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 cryptocurrencies to applications for the Internet of Things (IoT), and many more. The concept of blockchain appears therefore blurred, as it is hard to believe that the same technology can empower applications that have extremely different requirements and exhibit dissimilar performance and security. This position paper elaborates on the theory of distributed systems to advance a clear definition of blockchain that allows us to clarify its role in the IoT. This definition inextricably binds together three elements that, as a whole, provide the blockchain with those unique features that distinguish it from other distributed ledger technologies: immutability, transparency and anonimity. We note however that immutability comes at the expense of remarkable resource consumption, transparency demands no confidentiality and anonymity prevents user identification and registration. This is in stark contrast to the requirements of most IoT applications that are made up of resource constrained devices, whose data need to be kept confidential and users to be clearly known. Building on the proposed definition, we derive new guidelines for selecting the proper distributed ledger technology depending on application requirements and trust models, identifying common pitfalls leading to improper applications of the blockchain. We finally indicate a feasible role of the blockchain for the IoT: myriads of local, IoT transactions can be aggregated off-chain and then be successfully recorded on an external blockchain as a means of public accountability when required