The integration of IoT and Blockchain networks is a sweet spot for digital transformation and innovation. It is actually moving ahead at a much faster space than expected, according to a recent Gartner Survey of over 500 U.S. companies. 75% of IoT technology adopters in the U.S. have already adopted blockchain or are planning to adopt it by the end of 2020. Among the blockchain adopters, 86% are implementing the two technologies together in various projects. See Survey Analysis: IoT Adopters Embrace Blockchain for more information and Figure 1 below.
So, while blockchain technology is hitting rock bottom of the Gartner Hype Cycle — i.e. the Trough of Disillusionment, promising projects such as those that combine IoT with Blockchain will start pushing it out into the “Slope of Enlightenment.” See Hype Cycle for Blockchain Technologies, 2019
Blockchain networks have emerged as a promising innovation because of their ability to affirm the integrity of data shared among constituents in multiparty process collaboration. IoT has emerged as a method for bridging the gap between resources (or “things”) and their associated business processes. Integrating IoT and blockchain supports trusted multiparty processes that bridge physical world things to business process computing environments. See Figure 2 for an illustration of how this can work.
Business Drivers for Integrating IoT and Blockchain Technology
Indeed, among survey respondents, 63% indicated that the top benefit of their combined IoT/blockchain projects is increased security and trust in shared multiparty transactions and data. 56% said the top benefit is an increase in business efficiency and lower costs. Only 43% chose increase in revenue and business opportunities, while just 37% chose improved constituent or participant experience. See Figure 3 on Drivers.
A Word of Caution
Still, this combination of IoT and enterprise blockchain technologies is quite immature and faces many technical and business challenges. The relative volatility of blockchain implementations involving protocol changes may be a challenge for long-lived IoT devices. Some blockchain implementations struggle to scale to the transaction rates that can be generated by large numbers of connected things. In the long term, we expect the combination of IoT and blockchain to enable innovative devices and business models, but the necessary evolution in both blockchain and IoT will take five to 10 years to achieve maturity.
Early adopters will see early benefits but will also be paving the rocky road ahead of us, a potentially costly exercise. No Pain, No Gain.