Implementation Aspect: IIoT and Blockchain
An Industrial Internet Consortium White Paper
Version 1.0
2020-07-22

Implementation Aspect: IIoT and Blockchain
Blockchain is an emerging distributed ledger technology, usually used to support tamper-proof
recording of events and transactions, such as the management of digital currencies like Bitcoin.
The underlying concept is based on strong cryptographic principles to implement a secure
distributed ledger. Contractual business logic between stakeholders can be automated withsmart contracts running independently on the blockchain.

WHEN TO USE BLOCKCHAIN IN IIOT SOLUTIONSWhen looking to use blockchain in an Industrial Internet of Things (IIoT) project, we must
understand both potential benefits and risks. There are many unsolved problems such as
scalability and performance that need to be addressed so blockchain technology can evolve
quickly. Due to this state of development, the risk from a project manager´s point of view isincreased. Special care must therefore be taken when selecting blockchain technology anddesigning blockchain-based IIoT-solutions.
On the upside, blockchain has the potential to solve many of the problems faced during thelifecycle of IIoT-enabled assets, including provisioning, usage tracing and asset decommissioning.
Blockchain can enable tamper-proof chain of custody, trace important events and structuralchanges in a heterogeneous IIoT ecosystem. This makes an evaluation of the ecosystemcomplexity and trust level necessary to justify blockchain relevance.
Other technologies, such as artificial intelligence, additive manufacturing, and virtual andaugmented reality, need to be integrated to support project managers driving design decisions
and to overcome the complexity in IIoT.
This table provides an overview of typical IIoT use cases and how blockchain can be used.
IIoT Use Case
Device Monitoring

Blockchain Applications
e.g., logging of SLA violations

Device Analytics
e.g., logging of analytics results / forecasts
Edge Autonomye.g., logging of fault protocols (e.g., accident)
New IIoT-based Services e.g., truck odometer fraud prevention

DISTRIBUTION AND OWNERSHIP OF DATA
When defining blockchain-based IIoT solutions, solution architects must decide how to manage
the distribution and ownership of data in the system.
Network reliability, bandwidth and latency as well as functional or solution usage attributes haveto be designed with the system’s performance and trustworthiness in mind. This already complex
problem is complicated further with blockchain in the picture, as blockchain-related implications-2-Implementation Aspect: IIoT and Blockchain
need to be considered on all layers of the solution architecture. For example, a key question is
how to manage the wallet of each user, which contains the public and private key pair required
to create and access respective user data in the blockchain. Consequently, who owns andcontrols these wallets also becomes a key question.
There are three possible patterns for the distribution of data in a blockchain-based IIoT solution.
In this section, we will describe them while using the three-tier architecture pattern from IIC’s
Industrial Internet Reference Architecture (IIRA) as a guiding principle. To illustrate the threepatterns, we will use a simple example in which a truck is equipped with temperature and shock
sensors. If certain temperature or acceleration values are exceeded, the transportation company
will be liable for the violation of the agreed upon Service Level Agreements (SLAs).

PLATFORM-CONTROLLED WALLET
The first architecture pattern assumes that all data and control flows are managed centrally by
the platform tier. As shown in Figure 1, the central platform makes all the decisions and controls
the wallets. For example, the platform monitors the data coming in from the truck in the fieldand logs it in the time-series database of the platform. So as not to overload the blockchain, only
significant events (e.g., SLA violations) are logged. Data saved on the blockchain or in thedatabase is decided by the platform.
This pattern has the following benefits:•••

full control over data, control flows and wallets in the platform. This means that theimplementation will be easier to create and maintain,
no problems with remote management of wallets andno investment in specialized hardware.

However, a central disadvantage of this approach is that it requires all parties involved (including
the customer who is relying on the SLAs) to trust the link from the truck to the platform.
Moreover, the data access rights remain with the platform provider, which needs high data
security and privacy means to ensure trustworthiness with the end-user. This might not always
be a given. In this case, this pattern is not an option.

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Implementation Aspect: IIoT and Blockchain

Figure 1: Platform-Controlled Blockchain

ASSET-CONTROLLED WALLET
The next pattern assumes that every asset has an embedded wallet to sign and access its data on
the blockchain or provide access to the data. For example, Trusted Platform Module (TPM)
technology can be used to implement a specialized hardware that cannot be tampered with in
the field. It provides a secure storage of the corresponding wallet. As shown in Figure 2, thesoftware running on this hardware is directly deployed on the asset and it will decide which data
to write to the blockchain. Beforehand, it signs the data with the private key of its wallet.
The key advantage of this solution is a completely tamper-proof link directly from the sensor tothe blockchain.
However, there are some disadvantages, which include:•••

potentially costly custom hardware,potentially higher development and maintenance costs, due to the fully distributed
nature of the system andtrust in the TPM provider is required.

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Figure 2: Asset-Controlled Blockchain

SMART CONTRACTS ENHANCEMENT
Finally, smart contracts enhance the demonstrated architecture patterns. A smart contract
implements business logic directly embedded into the blockchain. This means that—due to the
distributed and cryptographic nature of blockchain—both the logged data and the business logic
are tamper-proof. It will only be executed if the maturity of distributed nodes in the blockchain
agree about the outcome of a decision. A smart contract enables an independent execution ofbusiness logic between stakeholders. Moreover, the agreed-upon outcome builds trusted input
for further procedures.
Note that this pattern can be combined with either of the first two patterns. For simplicity, Figure
3 shows the use of smart contracts with an asset-controlled wallet.

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Figure 3: Smart Contracts

CONCLUSIONS AND OUTLOOKCurrent project managers face high technological complexity when it comes to solution design.
A relevant component in the design of distributed systems is the emerging blockchaintechnology. Due to the distribution of functionalities and a missing intermediary, different design
and implementation principles need to be considered, as well as further technical challenges.
Blockchain guarantees trust between the stakeholders of a distributed system as an immutable,transparent, anonymous and tamper-free data structure. Despite the benefits of blockchain, therisks of the evolving technology need to be considered while designing blockchain-based IIoTsolutions.
This document described three design patterns for the distribution and ownership of data in a
blockchain-based IIoT solution while using the three-tier architecture pattern from IIC’s IIRAreference architecture. The patterns are illustrated by a simple practical example to emphasize
the patterns usage.
After the decision is made to use blockchain in an IIoT solution, the illustrated patterns givedesign alternatives and support the design decision in accordance with the requirements on datadistribution. Based on the chosen pattern, the trustworthiness of the IIoT solution can beevaluated by the pattern’s characteristics. Furthermore, transparency of data ownership andaccess is created that supports the project manager’s decision.
Finally, the chosen pattern provides the blueprint for a more detailed architecture andimplementation design by the solution architect. This tool provides guidance for project
managers that are preparing an IIoT project.
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AUTHORS AND LEGAL NOTICEThis document is a work product of the Industrial Internet Consortium Industrial Distributed
Ledger Task Group, co-chaired by Mike McBride (Futurewei) and Xinxin Fan (IoTeX).
Authors: The following persons contributed substantial written content to this document: Dirk
Slama (Bosch Software Innovations) and Daniel Burkhardt (Ferdinand-Steinbeis-Institute).
Technical Editor: Stephen Mellor (IIC staff) oversaw the process of organizing the contributionsof the above Authors into an integrated document.

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