The application of blockchains techniques in the Internet of Things (IoT) is gaining much attention with new solutions proposed in diverse areas of the IoT. Conventionally IoT systems are designed to follow the centralised paradigm where security and privacy control is vested on a "trusted" third-party. This design leaves the user at the mercy of a sovereign broker and in addition, susceptible to several attacks. The implicit trust and the inferred reliability of centralised systems have been challenged recently following several privacy violations and personal data breaches. Consequently, there is a call for more secure decentralised systems that allows for finer control of user privacy while providing secure communication. Propitiously, the blockchain holds much promise and may provide the necessary framework for the design of a secure IoT system that guarantees fine-grained user privacy in a trustless manner. In this paper, we propose a holistic blockchain-based decentralised model for Ambient Assisted Living (AAL) environment. The nodes in our proposed model utilize smart contracts to define interaction rules while working collaboratively to contribute storage and computing resources. Based on the blockchain technique, our proposed model promotes trustless interaction and enhanced user's privacy through the blockchain-Interplanetary File System (IPFS) alliance. The proposed model also addresses the shortfall of storage constraints exhibited in many IoT systems.