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Combining AI, IoT, and Blockchain

07 Apr 2021 updated
11 min

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Artificial Intelligence (AI), the Internet of Things (IoT), and blockchain have transferred from sci-fi to everyday human routines. AI has found numerous applications in all areas, from content creation to driverless cars to buyer preference anticipation. IoT makes our homes smarter, turning multiple devices we use into coherent ecosystems to deliver an outstanding user experience. Blockchain has also transformed how we transfer money, think about cybersecurity, and deal with digital assets. 

What’s more, all these three innovations can converge to serve us even better! Check our guide on maximizing the value of AI, IoT, and blockchain development in the form of robust, secure technological infrastructures. The future starts today, and here is how this happens. 

Understanding Blockchain, AI, and IoT 

To capture the unique potential AI, IoT, and blockchain present today, one should understand what these terms mean. So, let’s begin with their definitions and a brief overview of their significance. 

AI in finance, as the name suggests, is the capacity of intelligent machines. With the advancement of technology, machines have learned to learn from human input, thus making fast and intelligent decisions. As a result of AI advancement, machine learning has become commonplace, with smart AI algorithms giving users better insights into big data, allowing businesses to understand their clients’ preferences better, and moving automation to a whole new level (e.g., autonomous vehicles, specialized robots, etc.). 

The market potential of AI is immense, with a market of less than $360 million in 2016 expected to grow into a $31 billion industry by 2025. Thus, the immense prospects of AI in the tech-savvy world can hardly be put into question.

revenue from AI stats

IoT has emerged as a natural social response to rapid digitization. People got surrounded by multiple sensors, devices, and systems, which they found harder to control and converge. IoT has been introduced to unify isolated intelligent devices into one ecosystem that can be customized to an individual user’s preferences, coordinating those devices and at the same time collecting vital data for further analysis.

Thus, IoT may be equaled to the nervous system in the human body as it coordinates the entire organism’s functioning by connecting separate organs and sending signals from one to another. 

IoT’s market potential is unbelievable, as both users and IoT system producers can reap numerous benefits from its use. Users get seamless automated experiences and well-tuned digital ecosystems in their smart cars, homes, and workplaces. Manufacturers, in their turn, receive continuous valuable data about user habits and preferences, able to customize their next offers to exceed customer expectations. Besides, IoT systems boast advanced security, which is invaluable in the modern epoch of looming cyber-threats. 

As for blockchain, it is yet another technological innovation with great prospects in all industries. What used to be a $120 million market in 2016 has already crossed the $1.4 billion thresholds and is expected to almost double in 2021. The uniqueness of blockchain is making high-trust computing a reality. Blockchain-based digital systems are distinguished with reliability, transparency, and security that conventional systems lack.

These features make it ideal for financial transactions, contractual and legal agreement execution, and chain of ownership documentation. What’s more, blockchain brings down the cost of digital exchanges by removing the third-party intermediary from the process without security compromises. Thus, blockchain is an ideal facilitator of all digital exchange types, with its impressive transaction speed, real-time visibility of all operations, and low costs.  

blockchain chart

As you can see, all three innovations have much to offer to the modern community. While IoT collects data from smart devices and ensures the continuity of their use, AI performs intelligent thinking operations and can inform automated decision-making.

Transactions performed within the IoT ecosystems and informed by AI algorithms can get faster and more securer with blockchain. Accordingly, the convergence of all three technologies can be beneficial for industries of all types. Let’s clarify how it works in practice. 

Blockchain, AI, and IoT convergence

While each of the three innovations is much discussed today, their convergence is a still overlooked area. Yet, the convergence of blockchain, AI, and IoT offers numerous gains on the path to a large-scale digital revolution. These three technologies, when used together, can advance a ton of business processes, introduce new business models, scale and simplify data management, and disrupt numerous modern industries.

Read also: Blockchain in gaming

industries decentralization

Let’s see what each of them adds to the digital innovation equation. 

  1. IoT contributes to process automation and makes business processes user-friendlier.
  2. AI makes use of big data collected via IoT devices, detecting patterns and optimizing data-based business decisions. 
  3. Blockchain adds trust, transparency, and security to the existing digital systems via a decentralized, shared ledger. 

As a result, the converged digital systems benefit from the data derived from IoT sensors via the better computational capacity of AI and secure infrastructure of blockchain.

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Which fields leverage these technological trends?

Due to IoT, AI, and blockchain’s ability to automate and simplify transactions of data, digital assets, and money, their use has become commonplace in banking, construction, automotive industry, healthcare, and many other niches. 

A classic example of such convergence’s implementation is the smart city concept. Modern cities are large and infrastructurally complex, using numerous interconnected systems to supply energy and transportation, manage waste, etc. Thus, managing such systems involves high costs and risks. Using a combination of IoT, blockchain, and AI, engineers can use smart city blockchains as a decentralized identity and authorization layer between numerous IoT devices.

