Rademics Research Institute

Abstract

This book chapter explores the transformative role of smart contracts in automating Internet of Things (IoT) systems, focusing on their integration with blockchain technology to enhance operational efficiency, security, and compliance across diverse industries. As industries increasingly adopt IoT, the need for secure, transparent, and efficient processes becomes paramount. Smart contracts provide a solution by automating contract execution and ensuring realtime verification of transactions based on predefined conditions. This chapter highlights key applications in sectors such as supply chain management, energy, healthcare, and smart cities, emphasizing the potential of blockchain and IoT synergy. Through detailed case studies, the chapter demonstrates how smart contracts optimize automation, reduce operational costs, and foster trust within interconnected ecosystems. This work offers valuable insights into current challenges, benefits, and future directions for the integration of smart contracts in IoT, advancing automation and compliance in the digital age.

Introduction

The rapid evolution of the IoT has revolutionized industries by enabling the seamless connection of devices, systems, and services [1]. As IoT ecosystems expand, the complexity and scale of interactions among connected devices and entities have introduced significant challenges in terms of automation, security, and compliance [2-4]. Traditional methods of managing these interactions often involve manual oversight and intermediary involvement, leading to inefficiencies, delays, and the risk of errors [5,6]. In this context, the integration of blockchain technology and smart contracts offers a promising solution to automate processes, ensure transparency, and enhance security [7,8]. Smart contracts, which are self-executing contracts with predefined terms written into code, allow for automatic execution of transactions and processes when specific conditions are met [9]. By leveraging blockchain, these contracts ensure an immutable, transparent, and decentralized execution of actions across IoT systems, thereby enhancing the overall trust and reliability of IoT ecosystems [10,11]. The synergy between blockchain and IoT presents an opportunity to address several key challenges in IoT systems [12,13]. One of the major concerns in IoT was ensuring the integrity of data generated by devices and sensors [14]. With billions of IoT devices generating vast amounts of data, ensuring the authenticity and reliability of this data was crucial for making informed decisions [15,16]. Blockchain’s decentralized ledger offers an immutable record of all transactions, preventing tampering and providing a secure, transparent means of verifying data integrity [17,18]. When combined with smart contracts, IoT systems can automatically validate and execute actions based on verified data, eliminating the need for intermediaries and reducing the risk of fraud or manipulation [19,20].