The expansion of the Internet and wireless access has led to a widespread increase of Internet of Things applications. These smart devices are becoming a daily aspect of our lives. All the convenient and automated services provided by smart devices come from a centralized service provider. This service provider has access to all the personal data associated with the devices and hence, poses a threat to users' data privacy. Blockchain-based applications provide many desirable features for the IoT infrastructure, for example, decentralization, trust, and immutability. This paper discusses the integration of blockchain and IoT while expanding upon existing studies in a smart home environment where privacy needs immediate attention. Furthermore, different privacy-preserving mechanisms used in blockchain-based IoT solutions were classified and analyzed. The evaluation reflects that cryptographic solutions enhance overall privacy in terms of data confidentiality and untraceability but are low utility solutions for resource-constrained IoT. An effective balance can be found in data manipulation solutions. Finally, suggestions and future research directions on the subject of privacy in blockchain-based IoT systems are offered as a result of this review.