The blockchain-IoT market is a mix of blockchain and IoT technology. It has gained popularity due to the rapid development of technology and communication network. Additionally, the blockchain powered by cryptographic encryption and decentralized networks utilizes the IoT platform using a peer-to-peer network to provide transparency and security.
The growing amount of IoT devices and connections susceptible to cyber crimes has prompted the development of blockchain technology. The benefits of the IoT blockchain include speed of data changes and lower costs, increased privacy, and efficient logistics, supply chain, and insurance.
The Internet of Things (IoT) connects people, places and products. In doing so, it offers the possibility of creating and capturing value. IoT analytics capabilities use these data points to translate insights into action, impacting the business process and resulting in innovative ways of working.
The powerful combination of blockchain and IoT
According to ISG, Blockchain is a distributed ledger technology that enables machine-to-machine transactions to be feasible when combined with IoT. Using a set of transactions stored in databases, they are verified by multiple sources before being entered into a shared ledger distributed to each node. The combination of IoT and blockchain allows smart devices to operate independently without a central authority, bringing many benefits. It can also monitor how devices communicate with each other.
Although the decentralization aspect of blockchain technology is an advantage in design, it could pose challenges for IoT as these platforms are based on a hub-and-spoke or client-server architecture which is an authority central. An IoT platform designed to be decentralized can help ensure compatibility with blockchain networks; however, it might not be easy to configure IoT sensors to handle their own data storage and computation as they depend on storage resources and central computing.
Integration of blockchain and IoT will propel the market in the coming years
Although blockchain and IoT are both highly combined, the combination of these two technologies can be used by businesses. A study conducted by Aftrex Market Research in 2018 revealed that the total blockchain and IoT market could reach $254.31 billion in 2026. Below are five benefits of IoT and blockchain technology that will drive the market expansion in the coming years.
Blockchain for accelerated data modification
According to Aftrex Market Research, one of the main benefits of combining IoT and blockchain has been faster data changes. However, according to reports, the current blockchain implementation is not without drawbacks in this regard as it limits the number of transactions performed per second. Therefore, a more professional solution, such as a permission-based blockchain, is needed to manage the volume of data needed, the devices that are part of the IoT, and the speed of transactions between two parties.
A blockchain that reduces the time needed to validate transactions by using trusted nodes is crucial to address the performance requirements of IoT and can handle the rapid exchange of IoT information from IoT.
Improved security with Blockchain
Security is one of the main benefits of blockchain due to its ability to validate information and ensure that it comes from a trusted source. Due to the large number of devices that are part of the IoT, this feature is particularly beneficial. The combination of IoT and technology could help strengthen confidentiality agreements and improve communications security.
It’s not just for devices – it’s also human-to-human, device-to-device, and device-to-human. This trusted ledger easily displays who can access the account and who transacts. A log of every transaction is a big plus. Companies currently using a fusion of blockchains and IoT frequently rely on security measures such as device authentication, but that’s just the tip of the iceberg.
More efficient supply chain
One of the main goals of many companies is to make the supply chain more efficient. But many problems in the global economy are hampering this process. Removing the blockchain middleman and IoT can improve the efficiency and speed of supply chains, speeding up transactions while reducing costs. Since the blockchain serves as a validator, to some extent, untrusted parties can share data directly, eliminating the cost associated with each hop.
Room for growth with Blockchainn
The use of IoT-based blockchain technology is not yet widely used due to operational issues and technical issues. For example, scalability and storage are two major issues with blockchain systems that maintain an extensive central ledger. Ledger storage on edge nodes is inefficient because smart devices at the edge are not able to handle large amounts of computing power or store large amounts of data.
Although the concept of IoT-blockchain technology is still in its infancy, it will be a major factor in the next few years. The implementation of standards and regulations and security guidelines will help encourage the use of IoT blockchain technology. Additionally, with new standards for peer-to-peer communication and data transparency, blockchain could provide a higher level of security for the web.
The most acclaimed benefit for businesses is the ability to reduce operational expenses. Blockchain allows data to be transmitted peer-to-peer, without centralizing control, which reduces the cost of doing business. Building a highly reliable centralized infrastructure will likely be expensive. Decentralization is an effective way to eliminate single sources of failure and manage the size of the IoT.
Accounting is one of the key departments in an organization that can immediately benefit from the increased transparency offered by blockchain and IoT. First, companies need to understand what they are sharing/exchanging data/money on a linear, timestamped chain.
How is blockchain accelerating the potential of IoT?
Blockchain is a great technology with immense potential to accelerate the efficient operation of IoT. Because security is the main concern of IoT which has hindered the widespread adoption of IoT. IoT devices are often plagued by security vulnerabilities, making them a prime target for Distributed Denial of Service (DDoS) attacks. Here are the main concerns of blockchain-related IoT devices:
The distributed ledger used in the blockchain system is protected against tampering. It removes the need to trust the parties involved and provides the necessary security to devices or platforms, improving user experience and reducing the amount of work.
Thanks to the integration between IoT and blockchain networks, gadgets will have the ability to exchange information without having to use many servers. Additionally, it will ensure that there is no failure at any node in the network, which could cause the entire network to shut down.
Robust level of encryption
Using the blockchain to store IoT data will add a layer of protection that hackers must modify across all blocks in the chain to gain access to the network. In addition, the blockchain offers a higher level of security. It is therefore difficult to modify existing data records and even more difficult.
Due to the decentralized approach, using the Internet of Things network will help solve many problems. Such as Peer to Peer communication models to manage billions of transactions between devices. Also greatly reducing the cost of establishing and maintaining the huge central data center.
Confidence and assurance
By creating trust between the parties involved, blockchain could help IoT companies reduce costs. Hence the elimination of processing expenses associated with IoT gateways (e.g. traditional protocols, hardware or communication overhead).
The Key Takeaway
According to an August 2018 Twitter survey, 57% of participants said they would never use blockchain technology. In contrast, only 12% of survey participants used distributed ledger technology.
According to Leone’s analysis, Blockchain and IoT could be an amazing combination. But, we have some time before this innovative business tool becomes commonplace in enterprise technology. Therefore, it is advisable to start planning now.
Featured Image Credit: Photo by Anna Nekrashevich; pexels; Thanks!
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