A Privacy Preserving IoT Data Marketplace
Using IOTA Smart Contracts
Hadi Farahani, Hamid Reza Shahriari
Atlas Lab, Department of Computer Engineering
Amirkabir University of Technology (Tehran Polytechnic)
Tehran, Iran
Email: { hadifarahani, shahriari}@aut.ac.ir
Abstract
In recent years, the volume of data generated by IoT devices has increased dramatically. Using this data can improve decision-
making in the public and private sectors and increase productivity. Many attempts have been made to enhance and adapt
businesses to exploit this IoT data. Among these, IoT data trading is the most popular approach. To this end, ongoing projects
are currently focused on developing decentralized data marketplaces for IoT using blockchain and cryptocurrencies. Here we
explore how a decentralized data marketplace could be created using IOTA tangle and IOTA smart contract chains (SC chains).
We also consider the advantages of such architecture in terms of cost, scalability, and privacy over current designs and introduce
the various elements it should have.
Index Terms—IOT, Decentralized Data Marketplace, IOTA Smart Contracts, Privacy
I. INTRODUCTION
Internet of Things (IoT) envisions connecting billions of devices and sensors to the Internet. In recent years, the
number of devices in IoT has grown at a steady pace. As a result, the amount of data generated by these devices has
grown exponentially. A new forecast from IDC estimates that there will be 55.9 billion connected IoT devices,
generating 79.4 ZB of data in 2025. Using this data can lead to efficient and effective resource management. For
example, in Smart Cities, we have critical issues like Waste, traffic, energy, water, education, unemployment,
health, and crime management. Using this data can lead to inform decision-making and reduce costs, eliminate
Waste, and increase productivity [1]-[3].
One practical way to use this data would be to exchange it in a decentralized data marketplace, open to
everyone, and use cryptocurrencies to pay for data. We need a secure, cheap, fast, and scalable platform to facilitate
data trades in such a marketplace without violating users' privacy. To this end, several researches have explored
such marketplaces[3]-[9].
The authors in [3,4,5,6] presented their blockchain-based platforms for data trading and proposed using the
Ethereum blockchain and its smart contracts to develop this marketplace. However, these platforms do not operate
cost-effectively, as the cost of system operations in a trade exceeds the exchanged value. In general, using Ethereum
as a blockchain platform is not economically justifiable due to its rising transaction fees. Additionally, users’
privacy is not considered in the design of these platforms. Another issue is that the throughput of their platforms is
limited by the low scalability of the Ethereum network.
The authors In [7] presented a system architecture for data sharing in smart transportation systems, in which
IOTA tangle, IPFS, and Ethereum smart contracts are used for data storage and coordinating the data sharing. But
similarly, their design is not cost-effective and scalable due to the use of Ethereum.
In [8], the authors proposed using the Lightning network to fulfill the requirement of having micro-payment and
cost-effective system operation. However, establishing and closing a payment channel in the lightning network
requires two transactions, namely funding transaction, and closing transaction in the Bitcoin network. Due to the
high transaction fee in the Bitcoin blockchain, this proposal is not cost-effective. Even if the seller and buyer use
their already-established channels, their privacy would be in danger. Generally, privacy is in contrast with
efficiency (efficient routing) in the lightning network.
In [9], the authors proposed using Ethermint (instead of the Ethereum network) and state channels to develop
the data marketplace. But they did not consider users’ privacy in their design.
In an IoT data marketplace, we have a large volume of trades, so the scalability of this market should be
considered in the designed platforms. Also, the payments in a data marketplace, trading sensor data, are micro-
payments. Hence, using public blockchains like Bitcoin and Ethereum, due to their low scalability (transaction
throughput) and high transaction fees, is not suitable for this purpose.
In this paper, we have chosen the IOTA tangle due to its feeless and scalable nature, as well as IOTA smart
contracts to implement the business logic of the marketplace in a privacy-preserving manner. We also used a
decentralized data storage platform to store and access sensor data and a decentralized certificate Authority scheme
to ensure data authenticity.
The rest of this paper is organized as follows: Section II presents the general architecture of our system. The
implementation and proposed protocol are presented in section III. The performance analysis of our platform is
discussed in section IV. Section V concludes this paper.