IoTs are integrated, interconnected concepts of things or objects in our surroundings, with an essence of virtualization. The interconnectivity of the business world, health environments, smart home devices, and daily use gadgets takes place through the networks based on cloud infrastructure which is not restricted to jurisdictional, geographic, and national boundaries. However, the light-weight IoT devices come with a limited storage and processing capacity. Due to this limitation, the need for separate data storage arises so that data can be utilized in the future. These third-party storage services are provided at the cost of a user’s privacy. Furthermore, the storage relies on a centralized database which is more open to attack due to its single point security breach chances.  Furthermore, present IoT data is not trustworthy in the external environment, as data manipulation is lacking when data is shared with other parties. To overcome the above-mentioned limitations of IoT, the emerging secure decentralized storage technology; Blockchain, have begun to abandon the significant impact in the IoT with the enhancement of security and incorporating a large number of devices in the today’s ecosystems. In this paper, we have performed a comprehensive literature review to show how well blockchain has transformed the smart environments connected with IoT sensors and the underlying issues for its adaptation. Further, a well-organized taxonomy is presented by highlighting the strengths, weaknesses, opportunities, and threats (SWOT) of blockchain based IoT environment. In addition to that, we have clearly presented the verities of blockchain applications such as bitcoin (earlier cryptocurrency used in blockchain) or ethereum (establish smart contracts) based works and pinpoint the necessities and security challenges. Moreover, we have highlighted the essential implementation requirements of blockchain in the IoTs. This paper is also equipped with a state-of-the-art framework of IoT while adopting security features and decentralized storage requirements of the blockchain. In the end, we have presented insightful challenges need to be addressed to obtain efficient, secure, and effective communication goals and to provide private and secure services for users as per their requirements. •In this paper, we have performed a comprehensive literature review to show how well blockchain has transformed the smart environments connected with IoT sensors and the underlying security issues for its adaptation.•A well-organized taxonomy is presented by highlighting the strengths, weaknesses, opportunities, and threats (SWOT) of blockchain based IoT environment.•We have compared existing blockchain applications such as bitcoin (earlier cryptocurrency used in blockchain) or ethereum (establish smart contracts) based works and pinpoint the necessities and security challenges for IoTs.•We have highlighted the essential implementation requirements of blockchain in the IoTs.•A state-of-the-art framework of IoT while adopting security features and decentralized storage requirements of the blockchain is presented.•Last but not least, we have presented insightful security challenges need to be addressed in adaptation of blockchains in IoTs.