Distributed Ledger Technology (DLT) for IoT

DLT enables the maintenance of a global immutable data structure in a decentralized peer-to-peer network. Blockchain is the first and widely recognized class of DLT solutions in this space, using a series of cryptographically linked blocks as the ledger structure. DLT is widely recognized as a key enabling technology for autonomous and verifiable interactions between things in decentralized IoT environments, paving the way for peer-to-peer markets (this is particularly interesting for example in the energy sector), as DLT offers the ability to maintain a sustainable, decentralized, and privacy-preserving model of information exchange without a trusted intermediary.

One of the major challenges associated with the use of DLT in IoT environments is the scalability of DLT and low transaction throughput, as well as the use of DLT for edge and fog computing. Initial proposals to solve these issues include second-layer solutions for distributed ledgers and consortium blockchains. There are solutions that promise to solve the scalability dilemma by using a Directed Acyclic Graph (DAG). For example, IOTA uses DAG as the underlying data structure for the ledger. The solution is partition tolerant and does not require mining, so it is not as wasteful as a Proof of Work (PoW) driven DLT solution. A small amount of PoW is still required, but only as a spam protection measure. It can be concluded that DLT is still a hot research topic in the IoT context, as the essential requirement of high-throughput transaction processing is still an open issue. In addition, there needs to be a mechanism for decentralized payments and trust enforcement in open systems, as well as an incentive mechanism for service provision.