is sure, namely that the possibilities are limitless if the technology is used with care and good intention.

One natural advancement for this so-called People’s Network is to increase the baud rate for the existing hotspots, thus enabling the use of the network through our smartphones. For this to happen the existing hardware will need an upgrade and it will most definitely need to pass more regulatory hurdles before becoming commercially available. Another interesting aspect of this technology is to see how the telecommunication giants will respond to it, as such a blockchain network has the capabilities to partially replace their offering at no cost for the user. Basically, the people will then become the owner of the telecommunication network, by sharing their home Internet. Besides the telecom companies, there are other “centralised” service providers owned up to 99% by the Big Tech companies (GAFAM[7]). It might be of no interest for them to switch to a decentralised model which is hard to monetise. Thus, in order for this model to thrive, there is a need to provide a benefit not only for the user but also for the one who is developing the service.

A further technological advancement is the 5G network, which is already planned for the current Helium infrastructure. This will represent a significant upgrade in terms of coverage and throughput and it remains to be seen whether this will be sufficient for the consumer and their smartphone in terms of Internet speed and reliability, respectively.

Will the combination of LoRa and 5G gateways be the future for blockchain IoT-based applications?
Will there be a standardisation in terms of communication protocols for both consumer and industrial IoT products?
How will the telecommunication industry or the Big Tech companies embrace this pioneering blockchain network for IoT devices and how will they operate and cooperate?

Big questions for a bright future!


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Abbreviations and Footnotes

[1] Collusion – a collaborative agreement, usually secret, amongst rivals to prevent open competition through deceptive means in order to gain a market advantage

[2] Tampering – data alteration or intentional modification of products in a way that would make them harmful to the consumer

[3] Altcoin is an alternative digital currency to Bitcoin

[4] kbps stands for kilobits per second

[5] HNT is a Helium-based cryptocurrency

[6] PoA stands for Proof of Authority

[7] GAFAM – Google, Apple, Facebook, Amazon and Microsoft

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