The Internet of Things (IoT) is the latest phase of online exploration for businesses that generate a wealth of data. The IoT business is still very new in its development but is becoming more powerful by the day. Adding blockchain technology to the equation creates a wide array of opportunities for companies to gain more control in transactions and interactions.
How Blockchain Fits into IoT Development
Blockchain technology has become widely known through the introduction of cryptocurrencies, spearheaded by Bitcoin. The IoT business is embracing blockchain because it’s a secure way to document transactions through an online ledger that is private within a closed network and cannot be modified. But blockchain has other powerful uses, as well, such as serving as an interface for smart contracts. Once conditions are met, a smart contract is automatically executed by an application.
Artificial intelligence (AI) driven by sensors will also play a major role in the convergence of IoT and blockchain. The combination of these technologies will speed up processes and elevate the level of trust and accountability between business entities. According to IBM, the primary benefits of blockchain are building trust, cost-cutting, and faster transactions. Part of the reason IoT and blockchain are part of the same puzzle is that they both involve distribution of data.
IoT and Blockchain Integration Challenges
The main challenges that you will need to consider in building a business that supports both IoT and blockchain are security, operational logistics, and legal issues. As smart contracts become more adopted, blockchain will allow peer-to-peer agreements without the need of verification from a third party. Blockchain will ultimately be the answer to multiple challenges, such as:
- Capability of storing records
- Scalable solutions for future growth
- Time stamping to confirm a transaction
- Better privacy with a higher trust level
How IoT and Blockchain Will Revolutionize Multiple Industries
The insurance industry has been an early adopter of blockchain technology, using it to execute smart contracts for insurance policies. The combination of IoT and blockchain will help improve both operational and manufacturing technologies. The utility industry will also benefit from the buying and selling of smart contracts, as will any firm that relies on automated machine-to-machine transactions.
Essentially, blockchain can be used as proof for any type of online transaction. It can also meet all the requirements of all the parties involved so that senders and receivers are sent notifications of payment and delivery of the product or service. Blockchain will particularly be useful in the shipping industry for verification of movement from point A to point B in a supply chain.
There’s a bright future ahead for the IoT business as it mixes with other new technologies such as blockchain, machine learning, and security. The foundation of this convergence will involve security, identity, interactions, and transactions. Companies that are looking into these innovations will be well-prepared for next-generation technology and have a chance to establish a competitive edge in the coming years.