The emergence of blockchain-based applications is driving substantial investment in IoT-oriented projects. ABI Research finds there to be great promise for the technology to alter and transform established industries beyond fintech. In addition to transactions, blockchain technology can also be used for communication, identification, ownership, and device management. With continued architecture improvements, blockchain technology is expanding into smart contracts that both people and machines can be 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,” says 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 analyzed against venture capital funding, which hit half a billion USD globally in 2016. There are currently more than 1,500 startups 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. 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,” concludes Menting. “The excitement around Bitcoin’s success is nonetheless fueling a great many endeavors beyond fintech that are likely to impact the IoT.”