AI-assisted infrastructure administration systems function based on the IoT device-derived data to make decisions. In other words, blockchain systems of smart cities can effectively link small, purpose-built systems into larger ecosystems sharing and storing big data for AI decision-making. 

distributed blockchain networks

The use of blockchain, IoT, and AI in smart cities can help coordinate numerous administrative functions, fostering sustainable city existence and harmonious management of their interrelated elements. Smart cities’ core principle is sustainable waste management, green energy use, green transportation without mobility compromises, and the overall quality of the smart city population’s life. All these aspects can be efficiently combined in a well-functioning, autonomous digital ecosystem. 

smart cities

Blockchain & AI use cases

AI uses data as the raw material for its operations and decisions. Thus, to enable the proper functioning and further advancement of AI models, engineers are tasked with accumulating and storing huge data sets (i.e., big data). Only a handful of companies can supply the necessary data volume for AI algorithms, so they currently possess a disproportionate competitive advantage on the market. Also, there are no universal data sharing standards today, resulting in masses of data remaining unexplored. Finally, much user data contains sensitive personal information, so using it with AI algorithms entails legally punishable privacy breaches.

Blockchain helps AI companies resolve some of these challenges by offering a unique combination of data privacy, security, and transparency. By converging AI and blockchain, users can: 

  • Establish decentralized, open data markets for AI model training;
  • Identify and record data, thus enabling the data owners and aggregators to package information efficiently for further sale, rent, or sharing; 
  • Create a level playing field for data owners producers and those who need data for AI;
  • Generate large marketplaces for independent AI services. 

In this way, AI can become more commonplace, with the community of blockchain developers spreading the AI benefits and putting it to use easier. To date, the use cases of AI and blockchain convergence can be found in logistics, digital media, money transfer systems, and the like. 

Blockchain & IoT use cases

IoT can refer to anything today, from consumer applications such as smart homes or outpatient care to autonomous, self-driving cars and entire smart cities. However, for the dramatic expansion of IoT use to be safe and manageable, it has to overcome several bottlenecks. First, massive IoT implementation presupposes managing data and coordinating activities of millions, if not billions, of devices. All of them need to be monitored and controlled by somebody, repaired and maintained, secured against hacking, etc. Besides, IoT’s core benefit is the ability of devices to communicate directly, without human intermediaries, which requires a secure means of P2P communication. With many manufacturers and device types, achieving complete congruence is challenging today. 

Today, the IoT systems are typically designed with client-server-based approaches, with one centralized system handling all data and cross-device communication. Yet, with the massive growth of IoT, such models are already stretched to their limits, unable to ensure larger systems’ flawless functioning. Besides, such centralized devices represent a single point of failure, with all system data lost or compromised upon a cyber-attack or hardware collapse. Finally, the centralized controller’s vendor typically has access to the data stored on its platform, which hinders client confidentiality.

Blockchain offers a solution to all these IoT bottlenecks. By merging IoT solutions with blockchain, users can achieve the following gains: 

  • Centralized servers are replaced by a decentralized IoT platform operated by a community of stakeholders (nods). 
  • Blockchain enables sealing and unique identification of data to prevent fraud or data manipulation. 
  • Blockchain is highly scalable, able to serve as many IoT systems as necessary.
  • Blockchain ensures information provenance via audit trails.
  • Blockchain provides verifiable identities to real-life network participants. 
  • Data in the blockchain is totally private and securely protected. 

Use cases of blockchain and IoT include IOTA (a platform supporting IoT and machine economy), the Robonomics Network of Airalabs, and the device connecting platforms of Modum,, and Ambrosus, among others. The combination of IoT and blockchain in the car-sharing industry is put in place by HireGo and the car insurer Car Dossier. 

Why are Blockchain, AI, and IoT a perfect match?

Now that the ability to converge AI, IoT and blockchain has become more apparent, let’s dive deeper into the gains that businesses choosing to combine them can reap from the combination. 

First, it’s data management that gets better, smoother, and way more efficient. Data can be standardized and packaged easier via the creation of a harmonized digital platform backed by blockchain. Simultaneously, data privacy and security are protected with rigorous mechanisms embedded in the blockchain system. Besides, data management gets really scalable, which is invaluable in a period of massive data growth. 

Second, trust and transparency within such converged ecosystems are considerable. Authentication via a blockchain-based identity increases trust within the network. Identity management gets easier for both individuals and devices, speeding up the transactions and bringing their costs down. 

Finally, smart contracts enable advanced automation. However, the drawback of smart contracts that parties still need to overcome is the high volatility of cryptocurrency exchange rates. Once smart contracts can be established in fiat currency, their adoption in business will become more commonplace. 


As many tech experts say, the future starts today, and the convergence of the best fruits of technological evolution can help society progress in leaps. Blockchain is a powerful technology improving data management today, which contributes to IoT devices’ transparent, truthful, immutable, and secure functioning.

By adding AI to the equation, engineers can address IoT data processing limitations, thus achieving more effective data use and smart analytics. As the example of smart cities has shown, Ai, IoT, and blockchain can enhance the benefits of each other, enabling scalable data management and data-based automated operations of autonomous systems. 

Your ability to catch up with the innovative tech trends is your unique competitive advantage. So, why waste your time thinking about the future if it has already here? 4ire Labs can help you capture the moment and implement advanced AI, IoT, and blockchain solutions customized to your business needs and realities.

Our sister company,, also offers innovative AI and ML automation product, creating the vital components for your converged high-tech systems. Make your business times more efficient with data analytics and ML; utilize cloud-based products and on-premises solutions by Datrics to transform your way of doing business, making decisions, and making sense of business data. 

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