decentralization within IoT eliminates the need to use distributed networks within IoT to communicate only with servers that may face difficulties related to the internet, vulnerabilities, DDOS, or hijacks, merging blockchain with IoT converted the IoT system into a decentralized with many benefits and outcomes from this conversion. An encryption scheme homomorphic technique (HE) is a method that encrypts the cipher data without the need to decrypt it,paillier encryption method is used. This paper aims to propose a system that integrates Paillier cryptosystem homomorphic technology with IoT and lightweight blockchain technology to provide decentralization to the IoT environment and improve security. The proposed system results in improving the IoT device’s work environment by solving the main challenges of security using blockchain, privacy using homomorphism, and data volume using blockchain. The data set used to implement and evaluate the proposed system is industrial internet of things data The dataset used in this paper is generated via machine industry 4.0 Storage System status which represents the system failure and work status. this system is evaluated using standard metrics used to evaluate the blockchain effectiveness and time, resources consumed and shows better results in time and power consumption.