Blockchain driving IoT investment, says ABI
May 10, 2017
The emergence of blockchain-based applications is driving investment in IoT-oriented projects, according to ABI Research, which found great promise for the technology to alter and transform established industries beyond fintech.
In addition to transactions, blockchain technology can also be used for communications, identification, ownership and device management. With continued architecture improvements, blockchain technology is expanding into smart contracts that both people and machines can leverage.
"These pre-programmed, self-executing, autonomous contracts can be used for numerous applications, including digital identities, governance, asset tracking and M2M transactions, among many others," said Michela Menting, research director at ABI Research. "Through these evolving technologies, blockchain can affect and perhaps radically transform all kinds of interactions, from business and legal to social and political."
Blockchain's potential as a market beyond cryptocurrency can be analysed against venture capital funding, which hit US$0.5bn globally in 2016. There are currently more than 1500 start-ups on the blockchain scene. But not all are public.
Some blockchains are permissioned and private, while others are of a hybrid nature or run by a consortium. Not all distributed ledger technologies are blockchains either, as the goals and objectives of the various participants are compelled by other imperatives.
While blockchain undoubtedly holds great transformative potential, the technology itself needs to overcome numerous obstacles, according to the research. As a nascent technology, it is not immune from vulnerabilities, and unknowns may bar the way to growth and maturity.
Vendors, such as BitNation, Modum, MultiChain and Riddle & Code, will need to drive interest in blockchain for technology end users and create awareness of how it can be applied in varying applications across many different sectors. But first they will need to address issues associated to immutability, scale, cost and privacy, as well as clarify the legal uncertainties surrounding smart contracts. Above all, they will need to tackle misconceptions about what blockchain can enable and its limitations.
"While the cryptocurrency market may be maturing, IoT applications are still largely untested," said Menting. "The excitement around Bitcoin's success is nonetheless fuelling a great many endeavours beyond fintech that are likely to impact the IoT."
• The University of Surrey in the UK has won a total of £1.1m in three bids to use blockchain technology to improve the effectiveness of e-voting, digital archives and the use of healthcare information. The money is coming from the Engineering & Physical Sciences Research Council (EPSRC).
• According to Markets & Markets, the IoT operating system market is expected to grow from US$289.2m in 2017 to $1721.3m by 2022, at a CAGR of 42.9 per cent.