BloT, short for Blockchain or Things, is set to be the next big revolution in the Internet of Things. A 2018 report by After Market Research predicted that the combined market value of blockchain and IoT would reach an astonishing US$ 254.3 billion by 2026. Many industries are set to benefit from this revolutionary combination, including oil & gas, healthcare, manufacturing, telecommunications, automotive and retail sectors. The report suggests that combining IoT and blockchain is bound to result in incredible scalability, security and ease of access.
Blockchain and Internet of Things (IoT)
Today’s blockchain technology is a type of Distributed Ledger Technology (DLT) that has gained immense traction after 2014. Initially, blockchain technology was solely used in cryptocurrency but now researchers have found it incredibly powerful in boosting other advanced technologies too. We are already hearing rumors of blockchain being combined with several other techs, such as blockchain and Cybersecurity, blockchain and logistics, blockchain and finance, blockchain and Internet of Things (IoT).
Let’s take a closer look at the IoT + blockchain opportunities, advancements and obstacles.
Major researchers have linked blockchain with incredibly rapid evolution, especially after its superb performance with cryptocurrency. This has prompted many major companies to seek implementation of these two technologies in combination, as solutions for different industries.
Combining Blockchain and Internet of Things (IoT)
Blockchain has numerous benefits, especially on IoT as it is also a distributed application. As blockchain is a distributed ledger technology, these form the ideal way for multiple devices to communicate individually with one another. This will not only give us a detailed, chronological account of the way the devices interacted but also show us their state and the way they managed the query too.
Blockchain was designed to handle transactions and interactions. This technology has incredible potential for smart contracts or other smart applications that rely heavily on specific Internet of Things (IoT) processes. Smart contracts are automatically carried out when the specified conditions (condition of goods or environmental conditions) are met.
Thus, blockchain technology has the potential to solve current compliance issues in IoT and also improve cost-efficiency and features in using IoT.
Blockchain IoT Solves Security and Scalability Needs
An IoT network processes data transactions between multiple devices owned and administered by separate organizations. The downside is that this technology is unable to locate the point of data leaks in case of cyber-attacks. Besides this, IoT generates enormous data whose ownership often gets confusing as there are usually multiple stakeholders involved in the same IoT network.
However, blockchain technology can effectively solve scalability and security concerns relating to IoT, for instance:
As the blockchain system runs on the distributed ledger technology, it is practically tamper-proof which does not require the trust factor to be relevant between the stakeholders. This is because no single organization can stake ownership of the huge volume of data generated by IoT-powered devices.
Blockchain also enhances IoT security by presenting an additional layer that cyber-criminals will have to go through before reaching the network and accessing the data stored on IoT. Blockchain offers a stronger level of encryption and is virtually impossible to overwrite stored data records.
Blockchain also improves transparency by allowing access to the network to authorized users. These records also show the transaction history which helps locate potential data leakage points quickly and implement remedial actions faster.
Blockchain technology can also help IoT companies reduce costs by removing processing overheads that are required by conventional IoT gateways (for instance, hardware, traditional protocol, communication overhead costs, etc.). It does this by enabling trust between stakeholders.
Blockchain technology is proving effective in faster processing by coordinating billions of connected devices efficiently. The number of IoT-powered devices is increased worldwide and a distributed ledger technology like blockchain comes as the ideal solution as it supports large numbers of transaction processing.
Benefits of Combining Blockchain and IoT
These are the specific benefits that will propel blockchain and IoT combination as the source of incredible market growth in the near future:
1 – Faster data exchange
Accelerated data change is quoted as one of the biggest benefits of combining blockchain and IoT. According to reports, the existing implementation of blockchain is limited because it has a restricted transaction per second speed. A permission-based blockchain offers a more enterprise-level approach as it can easily handle large amounts of data, huge numbers of IoT-powered devices and improve the speed of communication between two devices. Blockchain technology can help reduce the time required for validating transactions by creating trusted nodes that can manage the performance requirements of the IoT because of its faster data exchange rate.
2 – Cut cost
Blockchain is able to reduce operational costs for enterprises. This technology allows data to be transferred on a peer-to-peer basis and does not require a centralized control system. This effectively lowers business expenses. It is expensive to create a reliable centralized infrastructure but decentralizing data with distributed ledger technology is an excellent way to avoid single points of failure and also meet the scalability required by the immense IoT network.
3 – Stronger security
Security is inherent for blockchain technology as it can legitimize data and ensure the trustworthiness of the data source. This comes especially handy when managing the large
numbers of devices connected within an IoT network. Combining blockchain with IoT can help strengthen privacy agreements and ensure more secure communications channels between devices. This technology can also do the same for human-to-human and human-to-device communications. Blockchain technology creates a transparent register that displays who has access, who is transacting and keeps a record of all these transactions too.
4 – Easier accounting
The accounting department can benefit immensely with the combination of blockchain with IoT thanks to the incredible transparency provided by these technologies. This way, organizations can easily check who is sharing, sending money and transferring data across a linear, chronologically-arranged chain.
5 – Enhanced supply chain efficiency
Increasing the efficiency of supply chains is a major priority for many businesses. There are several global and economic challenges that make this difficult to achieve. However, as blockchain combined with IoT eliminates the middle-man, it can improve supply chain efficiency. This also means faster transaction speeds at lowered costs.
Combining blockchain and IoT is yet to reach the mainstream usage due to lack of know-how and fear of costs by enterprises. However, as you have seen, the combination of blockchain on IoT is not only cost-efficient, but is also incredible secure and faster too.