When Blockchain and IoT Work Together: Reappraising the Promises and Pitfalls

Understanding the Convergence and Moving Past the Hype to See Real Value and Growth Opportunities

This study serves to explain how Blockchain and IoT can work together, what each technology is, how it works, how they integrate together, and example use cases.

• Blockchain and IoT represent two collections of technologies with tremendous potential to improve and optimize businesses operations and daily life, but despite the heralding of a new era the realized results have fallen short. Innovators have been combining these two groups of technologies in novel solutions, searching for ways to monetize existing capabilities and divining what customers may actually purchase. Service providers are exploring capabilities for these solutions to add value across applications, in use cases where stakeholders need a way to smooth transactions in situations that lack complete trust.
• As IoT connectivity progresses to support long range applications and high bandwidth applications, IoT can unleash waves of process optimization. While IoT is adding an identity and connectivity to billions of devices, simultaneously making it easy to measure and manage functions as well as making them vulnerable.
• Blockchain can be imagined as simply a way to find agreement with strangers. Or put another way, blockchain is a collection of technologies that secure an exchange of value without a central point of control. It minimizes the capability for any one actor behaving maliciously or deceptively to control the trusted chain. The blockchain’s goal is to reach consensus without a single central authority.
• Blockchain technologies can complement IoT deployments by adding a layer of verifiable trust to recording and exchanging data and securing devices. Integrating blockchain-enabled solutions into distributed (and/or multiparty) systems can mitigate security and operational risks, through identify verification, device authentication, and data transparency. Applications leveraging both IoT and blockchain can streamline business processes and transactions, optimizing and automating contracting terms and transactions with a consensus record that does not require a third-party approval.
• The IoT services ecosystem is fragmented but interdependent; service providers frequently work together across functions. The blockchain solutions landscape is also fragmented, with another highly complex value chain that requires proficiency across multiple domains.
• The market landscape for blockchain-enabled IoT solutions is fast-moving, with startups pivoting fast and established incumbents entering and exiting the space votsrelatively quickly. After much hype, enterprises are figuring out where blockchain adds more value than a standard database.
• Solutions in these segments usually involve complex and long value chains, with many multi-party systems. Service providers need to blend industry knowledge and technical expertise as they manage and evolve ecosystems. With 5G connectivity and a rising wave of IoT devices visible on the horizon, stakeholders will need to collaborate in order to standardize and broaden the appeal of these types of solutions.
• Fundamentally the market for solutions and services blending IoT and blockchain is nascent, with definitions and businesses models blurring and changing quickly.