According to Gartner, by 2020, the Internet of Things (IoT) installed base, excluding PCs, tablets, and smartphones, will reach 26 billion units, empowering a market worth of $3 trillion. By 2025, the total global worth of IoT technology could be as much as $6.2tr – most from devices in health care ($2.5tr) and manufacturing ($2.3tr). Another analysis estimates that blockchain will add $3.1tr in business value by 2030.
These and other fascinating insights show that people are about to witness even more change in the world than they could imagine.
Behind the Numbers: the Rise of IoT
IoT, to put it simply, is a network of interrelated physical objects accessed through the internet. IoT technologies allow data collection, remote monitoring, and the control of devices. The growth of IoT was made possible by a number of significant technological achievements. This connectivity progress was enabled in part by a breakthrough in the value of sensors and bandwidth as well as inexpensive processing and the development of the most recent version of internet protocol: IPv6.
In the future, IoT will transform into a network of interconnected offline devices that can interact with their environment to make smart decisions without human intervention. In other words, when an object can sense and communicate, it changes how and where decisions are made, and who makes them.
The success of this concept affects people’s quality of life, making it more effective and enhanced.
The implications of this revolution of connectivity extend way beyond just smartphones and private houses. In fact, it’s about to be applied on an industrial scale to everything from kettles to farming, in a manner people can hardly imagine.
The Internet of Things will benefit every industry:
- Real-time data aids and analysis
- Improved customer experience
- New jobs in flexible organizations
- Reduced time to market
- Intelligent machines automating tasks
- The elimination of waste in the supply chain
Manufacturing, healthcare, transportation, energy, retail, agriculture, and electronics are the industries most likely to first adopt IoT. For example, by 2021, 70% of retailers are planning investments in IoT. They rely on it to deliver greater transparency to supply chain operations. The aim is to reduce out-of-stock products and improve selection based upon consumer preferences.
Enterprise organizational systems like ERP and CRM are also taking advantage of IoT to rationalize their business processes. As a result, a huge amount of data traffic from diverse devices is now possible. To be exact, 40% of the total data created will be from sensors.
And these smart objects give major industries the important information they lack to keep track of inventory, control mechanisms, increase efficiency, reduce costs, and even save lives.
Understanding the Convergence of Blockchain and IoT: Benefits
Growing gradually, the IoT meets new challenges. Identification, connection, security, and the management of so many devices are the obstacles to remove for IoT widespread adoption. In fact, the use of blockchain for the IoT is the number-one task many companies have on the brain. By 2019, 20% of all IoT deployments will have basic levels of blockchain services enabled.
The reason will likely be a combination of increased DDoS attacks and an assumption on the part of vendors of a heightened need for cybersecurity investments.
The Blockchain Security Model
The privacy and security issue is the most important advantage of the IoT and blockchain convergence. Smart devices are able to gather a lot of data and information. These data can be manipulated and falsified.
As the backbone of all IoT interactions, blockchain creates a secure, democratized platform independent of all involved parties. The risk is eliminated by distributing the data across multiple sources, thereby limiting the possibility of hacker attack damage. It will all be caught publicly, and access will be denied.
In the blockchain system, there is no single person holding the records, and no one can delete it. Each identity that’s registered can be secured with the device’s public key. This enables more protected communication and greater trust in the overall network.
The greatest challenge of the IoT industry will be about setting up enforceable commercial relationships between devices and humans. This refers also to responsibility issues, especially when machines take actions based upon an operation that is automatically executed by one application, triggered by another application.
How will we interact and make devices act like humans? Smart contracts will come to create true business models. Humans, machines, and the internet will interact in respecting contractual obligations and deliverables.
Smart contracts remove violations, confusion, and fraud amongst devices. Even more crucially, the human job of the contractual conditions audit will be replaced by these digital contracts.
Blockchain presents ample opportunities for IoT. It changes the current state of things by giving it more transparency and making it secure. Companies already use blockchain based solutions to power IoT in multiple spheres. Filament is a startup born out of TechStars’ R/GA Accelerator program. They are engaged in the production of wireless sensors, that allow enterprises to manage mining operations or flows of water over agricultural fields.
Tilepay is another interesting use case. It offers a secure decentralized cloud solution where users register their devices, and sell their data in real-time in exchange for the cryptocurrency. That’s a great example of how blockchain can enable data monetization. One can easily come up with a list of more applications in the world of the IoT and blockchain convergence.
Michael Zernov is a Ukraine-based tech expert and writer.