Blockchain technologies could enable better communication, identification, and device management for IoT projects.
Analysts at research company ABI Research believe there is great potential for using the technology in IoT applications, in a trend they claim could transform established industries beyond the fintech sector, where most blockchain activity is currently focused.
In a new paper on the subject, Blockchain Applications: Beyond Fintech to the IoT, the firm has said that as well as handling financial transactions, the technology might also be used for communication, identification, ownership, and device management in IoT applications.
With continued architecture improvements, the technology is also expanding into smart contracts that both people and machines can leverage.
“These pre-programmed, self-executing, autonomous contracts can be used for numerous applications, including digital identities, governance, asset tracking, and M2M transactions, among many others,” said Michela Menting, research director at ABI Research.
“Through these evolving technologies, blockchain can affect and perhaps radically transform all kinds of interactions: from business and legal to social and political.”
But the analysts added that while blockchain holds great transformative potential, the technology itself needs to overcome numerous obstacles. “As a nascent technology, it is not immune from vulnerabilities, and unknowns may bar the way to growth and maturity”, they write.
Vendors in the market will also need to drive interest in blockchain for technology end users and create awareness of how it can be applied in varying applications across many different sectors. They will also have to overcome problems around immutability, scale, cost, and privacy, as well as clarifying legal uncertainties around smart contracts. Above all, they will need to tackle misconceptions about what blockchain can enable and its limitations, said the research company.
“While the cryptocurrency market may be maturing, IoT applications are still largely untested,” said Menting. “The excitement around Bitcoin’s success is nonetheless fueling a great many endeavors beyond fintech that are likely to impact the IoT.”
Blockchain use in the energy sector
The ABI Research report comes as blockchain specialist BTL also releases a white paper – in this case, on blockchain technology’s applicability to the energy sector.
Over the past few months, BTL says it has been undertaking a Europe-wide, energy-focused pilot.
Authors of the white paper write that connected devices and the IoT are already improving the way that energy companies can track and monitor energy flows. The decentralized nature of blockchain technology reduces the capital expenditure required to help embrace this expansion of connected sensors.
They add that the technology’s attributes of distributed, shared, validated and immutable record-keeping provides defence against cyber threats, as well as vast improvement of data transition and reconciliation within the energy lifecycle, thus leading to significant efficiencies and cost savings.