The good news is that after a few years of hype, early experimentations, education and proof of concepts (PoCs), we are finally starting to view blockchain for what it is: a technology tool for a variety of business uses.
Now that cryptocurrencies have proven viable first applications for blockchain – a distributed ledger that allows multiple parties to record transactions between them efficiently, securely and permanently – the technology is getting ready for primetime. In fact, a study by PwC showed that 84 percent of companies are actively exploring blockchain, while the global market is expected to reach $7.59 billion by 2024.
If the example of its over-hyped technology predecessors is any indication, blockchain adoption is right on schedule.
The Internet of Things (IoT) and Artificial Intelligence (AI), in particular, have demonstrated a two-phase adoption pattern: phase one focuses on improving existing processes, while phase two involves using the technology to create new value propositions, new business models and new market structures.
The second phase, however, requires the convergence of these interconnected digital tools. For example, working together, AI serves as the “brain” that powers IoT’s “body” to act on the data it generates to completely transform business and entire industries. Similarly, to unlock the full potential of blockchain, it should be combined with other capabilities such as IoT.
When Blockchain Met IoT
Although IoT has proven itself long before blockchain became the latest buzzword, the two are made for each other.
In the enterprise, the value of IoT comes from insights gleaned from data generated by connected devices. For instance, manufacturers can analyze data streams collected from IoT-enabled machines on their factory floor to cut costs and downtime with smarter predictive and preventative maintenance solutions.
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But, in the modern enterprise, IoT data is shared across organizational boundaries, often with supply chain or go-to-market partners and customers. This data needs to be accurate, trustworthy and secure. However, much of the time, data resides in disparate systems and must be reconciled manually. This process is tedious and does not address the issues of data consistency and security.
Instead of performing these transactions manually, blockchain technology, when integrated with IoT, automates the decentralized recording and reconciling of IoT data transactions across devices and entire enterprises. The best way to illustrate blockchain and IoT’s relationship is to explore a few use cases that promise to create new levels of trust and business value.
Blockchain in Business Action
In the supply chain, blockchain and IoT can enable new applications around anti-counterfeiting, supplier and purchaser financing, or management of disruptions and recalls. With multilayered ecosystems comprising various tiers of suppliers, manufacturers, distributors and customers, supply chains can use blockchain to track and trace products and materials.
For example, blockchain and IoT can help combat counterfeiting. No industry is immune to this challenge. For example, it is estimated to cost U.S.-based semiconductor companies more than $7.5 billion a year. Similarly, food supply chains can use blockchain to quickly identify the origin and locations of recalled goods, rapidly mitigating the issue before it becomes catastrophic (to put this into perspective, more than 20 million pounds of food were recalled in 2017). If a shipment of lettuce, for instance, is believed to be tainted with salmonella, manufacturers can trace it through the chain of custody and pinpoint where the contamination happened.
A pilot conducted by Walmart demonstrated the power of blockchain to track and trace a package of mangos back to its farm of origin. Using blockchain and IoT, the process took a mere 2.2 seconds. In contrast, the process would have taken as long as seven days when using paper-based, traditional methods.
Another emerging blockchain and IoT use case involves smart communities. Cities and municipalities can use blockchain-based solutions to create a secure, common ledger for managing real-time transportation, energy and utilities data from IoT connections. Such applications can improve services to citizens, reduce resource consumption and ensure that only authorized third parties are accessing mission-critical data.
Lastly, in the healthcare industry, patient data is siloed in various, legacy electronic health record (EHR) systems. This makes it difficult, if not impossible, for a doctor to gain a holistic view of the patient’s medical history and for patients to control access to their health data. By recording and viewing patient data on a secure, accurate blockchain, doctors can make sure they do not prescribe a treatment plan that will interfere with existing medications or conditions. With a single view of the truth, healthcare providers can, in turn, improve patient safety and reduce risks.
Blockchain’s Next Move
Like with IoT, the viability of blockchain requires the industry to develop solutions based on established frameworks. Such frameworks will enable disparate blockchain networks to scale and interoperate. This will drive not only greater scalability, but also more efficient deployment of solutions that include other emerging technologies such as AI and fog computing.
If you are already using IoT, you are a step ahead of the game – consider how blockchain can apply to your workflows and uses cases. If you’re new to both IoT and blockchain, I urge you to take a step back before diving into a deployment. Focus first on the use case and the business problem you’d like to solve. Then, once you realize some initial results from a few projects, you can scale and explore ways to use the solutions to create new business models, markets and revenue sources.
Before long, you just might discover that blockchain is more than the next, new shiny object. Along with its supporting cast of technologies, blockchain will emerge in a starring role for your business.