For this column, I am continuing my commentary that I began last week on blockchain for the IoT (Internet of Things). The first part of my two-part discussion, in case you missed it, helped define blockchain, which is, in essence, a continuously growing list of linked records. If you want to read more just hop over to my blog page.
For this column, rather than focus on the benefits and hurdles for enterprise adoption, I would like to dig a little deeper into the question: Should IoT companies invest in this technology now?
According to Gartner’s latest Trend Insight Report on blockchain, this technology is evolving from a digital currency infrastructure to a platform for digital transformation. For all practical purposes I can’t find any fault with that statement and it seems very accurate.
I believe with time and innovation, blockchain will change the game for all kinds of businesses by reducing transaction costs, easing integration, increasing technology readiness, and encouraging new business models.
Let’s talk about some of the opportunities and challenges presented by blockchain.
In our latest feature article on connectedworld.com, “Blockchain: A New Hope for IoT Security,” one of our experts, Professor Ahmed Banafa, general engineering faculty and advisor in the Davidson College of Engineering at San Jose State University, says, “If you need security, you need blockchain.”
You can’t help but appreciate the candor of his direct, poignant approach to the question of whether IoT companies need blockchain.
In our research for this story, we couldn’t escape the fact that heading into 2018, a concerning trend in security is the growing number of public and successful IoT attacks. And, as more and more devices are connected, there’s a growing surface of attack. Essentially, the prize is getting bigger for the bad guys. And, therefore, the burden on the good guys to keep their systems and data secure is also growing.
Blockchain offers the opportunity to radically change and, potentially, improve data security in a lot of use cases by enabling a trusted architecture that allows entities to undertake commercial transactions and exchange value. This fundamental departure from today’s transaction and recordkeeping mechanisms could lay a foundation for disruptive digital businesses.
And we’re not just talking about startups here.
Blockchain technologies could offer positive disruption for established enterprises too. But, of course, there are some hurdles for blockchain technologies that are important to talk about.
Gartner points out that blockchain technologies are relatively immature, poorly understood, and unproven in mission-critical business operations.
This is really good insight. But I have been a part of the M2M and now the IoT space since the beginning and I’ve seen a lot of trends come and go. Candidly, I have to say, blockchain seems to be on a bit of an accelerated trajectory. It also seems to me that blockchain has launched relatively quickly onto the scene, what do you think? Perhaps this is a result of its application as a foundation for cryptocurrency.
Another point that could be made is that the technology is being talked about in different circles than usual and all of this could mean it will gain adoption more quickly than it otherwise would have.
But now you’re wondering, should your company invest in blockchain? Let’s briefly look at the investment scene. Interest in investing in blockchain technology has been building during the past few years.
Let’s just go by the numbers. In 2015, 13 blockchain companies secured just over $365 million in funding. In 2016, that number is supposed to have passed a billion dollars, and it’s too soon to know what the numbers were for 2017, but one would have to assume it has continued to grow.
One of the most recent examples of blockchain investment came earlier this month. A blockchain growth lab called MState launched in early January with the goal of accelerating blockchain development for the enterprise space. Notably, MState is backed by some big dogs in the space, like IBM; Comcast Ventures, the venture capital affiliate of Comcast; and Galvanize, a well-known technology incubator.
To give an idea of how this lab will help advance enterprise blockchain, MState will run a six-month program at two offices in New York and San Francisco. The goal is to help startups with product and business development, sales and marketing, customer support, and other aspects of their go-to-market strategies. We will have to wait and see what startups come out of this lab. But it will definitely be worth the wait.
I love seeing stuff like this; it’s just a very exciting time in the IoT. Clearly, blockchain is definitely a part of the tech industry’s future.
That’s why Research and Markets estimates the global blockchain market will grow from $210 million in 2016 to $2.3 billion in 2021. We are simply talking about a compound annual growth rate of 61.5%. Insane.
As I have noted previously, blockchain is already being used in various vertical markets—from including banking, financial services, and insurance to government, healthcare, retail, energy, and automotive.
Interestingly, Research and Markets’ analysis suggests the media and entertainment vertical could represent the highest compound annual growth rate during the next several years.
Now, after reading all of this, are you still wondering whether now is the time for your enterprise to invest in blockchain technology? As I see it, it all depends on whether you like the risk and reward potential at this point.
Overall as organizations focus more and more on security, transparency, and scalability, there is no question that blockchain will play an even greater part in all of this in the future. We will definitely have to wait to see how certain things shake out. But that’s all a part of the fun, of disruptive technology trends, or, at the very least, trying to determine the past path to take.
If you’re interested in reading more insights about blockchain and data security, be sure to visit connectedworld.com and check out our latest content on the topic. And if you have thoughts on this topic please send me a tweet to continue this discussion on social media @ConnectedWmag.
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