Toward Trust in Internet of Things Ecosystems: Design Principles for Blockchain-Based IoT Applications

The Internet of Things (IoT) describes the concept of physical objects equipped with identifying, sensing, networking, and processing capabilities being connected to the Internet. Architectures for the IoT typically rely on transmitting data to centralized cloud servers for processing. Although cloud services are supposed to enhance the IoT in storage, computation, and communication capabilities, this approach often generates isolated data silos and requires trust in third parties operating the cloud servers, which become single point of failure. In addition, centralized cloud-based applications lack transparency and allow for undetected manipulation and concealment of IoT data. To overcome these downsides, we develop and evaluate a blockchain-based IoT sensor data logging and monitoring system, employing a design science research approach. In this article, we show that such systems should provide modularity, data parsimony, and availability in addition to domain-specific principles. The prototype improves data integrity and availability but uncovers challenges, such as high operating costs through smart contract computation fees. Furthermore, semistructured interviews with practitioners allowed us to derive insights for developing blockchain-based IoT ecosystems and reveal that cooperation with organizations is key for transferring solutions into production. We contribute to the IoT knowledge base by providing design principles as well as managerial and technological recommendations.

I. Introduction

The Internet of Things (IoT) is a paradigm increasingly attracting interest in research and practice. The term describes a concept under which physical objects with identifying, sensing, networking, and processing capabilities are connected to the Internet [1] to achieve a goal [2]. Applications of the IoT are diverse and occur in almost every aspect of society by now, ranging from logistics to public utility services as well as private spaces, such as smart homes [3]. Hence, the IoT is currently experiencing rapid development and high investment. The research company Gartner estimates that the number of installed IoT devices worldwide will grow up to 20.4 billion units by 2020 [4]. Current architectures for the IoT typically rely on transmitting device data to centralized cloud servers for processing [5]. Utilizing cloud services in this scenario is supposed to enhance the IoT in terms of storage, computation, and communication capability [6]. Yet, this approach typically generates isolated data silos and requires trust in third parties operating the cloud servers [7], which also represent single point of failure [8]. Furthermore, centralized cloud-based applications lack transparency and thereby allow for undetected manipulation and concealment of IoT data [5]. The challenges of this scenario are especially problematic in applications where data integrity and availability are important, such as in monitoring sensor data in food supply chains [9] or industrial applications [10].