The emergence of blockchain-based applications is driving substantial investment in IoT-oriented projects.
Blockchain is showing great promise to alter and transform established industries beyond fintech, according to analysts at ABI Research.
Aside from transactions, blockchain can also be used for communication, identification, ownership and device management, and with continued architecture improvements, the technology is expanding into smart contracts that both people and machines can be 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."
Blockchain's potential as a market beyond cryptocurrency can be analysed against venture capital funding, which hit ₹3,399.74 crore ($500 million) globally in 2016. There are currently more than 1,500 start-ups on the blockchain scene. But not all are public. Some blockchains are permissioned and private, while others are of a hybrid nature or run by a consortium. Not all distributed ledger technologies are blockchains either, as the goals and objectives of the various participants are compelled by other imperatives.
While blockchain undoubtedly 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.
Vendors, such as BitNation, Modum, MultiChain and Riddle&Code, will 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. But first they will need to address issues associated to immutability, scale, cost and privacy, as well as clarify the legal uncertainties surrounding smart contracts. Above all, they will need to tackle misconceptions about what blockchain can enable and its limitations.
"While the cryptocurrency market may be maturing, IoT applications are still largely untested," said Menting. "The excitement around Bitcoin's success is nonetheless fuelling a great many endeavours beyond fintech that are likely to impact the IoT."