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This paper provides overview of current issues in Internet of Things (IoT). One of the main purposes of IoT is that devices around us should be able to exchange information. The standards which are used in traditional networks, are not suitable to be used in IoT environment. Here are many devices, which are low-cost devices. Therefore, it is necessary to search for new approaches to solve issues regarding security, Quality of Service and reliability in IoT. These issues are very important to be solved, because low-cost devices are often exchanging secret or sensitive information. IoT protocols with support of DTLS or TLS cannot be used for some low-cost devices. This paper proposes architecture of smart gateway and application protocol for lost-cost devices in IoT with focus on security and reliability.