IT and Business Insights for SMB Solution Providers

When IoT and Blockchain Intersect

Will accelerating and securing IoT solutions be the long-awaited “killer app” for blockchain? By Frank J. Ohlhorst

BLOCKCHAIN TECHNOLOGY has become the internet sweetheart of those looking to bring security to transactions via an incorruptible, distributed electronic ledger. Businesses, though, aren’t yet taking full advantage of its disruptive potential. Will the Internet of Things (IoT) be just the use case blockchain has been waiting for?

Blockchains first emerged as the underpinning of cryptocurrencies such as bitcoin. Many businesses have now started to adopt the concept of protected, fully auditable digital ledgers shared across a peer network of PCs to instill a high level of trust into other processes, such as supply chains. WalMart, for example, has adopted a blockchain for its produce supply chain, recording and tracking every movement from farm to market.

Yet Walmart’s use case has not had the impact that many pundits predicted. Research from Gartner reveals that even by 2021, 40 percent of the projects currently using permissioned blockchains will not be taking advantage of the technology’s unique aspects, such as the concept of decentralization, where a ledger is distributed across multiple systems and no one system can be used to corrupt all the transactions held across the blockchain.

Avivah Litan, Gartner VP and distinguished analyst

“CEOs will have seen articles about blockchain or heard that their competitors are using it, so they’ll call up Gartner and say, ‘Just tell me how it works and how I can use it,’” says Avivah Litan, Gartner vice president and distinguished analyst. That’s an indication that business executives just don’t get blockchain. She adds, “Inquiring enterprises can’t think of use cases that really need blockchain.”

IoT Enters the Equation

Perhaps it comes down to a lack of imagination. Consider the exponential growth of the IoT market. Businesses are deploying sensors, controllers, and other devices into their supply chains, and embedding IoT technology into critical systems such as environmental controls or transportation systems. Simply put, IoT creates data, and that data is used to advance business. However, businesses need to know they can trust that data, as well as audit and potentially share it—requirements that scream for an immutable record placed in an incorruptible ledger.

“Blockchain technology is a natural extension of IoT that allows corporations to extend the value of their connected devices by adding the capability to transact and participate in the machine economy,” says Allison Clift-Jennings, CEO of Filament, a developer of blockchain systems for IoT.

Adding blockchains to IoT solutions offers additional benefits as well. For instance, Gartner research continues to show that security is the biggest area of technical concern for organizations deploying IoT systems. That’s a viable use case for blockchain technology, which can ensure that information reported by IoT devices isn’t corrupted or altered, preventing fraud. “Blockchain supports the security of IoT with a secure and scalable framework among devices,” Clift-Jennings says.

However, many organizations still find identifying specific IoT-related deployment opportunities for blockchain somewhat challenging. Adopters, experts say, must start by identifying IoT use cases that will benefit from a blockchain, such as sensors and devices that are responsible for maintaining compliance or contractual requirements. The blockchain can secure the data recorded and enhance trust in any transactions those devices are involved in.

In the past, building a blockchain could involve demanding tasks like deploying underlying infrastructure and building a distributed, decentralized network. However, blockchain as a service is an emerging market with offerings such as Amazon Managed Blockchain, Microsoft’s Azure Blockchain, and SAP’s Leonardo Blockchain. And companies like Filament are paving the way for blockchain-enabled IoT devices, creating different opportunities for channel players.

For IoT integrators looking to build on the potential of blockchain, partnering with those blockchain-as-a-service providers may be a good starting point in what is sure to be a disruptive market.

Image: iStock

About the Author

Frank J. Ohlhorst is a technology journalist and IT industry analyst with extensive experience as a business consultant, editor, author, and blogger.

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