If you talk about the future of the IoT (Internet of Things) blockchain is bound to enter the conversation. If you have visited the Connected World Website at this month, you know that we’ve dedicated a lot of content to both data security and blockchain.
I have also spent a lot of my podcast time at CES 2018 interviewing guests and getting their predictions on the future of disruptive technology, and of course, blockchain has certainly entered the equation as having an impact on the IoT. Simply, as we see it here, security is always important and it needs to be addressed, and we believe blockchain will be more than just a buzzword for 2018.
The question many of us in the space are grappling with is how will this technology make waves in the world of IoT? Is this viable for more than just contracts and banking? Is this something companies should invest in now, or can they afford to wait?
For those of you who read my last editorial you know that I addressed blockchain by addressing how history teaches us many things. In most cases, it gives us a window into our future. History has a tendency to repeat itself and that means sometimes we forget the lessons we have learned from our past.
Since that column several of you have asked me to dig a little deeper and to really explain the roots of blockchain. While it’s pretty complicated, I will do my best to try and simplify it as best as possible. With that being said, I am tackling the aforementioned questions in the next few columns and on my radio podcast.
Let’s begin by defining the blockchain. I will start by borrowing Wikipedia’s definition, because it’s pretty straightforward. So for this discussion, let’s go with it. “A blockchain is a continuously growing list of records, called blocks that are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, as well as a timestamp and transaction data.”
Blockchain technology makes cryptocurrency different from regular currency because it provides an open, distributed, and public ledger for bitcoin transactions. It’s decentralized.
With blockchain, a typical transaction between two parties no longer relies on a central server or “trusted authority,” such as a bank. What is taking place is a peer-to-peer network that manages a blockchain by following a protocol for validating new blocks.
All of the blocks are distributed within the network using a cryptographic audit trail that’s maintained and validated by independent, separate users. Once recorded, the data within a block can’t be easily altered without also altering a bunch of other blocks. Therefore, by design, blockchains are secure and inherently resistant to modification. Outside of its application to cryptocurrencies, that is why a blockchain is perhaps most talked about in the financial services industry. And again if you think about the world of financial services it is built on transactions.
Research from PwC, suggests 77% of FinTech businesses expect to adopt blockchain as part of a production system or process by 2020. That’s significant.
And in the next several years, blockchain is poised for tremendous growth as the technology matures, and as industries find new ways to leverage it. Again, the real question is how will this impact the IoT? The 2017 IDC Futurescape Report predicts that by 2019, 20% of all IoT deployments will have basic levels of blockchain services enabled.
As I discovered at CES 2018, during my interview with Jemma Green, cofounder and chair of Power Ledger, she is building a blockchain-powered peer-to-peer renewable energy trading marketplace. So blockchain in the energy market, for instance, isn’t coming, it’s here.
In 2018, I fully expect blockchain and the IoT to converge more than ever before. Horizontal and vertical industries will be impacted, including not just financial services, but also consumer products, retail, health, national security, and so much more. Look for even more discussion on this in my next column.
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